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BCG Matrix

The BCG matrix is a portfolio analysis tool developed by the Boston Consulting Group in the late 1960s to help companies analyze their business units or product lines. It categorizes products in a matrix based on combinations of a business unit's market growth and relative market share. The four categories are: dogs with low growth and share; question marks with high growth but low share; stars with high growth and share; and cash cows with low growth but high share. The matrix is used to help companies allocate resources and is still a commonly used framework today.

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186 views2 pages

BCG Matrix

The BCG matrix is a portfolio analysis tool developed by the Boston Consulting Group in the late 1960s to help companies analyze their business units or product lines. It categorizes products in a matrix based on combinations of a business unit's market growth and relative market share. The four categories are: dogs with low growth and share; question marks with high growth but low share; stars with high growth and share; and cash cows with low growth but high share. The matrix is used to help companies allocate resources and is still a commonly used framework today.

Uploaded by

Akhila Antony
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BCG MATRIX

In the late 1960’s the Boston Consulting Group developed a portfolio business model based
on this thinking. The model, the BCG matrix or growth/share matrix, was based on the
Boston Consulting Group’s knowledge and work in the area of the experience curve and of
the product life cycle and how they relate to cash generation and cash requirements. The
BCG Growth-Share Matrix is based on the observation that a company's business units can
be classified into four categories based on combinations of market growth and market share
relative to the largest competitor, hence the name "growth-share". Market growth serves as a
proxy for industry attractiveness, and relative market share serves as a proxy for competitive
advantage. The growth-share matrix thus maps the business unit positions within these two
important determinants of profitability.
The Boston Consulting Group developed this model for managing a portfolio of different
business units (or major product lines). The BCG growth-share matrix displays the various
business units on a graph of the market growth rate vs. market share relative to competitors:
1) Dog - a business unit that has a small market share in a mature industry. A dog may
not require substantial cash because dogs have low market share and a low growth
rate.
2) Question Mark (or Problem Child) - a business unit that has a small market share in a
high growth market. Question marks are growing rapidly and thus consume large
amounts of cash, but because they have low market shares they do not generate much
cash.
3) Star - a business unit that has a large market share in a fast growing industry. Stars
generate large amounts of cash because of their strong relative market share, but also
consume large amounts of cash because of their high growth rate.
4) Cash Cow - a business unit that has a large market share in a mature, slow growing
industry. As leaders in a mature market, cash cows exhibit a return on assets that is
greater than the market growth rate, and thus generate more cash than they consume.
BCG matrix of Hindustan Unilever Ltd
High growth rate Low growth rate High market share Low market share
industries industries
Deodorant Toothpowder AXE Deodorant Pepsodent
Anti-Ageing Cream Shaving Products Fair & Lovely Bru
Fairness Cream
Skin And Fairness Jam & Jellies Surf Excel Taj Mahal Tea Bags
Cream
Detergent Powder Moisturizing Creams Kwality Walls Breeze
Processed Food Liquid Soaps Lipton Knor Meal Maker
Range
Tea Bags Packed Branded Tea Vim Brooke Bond
Sehatmand
Ice Creams Sunsilk Domex
Submitted by,
Sisi Akhila
6256, sem IV

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