BCG Matrix

Known as Boston Consultancy Group Matrix. It is a 4 celled 2*2 matrix developed by BCG in USA. It is considered to be a most renowned corporate portfolio analysis tool. It is a two dimensional analysis on management of SBU. In other words, it is a comparative study of business potential and evaluation of environment.

Source------ Managementstudy.com

Stars
Stars represent business units which have large market share and a fast growing industry. They require huge investments to maintain their lead. If successful, a star will become a cash cow when industry matures. Example: Wal-Mart (high market share and everyone wants cheap products which results in high growth business)

Cash Cows
Cash cows represent business units having large market share and slow growing industry. They require little investment and generate cash that can be utilized for investment in other business units. When a cash cow loose their appeal and move towards deterioration, then a retrenchment policy may be pursued. Example: Pepsi (a business that is not growing but making a lots of profit)

Question marks
It represents business units having low relative market share and located in a high growth industry. They require huge amount of cash to maintain or gain market share. Question marks are generally new goods and services which have a good commercial prospective. Example: Windows 8 operating system.

Dogs
It represents business having weak market shares and low growth markets. They neither generate cash nor require huge amount of cash. These business have weak market share because of high cost, poor quality, ineffective marketing etc.

Limitations
Market is not clearly defined in this model. Growth rate and relative market share are not the only indicators of profitability. This model ignores other indicators of profitability. At times, dogs may help other businesses in gaining competitive advantage. They can even earn more than cash cows sometimes. The four celled approach is considered to be very simplistic.