The BCG matrix, developed by the Boston Consulting Group, is a strategic tool that helps companies assess their product lines based on market share and growth rate to optimize resource allocation. It categorizes products into four groups: question marks, stars, cash cows, and dogs, each requiring different investment strategies. While the matrix offers a clear framework for decision-making, its limitations include reliance on only two dimensions and potential confusion for products that do not fit neatly into categories.

1. BCG MATRIX
[BOSTON CONSULTING GROUP MATRIX]
Presented by:
MISHA AMAN ARAIN
MBA (Marketing)

2. INTRODUCTION
■ BCG matrix developed by Boston
Consulting Group is an analytical tool used
to assess company’s product lines. It aims
at helping the company to make the best
possible allocation of its resources.
■ Growth Share matrix uses relative
market share and industry growth rate
factors to evaluate the potential of
business brand portfolio and suggest
further investment strategies.

3. INTRODUCTION
■ The BCG growth-share matrix is a tool
used internally by management to assess
the current state of value of a firm's units
or product lines.
■ The Growth-share matrix aids the
company in deciding which products or
units to either keep, sell, or invest more
in.

4. MARKET SHARE & MARKET GROWTH
RELATIVITY
RELATIVE MARKET
SHARE
Market share is the percentage
of the total market that is being
serviced by your company
measured either in the revenue
terms or unit volume terms
MARKET GROWTH
RATE
Market Growth is used as a
measure of a market’s
attractiveness
To understand the Boston Matrix you need to understand how market share
and market growth interrelate.

5. BCG GROWTH SHARE MATRIX

6. Question
Marks?
• Most businesses start of as
question marks.
• They will absorb great
amounts of cash if the market
share remains unchanged,
(low)
• Why question marks?
• Question marks have potential
to become star and eventually
cash cow but can also become
a dog. Investments should be
high for question marks.
High Growth –
Low Market Share

7. Stars
• Stars are leaders in
business.
• They also require heavy
investment, to maintain its
large market share.
• It leads to large amount of
cash consumption and cash
generation.
• Attempts should be made to
hold the market share
otherwise the star will
become a CASH COW.
High growth –
High market share

8. Cash Cows
• They are foundation of the
company and often the stars
of yesterday.
• They generate more cash
than required.
• They extract the profits by
investing as little cash as
possible
• They are located in an
industry that is mature, not
growing or declining
Low growth-
High market share

9. Dogs
• Dogs are the cash traps.
• Dogs do not have potential
to bring in much cash.
• Number of dogs in the
company should be
minimized.
• Business is situated at a
declining stage.
Low growth-
Low market share

10. Why BCG Matrix?
To assess :
■ Profiles of products/businesses
■ The cash demands of products
■ The development cycles of products
■ Resource allocation and divestment
decisions

11. Special Considerations
The matrix is a decision-making tool, and it
does not necessarily take into account all the
factors that a business ultimately must face.
For example, increasing market share may be
more expensive than the additional revenue
gain from new sales. Because product
development may take years, businesses
must plan for contingencies carefully.

12. BENEFITS AND LIMITATIONS
BENEFITS
■ Easy to perform.
■ Helps to understand the
strategic positions of business
portfolio.
■ It’s a good starting point for
further more thorough
analysis.
■ It is used to identify how
corporate cash resources can
best be used to maximize
company’s future growth &
profitability.
LIMITATIONS
• BCG matrix uses only two
dimensions relative market
share & market growth rate.
• High market share does not
mean profits all time.
• Business with market share
can be profitable too.
• It can be confusing to classify
an SBU that falls right in the
middle.

13. SUMMARY
Taken all of these factors together, you can draw the ideal path to follow
in the BCG Matrix, from start-up to market leader. Question Marks and
Stars are supposed to be funded with investments generated by Cash
Cows. And Dogs need to be divested or liquidated to free up cash with
little potential and use it elsewhere. In the end, you will need a balanced
portfolio of Question Marks, Stars and Cash Cows to assure positive cash
flows in the future.
Though BCG matrix has its limitation it is one of the most famous &
simple portfolio planning matrix, used by large companies having multi-
products.