BCG Matrix

BOSTON CONSULTING GROUP MATRIX

 Matrix is developed by Bruce Henderson of the Boston Consulting Group in

the early 1970’s
 According to this technique, business or products are classified as low or
high performance depending upon their market growth rate & relative
market share.
 BCG matrix is also known as growth-share or Boston matrix
Introduction

 BCG matrix is a framework created by Boston Consulting Group to

evaluate the strategic position of the business brand portfolio and its
potential.
 The Boston Consulting group's product portfolio matrix (BCG) is designed to
help with long-term strategic planning, to help a business consider growth
opportunities .
 RELATIVE MARKET SHARE & MARKET GROWTH

To understand the Boston Matrix you need to understand how market

share & market growth interrelated.
RELATIVE MARKET SHARE & MARKET GROWTH

 Market Share
Market share is the percentage of the total market that is being
serviced by your company measured either in the revenue terms or
unit volume terms.
The higher your market share, the higher
proportion of the market you control.
 RELATIVE MARKET SHARE & MARKET GROWTH

 Market Growth Rate

Market Growth is used as a measure of a market’s
attractiveness.
Markets experiencing high growth are ones where
the total market share available is expanding &
there is plenty of opportunity for everyone to make
money.
THE BCG GROWTH-SHARE MATRIX

The growth–share matrix, (Boston Consulting Group analysis, portfolio

diagram) is a chart that was created by Bruce D. Henderson for the Boston
Consulting Group in 1970 to help corporations to analyze their business units,
that is, their product lines.
This helps the company allocate resources and is used as an analytical tool
in brand marketing, product management, strategic management,
and portfolio analysis.
THE BCG GROWTH-SHARE MATRIX
THE BCG GROWTH-SHARE MATRIX
 THE BCG GROWTH-SHARE MATRIX

Stars generate large amounts of cash because of their strong relative market share, but
also consume large amounts of cash because of their high growth rate.
Question marks are growing rapidly and thus consume large amounts of cash, but
because they have low market share they do not generate. Resources should be
invested in them to enhance their competitive positions.
Cash cows are with high market shares in low-growth industries. These units have limited
long-run potential but represent a source of current cash flows to fund investments in
“stars” and “question marks”.
Dogs are with weak market shares in low-growth industries. Because they have weak
position and limited potential, most analysts recommend that they be divested
Product Life Cycle
 BCG MATRIX

WHY BCG MATRIX

To asses
 Profile of product /business
 Cash demands of products
 The development cycle of product
 Resource allocation & divestment decisions
 Where we should discontinue
 BCG MATRIX

BENEFITS
 BCG matrix is simple & easy to understand
 It helps to quickly & simply screen the opportunity open to you, & help you
think about how you can make the most of them.
 It is used to identify how corporate cash resources can best be used to
maximize company’s future growth & profitability.
Thank You