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BUSINESS POLICY 
AND STRATEGIC 
MANAGEMENT 
BCG Matrix 
Presented By : Mayur Narole 
MBA (Finance)
BOSTON CONSULTING GROUP (BCG) 
 Matrix is developed by Bruce Henderson of the 
Boston Consulting Group in the early 1970’s 
 According to this technique, business or products 
are classified as low or high performance 
depending upon their market growth rate & relative 
market share.
RELATIVE MARKET SHARE & MARKET GROWTH 
 To understand the Boston Matrix you need to 
understand how market share & market growth 
interrelated. 
 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.
RELATIVE MARKET SHARE 
Business Unit Sales this year 
RMS :- 
Leading rival sales this year 
The higher your market share, the higher 
proportion of the market you control.
MARKET GROWTH RATE 
 Market Growth is used as a measure of a market’s 
attractiveness. 
Individual Sales this year – Individual sales last year 
MGR = 
Individual Sales last year
 Markets experiencing high growth are ones where 
the total market share available is expanding & 
there is plenty of opportunity for everyone to make 
money
THE BCG GROWTH-SHARE MATRIX
BCG
It is portfolio planning model which is based on the 
observation that company’s business unit can be 
classified in to four categories . 
 Question Marks 
 Stars 
 Cash cows 
 Dogs 
It is based on the combination of market growth & 
market share relative to the next based competitor.
BCG
QUESTION MARKS/PROBLEM CHILDREN ( 
HIGH GROWTH, LOW MARKET SHARE) 
 Most business start of as question marks 
 They will absorb great amount of cash if the market 
share remains unchanged (low) 
 Question marks have potential to become star & 
evenly cash cow but can also become dog. 
 Investment should be high for question marks.
STARS 
(HIGH GROWTH, HIGH MARKET SHARE) 
 Stars are leader in business 
 They also require heavy investment to maintain it’s 
large market share. 
 It leads to large amount of cash consumption & 
cash generation. 
 Attempts should be made to hold the market share 
otherwise the star will became a cash cow.
CASH COWS 
( LOW GROWTH, HIGH MARKET SHARE) 
 They are foundation of the company & often the 
stars of yesterday. 
 They generate more cash than required 
 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
DOGS 
(LOW GROWTH, LOW MARKET SHARE) 
 Dogs are the cash traps 
 Dogs do not have potential to bring 
 High cost – Low quality 
 Business is situated at a declining stage
WHY BCG MATRIX 
To asses 
 Profile of product /business 
 Cash demands of products 
 The development cycle of product 
 Resource allocation & divestment decisions
MAIN STEPS OF BCG MATRIX 
 Identifying & dividing a company into SBU 
Assessing & comparing the prospects of each SBU 
according to two criteria 
1) SBU’s relative market share 
2) Growth rate of SBU’s industry 
Classifying the SBU’s on the basis of BCG matrix 
Developing strategic objective for each SBU
BENEFITS 
 BCG matrix is simple & easy to understand 
 It helps to quickly & simply screen the opportunity 
open to you, & help you think about how you can 
make the most of them. 
 It is used to identify how corporate cash resources 
can best be used to maximize company’s future 
growth & profitability.
LIMITATION 
 BCG matrix uses only two dimensions relative 
market share & market growth rate. 
 Problem of getting data on market share & market 
growth 
 High market share does not mean profits all time. 
 Business with market share can be profitable too.
BCG-MATRIX FOR THE PRODUCT LINE OF 
Coca-Cola
QUESTION MARKS 
(HIGH GROWTH, LOW MARKET SHARE
STARS 
(HIGH GROWTH, HIGH MARKET SHARE)
CASH COWS 
(LOW GROWTH, HIGH MARKET SHARE
DOGS 
(LOW GROWTH, LOW MARKET SHARE)
BCG
QUESTION MARKS
STARS 
 Invest for growth
CASH COWS 
( MILK TO FUND OTHER BUSINESS)
DOGS
CONCLUSION 
 Though BCG matrix has its limitation it is one of the 
most famous & simple portfolio planning matrix, 
used by large companies having multi-products.
BCG

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BCG

  • 1. BUSINESS POLICY AND STRATEGIC MANAGEMENT BCG Matrix Presented By : Mayur Narole MBA (Finance)
  • 2. BOSTON CONSULTING GROUP (BCG)  Matrix is developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s  According to this technique, business or products are classified as low or high performance depending upon their market growth rate & relative market share.
  • 3. RELATIVE MARKET SHARE & MARKET GROWTH  To understand the Boston Matrix you need to understand how market share & market growth interrelated.  Market Share
  • 4. 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.
  • 5. RELATIVE MARKET SHARE Business Unit Sales this year RMS :- Leading rival sales this year The higher your market share, the higher proportion of the market you control.
  • 6. MARKET GROWTH RATE  Market Growth is used as a measure of a market’s attractiveness. Individual Sales this year – Individual sales last year MGR = Individual Sales last year
  • 7.  Markets experiencing high growth are ones where the total market share available is expanding & there is plenty of opportunity for everyone to make money
  • 10. It is portfolio planning model which is based on the observation that company’s business unit can be classified in to four categories .  Question Marks  Stars  Cash cows  Dogs It is based on the combination of market growth & market share relative to the next based competitor.
  • 12. QUESTION MARKS/PROBLEM CHILDREN ( HIGH GROWTH, LOW MARKET SHARE)  Most business start of as question marks  They will absorb great amount of cash if the market share remains unchanged (low)  Question marks have potential to become star & evenly cash cow but can also become dog.  Investment should be high for question marks.
  • 13. STARS (HIGH GROWTH, HIGH MARKET SHARE)  Stars are leader in business  They also require heavy investment to maintain it’s large market share.  It leads to large amount of cash consumption & cash generation.  Attempts should be made to hold the market share otherwise the star will became a cash cow.
  • 14. CASH COWS ( LOW GROWTH, HIGH MARKET SHARE)  They are foundation of the company & often the stars of yesterday.  They generate more cash than required  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
  • 15. DOGS (LOW GROWTH, LOW MARKET SHARE)  Dogs are the cash traps  Dogs do not have potential to bring  High cost – Low quality  Business is situated at a declining stage
  • 16. WHY BCG MATRIX To asses  Profile of product /business  Cash demands of products  The development cycle of product  Resource allocation & divestment decisions
  • 17. MAIN STEPS OF BCG MATRIX  Identifying & dividing a company into SBU Assessing & comparing the prospects of each SBU according to two criteria 1) SBU’s relative market share 2) Growth rate of SBU’s industry Classifying the SBU’s on the basis of BCG matrix Developing strategic objective for each SBU
  • 18. BENEFITS  BCG matrix is simple & easy to understand  It helps to quickly & simply screen the opportunity open to you, & help you think about how you can make the most of them.  It is used to identify how corporate cash resources can best be used to maximize company’s future growth & profitability.
  • 19. LIMITATION  BCG matrix uses only two dimensions relative market share & market growth rate.  Problem of getting data on market share & market growth  High market share does not mean profits all time.  Business with market share can be profitable too.
  • 20. BCG-MATRIX FOR THE PRODUCT LINE OF Coca-Cola
  • 21. QUESTION MARKS (HIGH GROWTH, LOW MARKET SHARE
  • 22. STARS (HIGH GROWTH, HIGH MARKET SHARE)
  • 23. CASH COWS (LOW GROWTH, HIGH MARKET SHARE
  • 24. DOGS (LOW GROWTH, LOW MARKET SHARE)
  • 27. STARS  Invest for growth
  • 28. CASH COWS ( MILK TO FUND OTHER BUSINESS)
  • 29. DOGS
  • 30. CONCLUSION  Though BCG matrix has its limitation it is one of the most famous & simple portfolio planning matrix, used by large companies having multi-products.