BCG Growth-Share Matrix

The Boston Consulting Group (BCG) growth-share matrix is a planning device that involves graphical portrayals of a company's products and services with an end goal to assist the company with concluding what it ought to keep, sell, or invest more in.

The matrix plots a company's offerings in a four-square matrix, with the y-pivot addressing the rate of market growth and the x-hub addressing market share. It was presented by the Boston Consulting Group in 1970.

The BCG growth-share matrix breaks down products into four categories, referred to heuristically as "dogs," "cash cows," "stars," and "question marks." Each category quadrant has its own set of unique qualities.

Dogs (or Pets)

In the event that a company's product has a low market share and is at a low rate of growth, it is viewed as a "canine" and ought to be sold, liquidated, or repositioned. Dogs, found in the lower right quadrant of the grid, don't generate a lot of cash for the company since they have low market share and practically zero growth. Along these lines, dogs can end up being cash traps, tying up company funds for long periods of time. Hence, they are prime contender for divestiture.

Cash Cows

Products that are in low-growth areas yet for which the company has a somewhat large market share are thought of "cash cows," and the company ought to in this manner milk the cash cow however long it can. Cash cows, found in the lower left quadrant, are commonly leading products in markets that are mature.

By and large, these products generate returns that are higher than the market's growth rate and support itself from a cash flow point of view. These products ought to be exploited to the extent that this would be possible. The value of cash cows can be handily calculated since their cash flow designs are highly unsurprising. In effect, low-growth, high-share cash cows ought to be drained for cash to reinvest in high-growth, high-share "stars" with high [future potential](/acquiring potential).

The matrix is certainly not a predictive device; it considers neither new, disruptive products entering the market nor quick changes in consumer demand.

Stars

Products that are in high growth markets and that make up a sizable portion of that market are thought of "stars" and ought to be invested in more. In the upper left quadrant are stars, which generate high income yet additionally consume large measures of company cash. On the off chance that a star can stay a market leader, it ultimately turns into a cash cow when the market's overall growth rate declines.

Question Marks

Sketchy opportunities are those in high growth rate markets yet in which the company doesn't keep a large market share. Question marks are in the upper right portion of the grid. They commonly develop fast yet consume large measures of company resources. Products in this quadrant ought to be broke down as often as possible and closely to check whether they are worth keeping up with.

Special Considerations

The matrix is a dynamic instrument, and it doesn't be guaranteed to consider every one of the factors that a business eventually must face. For instance, expanding market share might be more costly than the extra revenue gain from new sales. Since product development might require years, businesses must plan for possibilities carefully.

Highlights

The growth-share matrix helps the company in choosing which products or units to one or the other keep, sell, or invest more in.
The BCG growth-share matrix contains four distinct categories: "dogs," "cash cows," "stars," and "question marks."
The BCG growth-share matrix is a device utilized inside by management to evaluate the current state of value of a company's units or product lines.