BCG Matrix

Relative Market Share Position

High Medium Low
1.0 .50 0.0
High
+20
Industry Sales Growth Rate

Stars Question Marks

II I
Medium
0

Cash Cows Dogs

III IV
Low
-20 Ch. 6-1
© 2001 Prentice Hall
 Strategy Analysis & Choice
BCG Matrix

• Question Marks
• Stars
• Cash Cows
• Dogs

Ch. 6-2
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 Strategy Analysis & Choice
BCG Matrix

• Question Marks
 Low
relative market share position yet
compete in high-growth industry.
 Cash needs are high
 Case generation is low
 Decisionto strengthen (intensive
strategies) or divest
Ch. 6-3
© 2001 Prentice Hall
 Strategy Analysis & Choice
BCG Matrix
• Stars
 High relative market share and high
industry growth rate.
 Best long-run opportunities for growth and
profitability
 Substantialinvestment to maintain or
strengthen dominant position
 Integration strategies, intensive strategies,
joint ventures

Ch. 6-4
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 Strategy Analysis & Choice
BCG Matrix
• 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

Ch. 6-5
© 2001 Prentice Hall
 Strategy Analysis & Choice
BCG Matrix

• Dogs
 Low
relative market share position and
compete in slow or no market growth
 Weak internal and external position
 Decision to liquidate, divest, retrenchment

Ch. 6-6
© 2001 Prentice Hall
Grand Strategy
Matrix
RAPID MARKET GROWTH
Quadrant II Quadrant I
• Market development • Market development
• Market penetration • Market penetration
• Product development • Product development
• Horizontal integration • Forward integration
• Divestiture • Backward integration
• Liquidation • Horizontal integration
WEAK • Concentric diversification STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV POSITION
• Retrenchment • Concentric diversification
• Concentric diversification • Horizontal diversification
• Horizontal diversification • Conglomerate
• Conglomerate diversification
diversification • Joint ventures
• Liquidation

SLOW MARKET GROWTH

Ch. 6-7
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 Strategy Analysis & Choice
Grand Strategy Matrix

• Quadrant I
 Excellent strategic position
 Concentration on current markets and products
 Take risks aggressively when necessary

Ch. 6-8
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 Strategy Analysis & Choice
Grand Strategy Matrix

• Quadrant II
 Evaluatepresent approach seriously
 How to change to improve competitiveness
 Rapid market growth requires intensive strategy

Ch. 6-9
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 Strategy Analysis & Choice
Grand Strategy Matrix

• Quadrant III
 Compete in slow-growth industries
 Weak competitive position
 Drastic changes quickly
 Cost and asset reduction indicated (retrenchment)

Ch. 6-10
© 2001 Prentice Hall
 Strategy Analysis & Choice
Grand Strategy Matrix

• Quadrant IV
 Strong competitive position
 Slow-growth industry
 Diversification indicated to more promising growth
areas

Ch. 6-11
© 2001 Prentice Hall