2. Relevance & Importance of BCG Matrix It was developed in the early 70s by the Boston Consulting Group. The BCG Matrix method is the most well-known portfolio management tool. It is based on product life cycle theory.
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6. Star (high growth, high market share) Stars use large amounts of cash. Stars are leaders in the business. Stars usually generate cash for the company It is critical that Stars should hold the market share, because the future rewards are generally cash cows
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10. The BCG Matrix Vs One size fits all strategies Imagine a company with a generic growth target (9 percent per year) or a generic return on capital of say 9.5% for an entire corporation.
11. Outcomes of such a strategy: • Cash Cows Business Units will reach their profit target easily. They are often allowed to reinvest substantial cash amounts in their mature business. • Dogs Business Units are fighting an impossible battle and, even worse, now and then investments are made. • Question Marks and Stars receive only mediocre investment funds, hence they can never become Cash Cows (or Stars)
