BOSTON CONSULTING GROUP

Meaning
BCG matrix (also called Growth-Share Matrix) is a portfolio planning
model used to analyse the products in the business’s portfolio according
to their growth and relative market share.
The model is based on the observation that a company’s business units
can be classified into four categories:

•Cash Cows
•Stars
•Question Marks
•Dogs
 Stars
High Growth, High Market Share

Star units are leaders in the category. These products have –

A significant market share, hence they bring the most cash to the
business.

A high growth potential that can be used to increase further cash

inflow.

With time, when the market matures, these stars become cash
cows that hold huge market shares in a low-growth market. Such
cows are milked to fund other innovative products to develop new
stars.
 Cash Cows
Low Growth, High Market Share

Cash cows are products with significant ROI but

operating in a matured market which lacks innovation
and growth.

These products generate more cash than it consumes. 

Usually, these products finance other activities in
progress (including stars and question marks).
 Dogs
Low Growth, Low Market Share

Dogs hold a low market share and operate in a market with a low
growth rate.

Neither do they generate cash, nor do they require huge cash. In

general, they are not worth investing in because they generate
low or negative cash returns and may require large sums of money
to support.

Due to low market share, these products face cost disadvantages.

 Question Marks
High Growth, Low Market Share

Question marks have high growth potential but a low market share
which makes their future potential to be doubtful.

Since the growth rate is high here, with the right strategies and
investments, they can become cash cows and ultimately stars.

But they have a low market share so wrong investments can

downgrade them to Dogs even after lots of investment.
 Limitations of BCG Matrix
•BCG Matrix uses only two dimensions, relative market share and
market growth rate. These are not the only indicators of profitability,
attractiveness or success.

•It neglects the effects of synergy between brands.

                                                                                                                                                                                                                                                                                                                                                                                                                 

•Businesses with a low market share can be profitable too.

•High market share does not always lead to high profits since a high
cost goes into getting a high market share.

•At times, dogs may help the business or other products gain
a competitive advantage.

•The model neglects small competitors that have fast-growing market

shares.
Thank you