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BCG Quadrant Matrix

ICFAI NATIONAL
COLLEGE
INC.AURANGABAD

By
Niranjan Chaitanya

Guided By
Ms. Swapna

By Niranjan Chaitanya INC.AURANGABAD


Boston Consulting Group (BCG)
Matrix
 When a firm’s divisions compete in
different industries, a separate strategy
often must be developed for each
business.
 To enhance and formulate strategies.
 To manage its portfolio of businesses
 Focuses on relative market share
position and the industry growth rate.
By Niranjan Chaitanya INC.AURANGABAD
BCG Matrix
 Pie Chart corresponds to corporate revenue
generated by that business unit.
 The pie slice indicates the proportion of
division’s profit.
 Divisions located
 Quadrant I is called Cash Cows,
 Quadrant II is called Dogs.
 Quadrant III is called Question Marks,
 Quadrant IV is called Stars,

By Niranjan Chaitanya INC.AURANGABAD


BCG Matrix
Relative Market Share Position
High Medium Low
1.0
High
Industry Sales Growth Rate

Stars Question Marks


IV III

Med

Cash Cows Dogs


I II
Low

By Niranjan Chaitanya INC.AURANGABAD


BCG Matrix Axes
 Relative market share position is given on
the X-axis of the BCG matrix.

 The Y-axis represents the industry growth


rate in sales, measured in percentage
terms.

By Niranjan Chaitanya INC.AURANGABAD


Cash Cows
 High relative market share but compete in a
low-growth industry
 Generate cash in excess of their needs
 Milked i.e. cash for other purposes
 Manages to maintain strong position as long as
possible
 Product development
 Concentric diversification
 Retrenchment or divestiture if the division becomes
weak

By Niranjan Chaitanya INC.AURANGABAD


Dogs
 Low relative market share and compete in
a slow- or no-growth industry
 Weak internal and external position
 Liquidation
 Divestiture
 Retrenchment

By Niranjan Chaitanya INC.AURANGABAD


Question Marks
 Low relative market share—compete in a
high growth industry
 Cash needs are high
 Cash generation is low
 Decision: strengthen by pursuing an
intensive strategy, e.g. to sell them.

By Niranjan Chaitanya INC.AURANGABAD


Stars
 High relative market share and a high
industry growth rate
 Represent the organization’s best long-
run opportunities for growth and
profitability.
 Substantial investment to maintain or
strengthen their dominant position.
 Integration strategies
 Intensive strategies
 Joint ventures
By Niranjan Chaitanya INC.AURANGABAD
BCG Matrix & Benefit
 Setting the path for growth
 Knowing dead investments
 Draws attention to the cash flow,
 Investment characteristics
 Needs of an organization’s various
divisions.
 To achieve a portfolio of divisions that are
Stars.

By Niranjan Chaitanya INC.AURANGABAD


BCG Matrix Limitations
 Viewing every business as a star, cash cow,
dog, or question mark is overly simplistic.
 Middle of the BCG matrix is not easily classified.
 The BCG matrix does not reflect whether or not
various divisions or their industries are growing
over time.
 Other variables besides relative market share
position and industry growth rate in sales are
important in making strategic decisions about
various divisions.

By Niranjan Chaitanya INC.AURANGABAD