Explain and provide examples comparing and contrasting cash cow businesses and cash hog businesses.
What will be an ideal response?
A cash cow business generates cash flows over and above its internal requirements, thus providing a corporate parent with funds for investing in cash hog businesses, financing new acquisitions, or paying dividends. A cash hog business generates cash flows that are too small to fully fund its growth; it thereby requires cash infusions to provide additional working capital and finance new capital investment. A popular example is Apple Inc., whose cash cows are Macs, notebooks, and iPads, whereas its cash hog businesses include services (iTunes, the App Store, the Mac App Store, Apple Music, iCloud, Apple Pay, and AppleCare) and its newer generation smartphones and wearables (iPhone and Apple Watch).
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