BCG Matrix Submitted by Vishesh Bhatia, Section A, Roll No.

19
The Boston Consulting Group (BCG) growth-share matrix is a planning tool that uses
graphical representations of a company’s different SBUs (Strategic Business Units) in an
effort to help the company decide what it should keep, sell, or invest more in.

The matrix plots a company’s offerings in a four-square matrix, with the y-axis representing
the rate of market growth and the x-axis representing market share. It was introduced by the
Boston Consulting Group in 1970.

The BCG growth-share matrix is a tool used internally by management to assess the current
state of value of a firm's SBUs.

The BCG growth-share matrix contains four distinct categories: "dogs," "cash cows," "stars,"
and “question marks.”

Dogs (or Pets): If a company’s SBU has a low market share and is at a low rate of growth,
it is considered a “dog” and should be sold, liquidated, or repositioned. Dogs, found in the
lower right quadrant of the grid, don't generate much cash for the company since they have
low market share and little to no growth. 

Cash Cows: SBUs that are in low-growth areas but for which the company has a relatively
large market share are considered “cash cows,” and the company should thus milk the cash
cow for as long as it can. Cash cows, seen in the lower left quadrant, are typically leading
products in markets that are mature. Generally, these products generate returns that are higher
than the market's growth rate and sustain itself from a cash flow perspective. These products
should be taken advantage of for as long as possible.

Stars: SBUs that are in high growth markets and that make up a sizable portion of that
market are considered “stars” and should be invested in more. In the upper left quadrant are
stars, which generate high income but also consume large amounts of company cash.

Question Marks: Questionable opportunities are those in high growth rate markets but in
which the company does not maintain a large market share. Question marks are in the upper
right quadrant of the grid. They typically grow fast but consume large amounts of company
resources. SBUs in this quadrant should be analysed frequently and closely to see if they are
worth maintaining.

Company Chosen for Example – Samsung

CASH COWS:

Samsung Home appliances which include Samsung AC’s, Refrigerators, Washing Machines
and Cooking Appliances are the Cash Cows for the company.

Over the years, Samsung Home Appliances have become a household name and stand for
quality and trust. Samsung has been able to attain a good market share across different
industry segments and still holds a good potential to grow in the coming future.
STARS:

The business units that have a high market share in high growth industry are the stars of the
organization. In the case of Samsung, Mobile phones, Tab, and TV business fall in the Star
Category of the BCG Matrix of Samsung.

Mobile phones: Samsung Galaxy and Note Series are quite a hit among customers and have
their own base of loyal customers. In order to maintain its market share and ward off the
competition, Samsung launches new smartphones with new features and design.

Samsung TV:  LED and OLED TV from Samsung are gaining good traction from the global
market and can be considered as the Stars of the company. The company is experimenting
with new technologies and it coming up with new TV’s with technologically advanced
features to gain customers.

QUESTION MARK:

There are SBUs that formulate a part of the industry that is still in the phase of development,
yet the organization has not been able to create a significant position in that industry. The
small market share obtained by the organization makes the future outlook for the business
unit uncertain, therefore investing in such domains is seen as a high-risk decision.

Considering the performance of all the SBUs that Samsung has to offer, Samsung Printer is
one such business unit which can be placed in the Question Mark quadrant of the BCG
Matrix of Samsung.

High competition and small market share of the unit in the industry is what makes it place in
this quadrant.

DOGS:

Dogs are those business units that were perceived to have the potential to grow but however
failed to create magic due to the slow market growth.

Failure to deliver the expected results makes the unit a source of loss for the organization,
propelling the management to withdraw future investment in the venture. Since the unit is not
expected to bring in any significant capital, future investment is seen as a wastage of
company resources, which could be invested in a Question mark or Star category instead.
With an aim to cater to the growing need of the digital world, Samsung launched
its Samsung Smartwatch but the product failed to achieve the success that it was expected
to achieve. Tough competition from competitors like Apple watch led to its downfall.

Hence Samsung Smartwatch can easily be placed in the Dog quadrant of the BCG Matrix.