Description
The BCG Growth-Share Matrix, developed by the Boston Consulting Group, is a strategic tool used by companies to evaluate their product portfolio and decide where to allocate resources.
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CG Growth-Share Matrix Explained
The BCG Growth-Share Matrix, developed by the Boston Consulting Group, is a strategic tool used by companies to evaluate their product portfolio and decide where to allocate resources. It categorizes products or business units into four quadrants based on their market growth rate and relative market share.
The Four Quadrants
- Stars
- Characteristics: High market growth rate and high relative market share.
- Strategy: Invest heavily to maintain or grow market position, as they have the potential to become cash cows when market growth slows.
- Cash Cows
- Characteristics: Low market growth rate and high relative market share.
- Strategy: Generate strong cash flow with minimal investment. Use the profits to fund other segments like Stars or Question Marks.
- Question Marks
- Characteristics: High market growth rate and low relative market share.
- Strategy: Assess whether to invest heavily to increase market share or divest. These products can either become Stars or fail.
- Dogs
- Characteristics: Low market growth rate and low relative market share.
- Strategy: Consider divesting or discontinuing these products as they typically generate low returns.
Application
- Resource Allocation: Helps companies decide where to allocate funds and resources for maximum return.
- Portfolio Management: Provides a visual representation of a company's products and helps in balancing the portfolio.
- Strategic Planning: Guides strategic decisions on which products to develop, maintain, or phase out.
The BCG Growth-Share Matrix is a valuable tool for businesses to analyze their product lines and make informed strategic decisions based on market dynamics and competitive positioning.