WHAT IS THE BCG GROWTH-SHARE MATRIX?
No strategic management or marketing text appears to be complete without the inclusion of the Boston Consulting Group (BCG) growth-share matrix. When used effectively, this model provides guidance for resource allocation. And despite its inherent weaknesses, is probably oneof the most widely used management instrument as far as portfolio management is concern. For instant, each SBU (strategic business unit) of large companies such as GeneralElectric, Siemens, and Centrica require different strategies to compete effectively andefficiently. It is not a question of one strategy fits all SBUs since the likelihood for each of them experiencing the same market growth rate, industry-threats and leverage is very slim. Thisis where the BCG model comes into play as a management analytical tool. The ensuingexamines the underpinnings of the model, for what it is used, how to use it and why it is used.
INTRODUCTIONWHAT IS THE BCG GROWTH-SHARE MATRIX?
To begin with, BCG is the acronym for Boston Consulting Group²a general managementconsulting firm highly respected in business strategy consulting. BCG Growth-Share Matrix(see figure 1) happens to be one of many of BCG's strategic concepts the organisationdeveloped in the late 1970s, and is being taught at leading business schools and executiveeducation programmes around the world.It is a management tool that serves four distinct purposes (McDonald 2003; Kotler 2003;Cipher 2006): it can be used to classify product portfolio in four business types based on four graphic labels including Stars, Cash Cows, Question Marks and Dogs; it can be used todetermine what priorities should be given in the product portfolio of a company; to classify anorganisation¶s product portfolio according to their cash usage and generation; and offersmanagement available strategies to tackle various product lines. Consider companieslike Apple Computer, General Electric, Unilever, Siemens, Centrica and many more, engagingin diversified product lines. The BCG model therefore becomes an invaluable analytical tool toevaluate an organisation¶s diversified product lines as later seen in the ensuing sections.