20 June 2006

BCG Matrix

The Boston Consultancy Group Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It 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.

Characterize Your Enterprise

The expert system will position your enterprise on the chart based upon your description of:
  • Share of market
  • Condition of the market You can trace through the supporting analysis and its conclusions, adjusting your input until you are satisfied your description accurately characterizes your enterprise
Analysis of Your Enterprise Position

Stars - High growth/High share

Business is likely to generate enough cash to be self sustaining. Recommended tactics:
  • promote aggressively
  • expand your product or service
  • invest in R & D
Cash Cows - Low growth/High share

Business can be used to support other business units.
  • defend & maintain
Question Marks - High growth/Low share

Business requires a lot of cash to maintain market share.
  • invest more cash
  • or, divest
Dogs - Low growth/Low share

Business is a cash trap.
  • focus on short term
  • avoid risky project
  • limited future
For further detailed information, click here.

1 comment:

Mabs said...

I was looking at http://www.coursework4you.co.uk/bcg.htm and saw that there were some limitations to the BCG Growth-Share Matrix. What can you say about those?