Welcome to the BCG Matrix Guide
What is BCG Matrix Analysis?
The BCG Matrix is a business method that was created by the Boston Consulting Group in the 1970’s. This business method bases its theory on the life cycle of products.
Also known as the Boston Box or Grid, BCG Charts are divided into four types of scenarios, Stars, Cash Cows, Dogs and Question Marks.
The Stars is the scenario where there is the optimum situation of high growth and high share, this method requires an increased investment due to the continuous growth.
The Cash Cow cycle deals with low growth and high share. This scenario requires a low investment, but the growth is very slow.
The Dogs method is the situation where the growth is low and the
market share is low, this is one of the worst situations. In this
situation if the products are not delivering the cash then it is best to
The last part of the cycle is the Question mark which is high market growth but low shares. In this situation there is a high demand but low returns. It is best to try and increase market share or get it to deliver cash.
The limitation of this business theory is that it only works with high market share and this is not the only meter for success. Also there are many situations in business where the Dogs can out earn the Cash Cows.
The BCG grid may provide a the basis for a business development strategy for large business but what about the small business?
It is possible to have a high market share and not have increased profits, or have a low market share and still be profitable.
BCG Analysis is a great stepping stone for market research and has
great possibilities, but for today's companies it may need to be
tweaked just a little.
This business model is a pretty decent model and if used in the right situation it can help a business to increase and monitor its market share and growth.
All business big or small should have some type of a business plan or model that they can base their business products on and by keeping an eye on the market and watching what consumers want they can increase their profit.
A simple BCG Matrix diagram or template can be used to plan your Growth Market Share strategy and many samples can be found on the web. If you prefer you may use BCG Matrix software.