1. What Is BCG Matrix?
 BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by “BRUCE
HENDERSON “of the BOSTON
CONSULTING GROUP IN THE EARLY
1970’s.
 According to this technique, businesses or
products are classified as low or high
performers depending upon their market
growth rate and relative market share.
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2. THE BCG GROWTH-SHARE
MATRIX
 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:
 Stars
 Question marks
 Cash cows
 Dogs
 It is based on the combination of market growth and
market share relative to the next best competitor.
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3. 3

4. BCG MATRIX
 Market-Growth/Market-Share Matrix
 A strategic planning tool based on the philosophy
that a product’s market growth rate and market
share are important in determining marketing
strategy
 Factors determining SBU/product’s position
within a matrix
 Product-market growth rate
 Relative market share

5. Growth-Share Matrix Developed
by the Boston Consulting Group
Source: Perspectives, No. 66, “The Product Portfolio.” Reprinted by permission from The Boston Consulting Group, Inc.,
Boston, MA. Copyright © 1970.

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
portfolio
 Question mark—high growth market, low market share
 represents a high-risk/cost opportunity requiring a large
commitment of resources to build market share

7. STARS
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
COW.
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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.
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9. DOGS
Low growth, Low market share
 Dogs are the cash traps.
 Dogs do not have potential to bring in much
cash.
 Number of dogs in the company should be
minimized.
 Business is situated at a declining stage.
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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
marks.
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11. The Boston Consulting Group’s
Growth-Share Matrix
Market
Growth
Rate
Relative Market Share
Dogs
?
Question marks
?
Cash cows
Stars

12. Star
 Leader expanding industry
 Generates large profits
 Requires substantial
investments to sustain
growth
 Farthest down on
experience curve relative
to competition
 Increase sales – e.g. new
markets, new channels of
distribution
 Increase market share

13. Problem Child or ?
 Low market share in
expanding industry
 Needs substantial cash to
improve its position
 Slow progress on
experience curve
 Increase sales (limit to
niche or increase market
share (limit to niche)
 Leave market

14. Cash Cow
 Leader in mature or declining
industry
 Can generate funds for other
SBUs
 Maintain market share e.g.
ensure quality, build customer
loyalty, develop substitute
brands
 MaximizeCash Flow e.g.
increase usage rate, rate of
replacement, modify expense
structure, raise prices

15. Dogs
 Low market share in a
mature or declining
industry
 Slow progress on
experience curve
 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
Industry
 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
industry
 HOLD - Maintain share and cost leadership until
further investment becomes marginal
 Maximize cash flow
 Dogs – Low market share in a mature or
declining industry
 DIVEST Plan an orderly withdrawal so as to maximize
cash flow or concentrate on niches that require limited
effort