1. What Is BCG Matrix?
BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by “BRUCE
HENDERSON “of the BOSTON
CONSULTING GROUP IN THE EARLY
According to this technique, businesses or
products are classified as low or high
performers depending upon their market
growth rate and relative market share.
2. THE BCG GROWTH-SHARE
It is a portfolio planning model which is based on the
observation that a company’s business units can be
classified in to four categories:
It is based on the combination of market growth and
market share relative to the next best competitor.
4. BCG MATRIX
A strategic planning tool based on the philosophy
that a product’s market growth rate and market
share are important in determining marketing
Factors determining SBU/product’s position
within a matrix
Product-market growth rate
Relative market share
6. BCG Classification
Star—high growth market, dominant market share
requires additional resources for continued growth
Cash cow—low growth, dominant market share
generates surplus resources for allocation to other SBUs
Dog—low/declining market, subordinate market share
has diminished prospects and represents a drain on the
Question mark—high growth market, low market share
represents a high-risk/cost opportunity requiring a large
commitment of resources to build market share
High growth, High market share
Stars are leaders in business.
They also require heavy investment, to
maintain its large market share.
It leads to large amount of cash consumption
and cash generation.
Attempts should be made to hold the market
share otherwise the star will become a CASH
8. CASH COWS
Low growth , High market share
They are foundation of the company and
often the stars of yesterday.
They generate more cash than required.
They extract the profits by investing as little
cash as possible
They are located in an industry that is mature,
not growing or declining.
Low growth, Low market share
Dogs are the cash traps.
Dogs do not have potential to bring in much
Number of dogs in the company should be
Business is situated at a declining stage.
10. QUESTION MARKS
High growth , Low market share
Most businesses start of as question marks.
They will absorb great amounts of cash if the
market share remains unchanged, (low).
Why question marks?
Question marks have potential to become
star and eventually cash cow but can also
become a dog.
Investments should be high for question
11. The Boston Consulting Group’s
Relative Market Share
Leader expanding industry
Generates large profits
investments to sustain
Farthest down on
experience curve relative
Increase sales – e.g. new
markets, new channels of
Increase market share
13. Problem Child or ?
Low market share in
Needs substantial cash to
improve its position
Slow progress on
Increase sales (limit to
niche or increase market
share (limit to niche)
14. Cash Cow
Leader in mature or declining
Can generate funds for other
Maintain market share e.g.
ensure quality, build customer
loyalty, develop substitute
MaximizeCash Flow e.g.
increase usage rate, rate of
replacement, modify expense
structure, raise prices
Low market share in a
mature or declining
Slow progress on
Cost disadvantages and
few growth opportunities
Concentrate on niches
requiring limited effort
16. Strategy Implications BCG
Star – Leader in Expanding Industry
BUILD - Continue to increase market share – if
necessary at expense of short-term earnings
Problem Child – Low market share in Expanding
HARVEST if weak, BUILD if strong.
Assess chances of dominating segment. If good, go
after share. If bad, redefine business or withdraw.
17. Strategy Implications BCG
Cash Cow – Leader in mature or declining
HOLD - Maintain share and cost leadership until
further investment becomes marginal
Maximize cash flow
Dogs – Low market share in a mature or
DIVEST Plan an orderly withdrawal so as to maximize
cash flow or concentrate on niches that require limited