Where did the term cash cow come from?
P., Here is a link..
Cash Cow: Encyclopedia of Business
Since its introduction by management guru Peter F. Drucker (1909-) in the mid-1960s, the term "cash cow" has taken on a variety of related meanings. Drucker used the term to describe a business or product line with large market share in a stagnant or declining market. Consequently, Drucker coined the term to refer to the process of ceasing to invest in such a business or product line when the market declines past a certain point and discontinuing it when it stops yielding a profit. Hence, Drucker's "cash cow" designates a product or business that can yield profits reliably for a limited number of years without further investment and with little attention and maintenance.
The term "cash cow" also has its origin in a matrix developed by the Boston Consulting Group, in which enterprises are classified as having positions in either a growing or shrinking market, and with either a growing or shrinking total market share. An operation with a large market share in a growing market is called a "star," while an operation with a small market share in a growing market is called a "question mark" (or sometimes a "problem child").
While the cash cow has a large market share in a stagnant or shrinking market, a company with low market share in a declining market is called a "dog."
Question marks generally require high investment to achieve a more favorable position and become a star (hence they are sometimes referred to as "cash hogs"). If they can manage the transition to star, they will, over time, be subjected to intense competition. As the market matures, stars become cash cows. If a cash cow's competitive position is allowed to deteriorate, it becomes a dog.
Dogs are enterprises that generally can never operate in high-growth markets because those markets have matured. The investment needed to turn them into cash cows is, in many cases, prohibitive. As a result, dogs are either divested by sale to a competitor or, especially if they are losing money, are closed down and liquidated to prevent further losses.
Because the cash cow has a high market share in a stable or slowly growing market, it is generally able to maintain a profitable position, hence the name "cash cow"?the operation may be "milked" for profit as long as its margins and market share can be maintained.
Additional investment in the cash cow's products, representing technological improvements that yield new applications, can sometimes result in its transformation into a star. Because it is profitable, the cash cow can often provide its own investment capital.
More often, however, the cash cow is milked for capital to fund the development of question marks into stars because it is easier to build market share in a growing market than to revive an entire market that has matured.
Over the decades, however, "cash cow" has come to mean a profitable enterprise with a stable market share in a growing market. Such an entity?whether a company, a division of a company, a product, or an investment?is in a highly competitive position as long as it can take advantage of growing production expansion and efficiency or economies of scale.
As long as a cash cow has the capacity to expand its shipments and sales, its margins?and therefore its profitability?are in a strong growth position. These profits may be reinvested in the operation to build additional capacity to further fuel growth in market share. Consequently, when used loosely, "cash cow" often can refer to refer to any investment, product, or service generating at least a modest profit.
[John Simley updated by Karl Heil]
FURTHER READING: Bartol, Kathryn M., and David C. Martin. Management.McGraw-Hill, 1991. Donnelly, James H., Jr., James L. Gibson, and John M. Ivancevich. Fundamentals of Management. 6th ed. Plano, TX: Business Publications, 1987.
cow - Meaning from Word of the Day
Part of Speech: noun Pronunciation:[kæw] Definition: (1) A female bovine animal raised for meat and milk around the world. (2) Coalition of the Willing. (3) Cost of war. Usage:The two twin acronyms creeping out of Washington these days are COW and COW: Coalition of the Willing and cost of the war. The two meanings are related in an interesting way: part of the cost of the war is the foreign aid packages that will go to many of the smaller participants of the Coalition of the Willing, who may see the Coalition as a cash cow. (Does this mean we will be paying for this war until the COWs come home?) Suggested Usage: An interesting note on the original "cow" is that its plural used to be "kine," with the same [n] sound marking plural that we have in "oxen" and "children" today. It was replaced by "cows" in the 17th century. But we have selected this word as our Word of the Day because of two topical acronyms orthographically identical with it. Etymology:Did you know that "cow," "beef," and "butter" all come from the same word? That word was Proto-Indo-European *gwou- "cow, bull," spoken 6,000 years ago. In the Germanic languages, the [w] dropped out and the [g] became closely related [k]: German "Kuh," Icelandic "kýr," and English "cow." The PIE root remained all but unchanged in Sanskrit "gauh," currently "gAya" in Hindi. "Gauh" is found in goraksah "cowherd," the word the British borrowed as "Gurkha." In Latin and Greek, however, the combination [gw] converted to [b] at the beginning of a word, so we find Latin bos, bovis "ox, cow" and Greek bous "ox, cow." Latin "bovis" became "boeuf" in French, whence we borrowed it as "beef," the meat of the cow. (Until then, we ate cow.) "Butter?" It came to us via Latin from Greek bous "cow" + turos "cheese."
A single cow could transform a primitive family's lifestyle from survival mode to prosperity.
By turning indigestible matter (grass) into food, clothing, and money a cow was a alchemy lab on 4 legs... it wasn't quite as good as being able to turn lead into gold, but this actually WORKS.
All that's required is a twice daily workout to pull the milk from the udder. And to keep that milk flowing... the cow produces an annual calf to be kept, sold, or eaten.
How appropriate that we call the businesses, enterprises, services we have that produce daily cash a "cash cow."
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