BCG Matrix with Example

What is BCG Matrix?

  • A strategic planning tool also called as growth/share matrix
  • BCG stands for Boston Consulting Group
  • BCG matrix was created by Bruce Henderson in the early 1970s


Use of BCG Matrix

  • To review a portfolio of products
  • Decision making – invest or divest
  • To ensure the possible allocation of resources

BCG Matrix categories

  • Stars
  • Dogs
  • Cash Cows
  • Question Marks

bcg matrix categories

 

BCG Stars

  • Stars are units having high relative market share + high market growth rate
  • They are market-leading products
  • A lot of investment is required to retain the leading position
  • Stars generate a lot of income but require investment too

 

Cash Cows

  • Cash cows are units having high relative market share + low market growth rate
  • Low competition market & saturated
  • Investment factor is under control or less required
  • Income is consistent and same is invested in other units

 

Dogs

  • Dogs are units having low relative market share + low market growth rate
  • They are low profit-making or loss-making
  • Dogs use a lot of resources and time
  • Usually divesting decision is made

 

Question Marks

  • New product to market
  • Might require heavy investment
  • Decision making is difficult
  • Work on New Customer Acquisition

BCG Matrix with Example

bcg matrix example 2020


Limitations of BCG Matrix

  • Market share doesn’t define profitability
  • Getting data is difficult(Relative market share)
  • Market growth – Industry attractiveness
  • Neglects small competitors with fast-growing market shares

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