Boston Consulting Group(Growth share matrix) Star Products Question Mark? Cash Cow They are the Leader in mature or declining industry Strategies of BCG Issues with Growth/Share Matrix

1. TRINITY INSTITUTE OF PROFESSIONAL
STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75
Affiliated Institution of G.G.S.IP.U, Delhi
Portfolio Analysis-BCG
Matrix
Dr. Jaspreet Kaur
Associate Professor

2. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Boston Consulting Group(Growth
share matrix)
• The SBUs/products are categorized into four
cell matrix on the basis of
– Market Attractiveness which shows Industry’s annual
growth rate
– Business Strength which shows the Company’s Market
Share Relative to Largest Competitor

3. The Boston Consulting Group’s
Growth-Share Matrix
20%-
18%-
16%-
14%-
12%-
10%-
8%-
6%-
4%-
2%-
0
MarketGrowthRate
10x 4x 2x 1.5x 1x
Relative Market Share
.5x .4x .3x .2x .1x
Dogs
8
7
3
?
Question marks
? ?
2
1
Cash cows
6
Stars
5
4

4. Star Products
• Leader expanding industry
• Stars generate a large
profits
• They need substantial
investments to maintain
growth
• Farthest down on
experience curve relative to
competition
• Stars increase the sales of a
company like new markets,
new channels of
distribution
• Stars Increase the market

5. Question Mark?
• Question marks have a Low
market share in the
industry
• They need substantial cash
for their growth
• Slow progress on
experience curve
• They Increase sales and
market share (limited to
niche)
• In case they are not
successful they will have to
Leave market

6. Cash Cow
• They are the Leader in
mature or declining
industry
• They generate massive
funds for other SBUs
• They have a high market
share
• They have a high quality
and customer loyalty.
• They bring in Maximize
Cash Flow like increase
usage rate, modify expense
structure and raise prices

7. Dogs
• They have a Low market
share in a mature or
declining industry
• Show a Slow progress on
experience curve
• They have Cost
disadvantages
• Their growth opportunities
are limited
• Harvest or Divest

8. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Strategies of BCG
• Star – Its is a Leader in Expanding Industry. The star
should be BUILD which is Continue to increase
market share even if it is at the expense of short-
term earnings
• Question Mark– It has a Low market share in
Expanding Industry. It should be Harvested if weak,
BUILD if strong. If the chances are good, go after
share. If the chances are bad, redefine business or
withdraw.

9. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Strategies for BCG
• Cash Cow – It is a Leader in mature or declining
industry. The strategy should be to HOLD that is
Maintain share and cost leadership till investment
becomes marginal. Also one should Maximize cash
flow
• Dogs – Has a Low market share in a mature or
declining industry. It should be Divested which is an
orderly withdrawal to maximize cash flow or
concentrate on niches which needs limited effort.

10. TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75
Issues with Growth/Share Matrix
• Market growth is not always related to the cash
usage.
• Market growth is not always related to cash
usage.
• Market share is not always related cash
generation.
• Multiple factors may bring in profitability.
• Cash cannot be the only factor in analyzing the
portfolio.

11. Thank You