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    The BCG Growth Matrix is a portfolio analysis tool developed in the 1960s to help companies allocate resources. It uses market growth rate and market share to categorize business units as Stars, Cash Cows, Dogs, or Question Marks. Stars have high growth and share, requiring investment. Cash Cows have high share but low growth, generating cash flow. Question Marks have high growth but low share, needing investment to achieve stability. Dogs have low growth and share, often requiring divestment. While simplistic, the BCG Matrix provides a framework for strategic resource allocation when used appropriately with further analysis.

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    BCG matrix

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    The BCG Growth Matrix is a portfolio analysis tool developed in the 1960s to help companies allocate resources. It uses market growth rate and market share to categorize business units as Stars, Cash Cows, Dogs, or Question Marks. Stars have high growth and share, requiring investment. Cash Cows have high share but low growth, generating cash flow. Question Marks have high growth but low share, needing investment to achieve stability. Dogs have low growth and share, often requiring divestment. While simplistic, the BCG Matrix provides a framework for strategic resource allocation when used appropriately with further analysis.

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    Download as PPT, PDF, TXT or read online from Scribd
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    Download as ppt, pdf, or txt
    137 views15 pages

    BCG Matrix

    Uploaded by

    Indranil Aich
    The BCG Growth Matrix is a portfolio analysis tool developed in the 1960s to help companies allocate resources. It uses market growth rate and market share to categorize business units as Stars, Cash Cows, Dogs, or Question Marks. Stars have high growth and share, requiring investment. Cash Cows have high share but low growth, generating cash flow. Question Marks have high growth but low share, needing investment to achieve stability. Dogs have low growth and share, often requiring divestment. While simplistic, the BCG Matrix provides a framework for strategic resource allocation when used appropriately with further analysis.

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    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    BCG Growth Matrix

    Presented by: Shashank Chandrasekharan Aubhi Home Tahira Sarkar Sumit Chatterjee

    Presentation Outline

    History of BCG Matrix BCG Matrix construction Strategy recommendations Evaluation of the tool

    History of the BCG Matrix


    1960s diversification of businesses Need for universal management tool First implementation in 1969 by Boston Consulting Group

    Basis of the BCG Portfolio Matrix

    BCG Matrix Construction

    Internal measure: Relative market share


    Firms sales of the SBU . Total markets average sales Firms Sales of the SBU . Strongest Competitors Sales

    External measure: Market growth

    Match strategy with market stage

    BCG Matrix Format


    Vertical Axis = Relative Market Growth Horizontal Axis = Relative Market Share

    Four quadrants in which individual SBUs are positioned as bubbles

    Bubble size = SBUs total revenue

    The BCG Matrix


    Relative Market Share High High Product Sales Growth Rate Low

    Low

    Strategy Recommendations

    Investment

    Further Growth Maintain Market Position

    Cash flow

    Self-sustaining: Fund their own growth Require funds from other SBUs (Cash Cows)

    Assure the future of the company Grow into Cash Cows

    Strategy Recommendations

    Investment

    Increase market share Selectively develop into Stars

    Cash Flow

    Require funds from other SBUs (Cash Cows)

    Unrealized future opportunities

    Strategy Recommendations

    Investment

    Maintain market share Maintain capacity

    Cash Flow

    Positive cash flow Provides funding to support Stars and ?

    No potential for profit growth

    Strategy Recommendations

    Investment

    Divestiture strategy Reduce capacity to free up resources

    Cash Flow

    Goal of Positive Cash Flow Negative Cash Flow = Divestment

    No real growth opportunities

    Evaluation of BCG Matrix: Cons


    Oversimplifies complex decisions Only 2 factors considered = creates risk Uncertainty in market and SBU definition Only considers current businesses no dynamics Does not recognize possible synergies between SBUs

    Evaluation of BCG Matrix: Pros


    Simple and rapid Solid basis for decision-making Good measurability of market share and growth Provides information about efficient resource allocation within the organization Generator for strategic options

    Conclusion

    As long as management understands that the BCG Growth/Share Matrix generates options which require further analysis and validation, this tool can greatly enhance strategic decision making

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