1.

Differences between BCG and GE Matrix

BCG Matrix GE Matrix

-It is a well-known Portfolio -Is a nine-cell (3 by 3) matrix used

Management tool. to perform business portfolio
analysis as a step in the strategic
-Based on product life cycle theory. planning process.
-Useful for multi-divisional or -Differs from other tools, like the
multiproduct companies. BCG Matrix, in that multiple factors
are used to define Industry
-It is divided into four cells or
Attractiveness and Business Unit
quadrants, each of which
Strength.
represents a particular type of
business.
-Does not only consider growth, it
-Applicable to large companies that mainly considers market
seek volume and experience attractiveness.
effects.
-Creates nine cells.
-More simpler and the factors
needed to construct it are accessed -Helps a strategic business
more easily and quickly unit evaluate its overall strength.

-It provides a base for management -Strategies are often not

to decide and prepare for future implemented in an accurate and
actions. proper manner.

- It takes into account a wide range

of factors when determining
market attractiveness and business
strengths, which is replaced by
market share and market growth in
the BCG matrix.
2.

3. Differentiate Cash cow, star, dog, and question mark

STARS: HIGH GROWTH, HIGH MARKET SHARE

Stars are leaders in business.

They require heavy investment to maintain its large market share.

It leads to a large amount of cash consumption and cash generation.

Attempts should be made to hold the market share otherwise the star will
become a cashcow.

CASH COWS: LOW GROWTH, HIGH MARKET SHARE

They are foundation of the company and often the stars of yesterday.

They generate more cash than required.

They extract the profits by investing as little cash as possible.

They are located in an industry that is mature, not growing or declining.

QUESTION MARKS: HIGH GROWTH, LOW MARKET SHARE

Most businesses start of as question marks.

They will absorb great amounts of cash if the market share remains
unchanged

Question marks have potential to become star and eventually cash cow but
can also become a dog.

Investments should be high for question marks

DOGS: LOW GROWTH, LOW MARKET SHARE

Dogs are the cash traps.

Dogs do not have potential to bring in much cash.

Business is situated at a declining stage.

4. Relate the BCG with the product life cycle

The horizontal axis of the BCG Matrix represents market share and the
vertical axis indicates anticipated market growth. The corporate business is
divided into four categories they are cash cows, stars, question marks, dogs.
The product life cycle is a new product progresses through a sequence of
stages from introduction to grow, maturity, and decline.

The four categories of corporate business correspond to the four

stages of the product life cycle.

(1) Question marks businesses correspond to the introduction stage of

the product life cycle. Question marks businesses are in an attractive
industry but hold a small market share percentage. In the introduction stage
the firm seeks to build market share rapidly build product awareness and
develop a market for the product.

(2) Starts businesses correspond to the growth stage of the product life
cycle. Start businesses are in a fast-growing market, and hold a dominant
share of that market. Their contribution to cash flow depends on their need
for resources. In the growth stage, the firm seeks to build brand preference
and increase market share. Market share tends to stabilize.

(3) Cash cows businesses correspond to the maturity stage of the

product life cycle. Cash cows businesses in this generate large amounts of
cash, but their prospects for future growth are limited. In the maturity stage,
the market reaches saturation. The primary objective is to defend market
share while maximizing profit.
 (4) Dogs businesses in this category do not produce or consumer
much cash. However they hold no promise for improved performance. In
decline stage, there is a downturn in the market, as sales decline,
discontinue the product liquidating remaining inventory or sell off.