The Boston Consulting Group (BCG) matrix is a portfolio analysis tool that classifies business units based on their relative market share and market growth rate. It sorts units into four categories: Stars (high share, high growth), Cash Cows (high share, low growth), Question Marks (low share, high growth), and Dogs (low share, low growth). The matrix is used to assess unit profiles, cash demands, development cycles, and resource allocation to maximize future growth and profits. It provides a simple framework but only considers two dimensions and may misclassify units.

1. BOSTON CONSULTING
GROUP MATRIX
 Boston consulting group (BCG) matrix is
developed by BRUCE HENDERSON of the
Boston consulting group(American consulting
company) in early 1970’s.
 According to this technique, Business or
product are classified as low or high
performers depending upon there market
growth rate and relative market share.

2. Continue….
 It is the most renowned corporate portfolio
analysis tool.
 It provides a graphic representation for an
organization to examine different businesses
in it’s portfolio on the basis of their related
market share and industry growth rates.

3. Market Share
• Market share is percentage of total market that is
being service by your company, measure either in
revenue or unit volume terms.
• Relative market share
RMS=business unit sales this year/Leading reviles
sales this year
• The higher your market share, the higher your
proportion of the market you control.

5. Market growth rate
 Market growth is used to measure of market
attractiveness.
 Market experiences high growth are ones
where the total market share available is
expanding, and there’s plenty of opportunity
for everyone to make money.

7. The BCG growth share- matrix
 It is a portfolio planned model which is based on
the observation that a company’s business unit
can be classified into four categories:
 Stars
 Question marks
 Cash cows
 Dogs
 It is based on the combination of the market
growth and market share relative to the next best
competitor.

9. STARS
High growth ,High market share
 Stars are leaders in business.
 They are required high investment ,to maintain its
large market share.
 It leads to large amount of cash consumption and
cash generation.
 Attempts should be made to hold market share
otherwise the star will become a CASH COW.

10. CASH COWS
Low growth, High market share
 They are foundation of the company and often
the star of yesterday.
 They generate more cash then required.
 They extract the profits by investment as tittle
cash as possible.
 They are located in the industry that is mature
,not growing or decline.

11. DOGS
Low growth ,low market share
 Dog are the cash traps.
 Dogs do not have potential to bring in much
cash.
 Numbers of dogs in the company should be
minimize.
 Business is situated in declining stags.

12. QUESTION MARK
High growth, low market share
 Most businesses start of as question mark.
 They will absorb great amount of cash
if the market share remains unchanged,(low).
Why question marks?
 Question marks has potential to became
star and eventually cash cow but can
also became a dog.
 Investment should be high for question mark.

13. BCG matrix with cash flow

17. WHY BCG MATRIX?
 To assess:
 Profiles of products/businesses.
 The cash demand of products.
 The development cycles of products.
 Resources allocations and divestment
decisions.

18. MAIN STEPS OF BCG
MATRIX
 Identifying and dividing a company into SBU.
 Assessing and comparing the prospects of each
SBU according to two criteria:
 SBU’S relative market share.
 Growth rate of SBU’S industry.
 Classifying the SBU’S on the basic of BCG matrix.
 Developing strategic objectives for each SBU.

19. BENEFITS
 BCG matrix is simple and easy to understand.
 It helps you to quickly and simply screen the
opportunities open to you, and helps you think
about how you can make the most of them.
 It is used to identify how cooperate cash
resources can best be used to maximized the
company’s future growth and profitability.

20. LIMITATION
 BCG matrix uses only two dimension's
Relative market share and market growth
rate.
 Problems of getting data on market share and
market growth.
 High market share does not mean profit all
the time.
 Business with low market share can be
profitable too.