BCG matrix is a corporate planning tool, which is used to portray firm’s brand

portfolio on a quadrant along relative market share and speed of market growth.

BCG matrix is a framework created by Boston Consulting Group to evaluate the

strategic position of the business brand portfolio and its potential. It classifies
business portfolio into four categories based on industry attractiveness

The four quadrants into which firms brands are classified are

Dogs which hold low market share compared to competitors and operate in a slowly
growing market.
Cash cows which are the most profitable as to provide as much cash as possible.
Stars. Stars operate in high growth industries and maintain high market share.
Stars are both cash generators and cash users.
Question marks. Question marks are the brands that require much closer
consideration.

Amazon’s business units can be divided various categories. Starting from

amazon.com, their cloud service AWS, the ai software Alexa, Whole Foods market,
Amazon Prime and retail.

so when we see about retail

in terms of profit, amazon isn’t doing that well, the reason is because Amazon
hates free cash flow. They invest their free money right into other business units
or products. Which is why the retail store is somewhat in the middle of a Cash Cow
and a Dog. If Amazon fails to integrate all their product line to capture
consumers into the “Amazon ecosystem”, the marketplace will indeed become a dog,
but if they do succeed, it will be a mighty cash cow

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AWS: The actual cash cow

AWS is pretty much a monopoly in the cloud business. Although there are competitors
like the Microsoft Azure or Alphabet, AWS holds as the dominant cloud service for
business and startups. In fact, probably most of the actual profit comes from this
only.

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Alexa:
Global tech giants are investing huge amounts of money into artificial
intelligence. As the ratio of people who use voice as a means of searching
increased steadily over the years, it’s clear that Amazon is trying to drive
commerce through Alexa.

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Amazon Prime

amazon has managed to successfully lure people into subscribing to their Prime
service and this in the long run, it will mean steady sales with full customer
loyalty. so thats why it is placed in star quadrant.

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Whole Foods Market - A new attempt for market dominance

Amazon is now expanding their business into offline markets through Amazon Go. The
Whole Foods Market was established to deliver the most fresh and ripe vegetables
and other eateries to consumers.

It is known that consumers like to shop offline where they usually shop, because
every other store sell the same products from the same brands. What Amazon really
has to do is to provide a new value to consumers so that shopping on Amazon offline
stores are more attractive than shopping at their usual stores

it’s still unsure whether the company will be able to dominate the offline market
as well. so thats why its in the question mark quadrant.

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conclusions

BCG matrix quadrants are simplified versions of the reality and cannot be applied
blindly. They can help as general investment guidelines but should not change
strategic thinking. Business should rely on management judgement, business unit
strengths and weaknesses and external environment factors to make more reasonable
investment decisions.