BCG Quadrants
Stars ⭐
→Cash Cows 🐄
→Question ❓
→Dogs 🐕
Introduction to BCG Matrix
The BCG Growth-Share Matrix, developed by Boston Consulting Group in 1970, helps companies allocate resources across business units. It classifies businesses on market growth rate and relative market share.
The Four Quadrants
| Quadrant | Characteristics | Cash Flow |
|---|---|---|
| Stars ⭐ (High Growth, High Share) | Market leaders in growing markets | Neutral (reinvest) |
| Cash Cows 🐄 (Low Growth, High Share) | Leaders in mature markets | Highly Positive |
| Question Marks ❓ (High Growth, Low Share) | Uncertain future | Negative |
| Dogs 🐕 (Low Growth, Low Share) | Little potential | Neutral/Negative |
Strategic Implications
- Stars: Invest heavily to maintain leadership
- Cash Cows: Harvest cash, minimal investment
- Question Marks: Invest selectively or divest
- Dogs: Divest or liquidate
Ideal Portfolio: Cash Cows fund Stars and select Question Marks. Avoid too many Dogs.
Constructing the Matrix
Relative Market Share = Your Share / Largest Competitor's Share
RMS > 1.0 means you are the market leader
- Identify strategic business units
- Calculate market growth rate
- Calculate relative market share
- Plot on matrix (circle size = revenue)
Limitations
- Oversimplification (only two dimensions)
- High growth doesn't always mean attractive
- Ignores synergies between SBUs
- Static snapshot in time
Conclusion
Key Takeaways
- BCG plots products on growth rate vs. market share
- Stars: Invest; Cash Cows: Harvest
- Question Marks: Select; Dogs: Divest
- Goal is balanced portfolio
- Use alongside other strategic tools