The Boston Consulting Group (BCG) Matrix
- Imagine you're managing a diverse portfolio of products.
- Some are thriving, others are struggling, and a few are full of potential.
- How do you decide where to invest, divest, or maintain?
Definition
Boston Consulting Group Matrix (BCG Matrix)
The BCG Matrix (Boston Consulting Group Matrix) is a strategic tool used in business management to analyze a company’s product portfolio and help with investment decisions. It categorizes products or business units based on market growth rate and relative market share.
Understanding the BCG Matrix
TipThe BCG Matrix is also known as the Growth-Share Matrix.
The BCG Matrix uses two key dimensions:
- Market Growth: The rate at which the market for a product is expanding.
- Market Share: The percentage of the market controlled by the product.
These dimensions create four quadrants: Stars, Cash Cows, Question Marks, and Dogs.
Stars: High Market Growth, High Market Share
- Stars are products in rapidly growing markets where the business holds a dominant position.
- They require significant investment to maintain their growth but have the potential to become Cash Cows.
A tech company's latest smartphone model, leading in sales in a booming market, is a Star.
TipInvest in Stars to capitalize on growth and secure future profitability.
Cash Cows: Low Market Growth, High Market Share
- Cash Cows are products in mature markets with high market share.
- They generate steady profits with minimal investment, funding other areas of the business.
A well-established soft drink brand in a stable market is a Cash Cow.
TipMaintain Cash Cows to ensure a consistent revenue stream.
Question Marks: High Market Growth, Low Market Share
- Question Marks are products in growing markets but with low market share.
- They require careful analysis to decide whether to invest for growth or divest.
