BCG Matrix

INTRODUCTION
The BCG matrix model was developed by
Bruce Henderson in the early 1970s
The BCG matrix stands for Boston consulting
group
The BCG matrix model is a portfolio
planning model
The BCG model is a well-known portfolio
management tool used in product life cycle
theory
Cont
BCG matrix is often used to prioritize which
products within company product mix get
more funding and attention
It has 2 dimensions: MARKET SHARE &
MARKET GROWTH
The BCG Matrix consist of 4 category in a
portfolio of a company Stars, Cash cows, Dogs,
Question marks
BCG Model
STARS
Stars = High Growth, High Market Share
The use of large amount cash & leader in the
business
Generates large amount of cash
If needed should hold share and reward will
be a cash cow if market share is kept
CASH COWS
Cash cows = Low Growth, High Market Share
Profit & cash generation should be high
Because of the low growth, investments
needed should be low, keep profits high
Foundation of a company
DOGS
Dogs = Low Growth, Low Market Share
Avoid & minimize the number of dogs in a
company
Beware of expensive turns around plans
QUESTION MARKS
Question marks = High Growth, Low Market
Share
Question marks have potential to become star
and eventually cash cow but can also become
a dog
Limitation of BCG Matrix
High market is not the only success factor
Market growth is not the only indicator for
attractiveness of a market
Sometimes dog can earn even more cash as
cash cows