BCG Matrix

 The BCG matrix method (Boston Consulting Group- Bruce

Henderson in 1968) is based on the product life cycle
theory that can be used to determine what priorities should
be given in the product portfolio or product lines of a
business unit. This helps the company allocate resources
and is used as an analytical tool in brand marketing, product
management, strategic management, and portfolio analysis.

 It has 2 dimensions: market share and market growth.

The basic idea behind it is that the bigger the market share a
product has or the faster the product's market grows the
better it is for the company.
 Boston Consulting Group Matrix

 Enhances multidivisional firms’ efforts to formulate

strategies
 Firm’s divisions may compete in different
industries/markets requiring separate strategy.
 Graphically portrays differences among divisions
 Manage business portfolio through relative market share
position and industry growth rate.

2
1. Question Marks-
 Low relative market share
position yet compete in high-
growth industry.
 Cash needs are high with low
profit generation.
 Decision to strengthen
(intensive strategies) or divest
2. Stars
 High relative market share and 
high industry growth rate.
 Best long-run opportunities for
growth and profitability
 Substantial investment to
maintain or strengthen
dominant position
 Integration strategies, intensive
strategies, joint ventures
3. Cash Cows
 High relative market share position,
but compete in low-growth industry
 Generate cash in excess of their
needs
 Milked for other purposes
 Maintain strong position as long as
possible
 Product development, concentric
diversification
If becomes weak—retrenchment or
divestiture.
4. Dogs
 Low relative market share position
and compete in slow or no market
growth
 Weak internal and external position
 Decision to liquidate, divest,
retrenchment 4
 BCG Matrix of BBC
 Radio: 52.6% market share,
47.4% growth rate;
considered a “STAR”
 TV: 37.1% market share,
62.9% growth rate; rated as
“CASH COW”
 BBC Online: “QUESTION
MARK” This is because it
has a very low market
share, but retains a high
growth rate percentage.
• Some limitations of the
Boston Consulting Group
Matrix include:
 High market share is not the
only success factor
 Market growth is not the
only indicator for
attractiveness of a market
 Sometimes Dogs can earn
even more cash as Cash
Cows