2. HISTORY OF
The Boston Consulting Group or BCG is a global
management consulting firm with offices in 41
countries. It is recognized as one of the most
prestigious management consulting firms in the
world.
The company was formed by Bruce D. Henderson.
The BCG Matrix was created by The Boston
Consulting Group (BCG) and it became one of the
most well-known portfolio management Decision
Making Tool in the early 1970’s.
3. COMPANY PROFILE
Type- Partnership
Industry- Management consulting
Founded- 1963
Headquarters-Boston, Massachusetts, United States, 71
offices in 41 countries
Key people- Hans-Paul Bürkner, President & CEO
Products- Management consulting services
Revenue- US$ 2.75 billion (2009)
Employees- 4,400 (consultants)
Website- bcg.com
4. ALLOCATION OF
RESOURCES
High market share in a high growth market are
designated as Stars.
High market share in a low growth market are
designed as Cash Cows.
Low market share in a high growth market are
designated as Question Marks or Problem
Children.
Low market share in a low growth market are
designated as Dogs.
6. Segments in the BCG matrix
Cash Cows (high market share, low growth) - Keep investments low,
while keeping profits high. Profits and cash generation should be
higher because of low growth.
Dogs (low market share, low growth) - Liquidate, if they are not
delivering cash. Avoid and reduce the number of these an organization
maintains. Keep an eye out for expensive revival strategies - a dog is
typically always a dog.
Stars (high market share, high growth) - Invest further in these - they
incur high costs, but they are market leaders and should also generate
lots of cash. Stars may balance on net cash flow, but the organization
should try to maintain market share on this would because rewards are
likely
Question marks (low market share, but high growth) - These have
poor cash inflow, but have high demands and low returns due to low
market share. Efforts should be made to change market share. If this
isn’t possible, this will likely turn into a dog as growth slows.
7. ADVANTAGES OF BCG
MATRIX
To evaluate balance in the firm’s current portfolio
of Stars, Cash cows, Question marks & Dogs
To decide & prepare for future actions
Applicable for large companies that seeks volume
& experience effects
It is simple & easy to understand
8. Limitations of BCG Matrix
BCG matrix classifies businesses as low and high, but
generally businesses can be medium also.
Market is not clearly defined in this model.
High market share does not always leads to high
profits. There are high costs also involved with high
market share.
Growth rate and relative market share are not the only
indicators of profitability. This model ignores and
overlooks other indicators of profitability.
