Tips and Tricks about my MBA experience

Strategy :: Boston Consulting Group (BCG) :: Matrix

The BCGM is used for those businesses that have more than one product in their portfolio. It is used to determine what priorities should be given to products. The theory stipulates that to maintain long-term value, a product portfolio should include base level products that are entering the market and need support, and established products that are profitable earners. 

It analyses two dimensions: market share versus market growth. The bigger the market share or the faster the market growth, the better it is.

The BCG Matrix places products into four distinct categories:

  • Stars — high growth rate and high market share
  • Cash Cows  – low growth rate and high market share
  • Question Marks — high growth rate but low market share
  • Dogs — low growth rate and low market share 

The below illustrates how the BCG Matrix relates to each of the above:


The success cycle goes from Question Marks to Stars and then to Cash cows.


Practical use

For each product or service, the ‘area’ of the circle represents the value of its sales. The BCG Matrix thus offers a very useful ‘map’ of the organization’s product (or service) strengths and weaknesses, at least in terms of current profitability, as well as the likely cashflows.




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