What is a cash cow?

CASH COW is a business undertaking that generates a constant return of profits that far exceeds cash expenses needed to obtain or start it. Many businesses are trying to create or obtain such businesses because they can be used to increase the total income of the company and to support fewer profitable efforts. The term is also sometimes used in a mockery way, usually in the discussion of the company's satisfaction of profitable product.

A classic example of a cash cow is a milk cow. Milk cows require small capital expenditures when they are obtained and then minimal maintenance costs. In return for their low maintenance costs, they create milk cows throughout the life of adults, along with calves. Since the 16th century, people used "Milch Cow" to refer to a profitable enterprise; The modern term appeared around 70 years.

Several functions distinguish such a business. The first is relatively small capital expenditure and maintenance costs. It also usually represents a significant competition on its market and the usualLE generates innovative and interesting products that capture increasing market share. Cash cows tend to attract customers with a range of products and favorable price programs, although some also sell more expensive products; The famous Apple iPod line is a classic example in the technological sector.

Although cash cow can be very beneficial for its parent companies, some warnings are involved in the solution. One of the main problems that the company faces is satisfaction in handling their profitable companies. For one success, the company must respond to market changes, ensure business growth and reliable cash flow. If stagnant is allowed, other companies capture their market share.

The term is also used in a completely different context, for referring to companies, or organizations that do not have a dish above their expenditure. In this sense they canBeing with this term listed sections of the government budget, such as defense, referring to the fact that taxpayers are milking to pay for them. As a result, funds are ineffective and poorly used.