BOSTON CONSULTING
GROUP (BCG) MATRIX
Presented by GROUP 1
Amador, Christel Marie M.
Hita-as, Cyril D.
Jordan, Nikki G.
Mantos, Rolando
Sanchez, Crislean Mae M.
INTRODUCTION
BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by BRUCE HENDERSON
of the BOSTON CONSULTING GROUP IN THE
EARLY 1970's
According to this technique, business or
products are classified as low or high perfomers
depending upon their market growth rate and
relative market.
Relative Market Share and
Market Growth
To understand the Boston Matrix you need to understand how market share and
market growth interrelate.
MARKET SHARE
Market Share is the percentage of the total market that is being serviced by
your company, measured either in revenue terms or unit volume terms.
RELATIVE MARKET SHARE
Business unit sales this year
RMS =
Leading
Karina Villanueva rival sales this year
Project manager
Howard Ong
Project manager Project manager
The higher your market share, the higher proportion of the market your control.
MARKET GROWTH
RATE
Market growth is used as a measure of a market attractiveness.
Individual sales this year - Individual sales last year
MGR =
Individual sales last year
Market experiencing high growth are ones where the total market
share available is expanding, and there’s plenty of opportunity for
everyone to make money.
It is a portfolio planning model which is based on the
THE BCG
observation that a company’s business units can be
classified in to four categories:
GROWTH-SHARE 1. Stars
2. Question marks
3. Cash cows
MATRIX 4. Dogs
It is based on the combination of market growth and
market share relative to the next best competitor.
Relative Market Share
(Cash Generation)
High Low
Star Question Marks
High
Market Growth Rate
(Cash Usage)
Cash Cows Dogs
Low
STARS
HIGH GROWTH, HIGH MARKET SHARE
Stars are leaders in business.
They also acquire heavy investments,
to maintain market share.
It leads to large amount of cash
consumption and cash generation.
Attempts should be made to hold the
market share otherwise the Star will
become CASH COW
CASH COW
LOW GROWTH, HIGH MARKET SHARE
They are foundation of the company
and often the stars of yesterday.
They generate more cash than
required.
They extract the profits by investing
little cash as possible.
They are located in the industry that is
mature, not growing of declining.
DOGS
LOW GROWTH, LOW MARKET SHARE
Dogs are cash traps.
Dogs do not have potential to bring in
much cash.
Number of dogs in the company
should be minimize.
Business is situated at a declining
stage.
QUESTION
MARKS
HIGH GROWTH, LOW MARKET SHARE
Most business start at a question mark.
They will absorb great amounts of cash if
the market share remained unchanged,
(LOW).
Why question marks?
Question Marks have the potential to
become Star and eventually Cash Cow
but can also become a Dog.
Investments should be high on question
marks.
WHY BCG MATRIX?
TO ASSES:
1. Profiles of product/business.
2. The cash demand of products.
3. The development cycle of the products.
4. Resource allocation and divestment decisions.
WHY BCG MATRIX?
Identifying and dividing a company into SBU (Strategic Business Unit).
Assessing and comparing the prospects of each SBU according to two criteria ;
1. Growth rate of SBU’s industry
2. SBU’s relative market share.
Classifying the SBU’s on the basis og BCG matrix.
Developing strategic objectives of each SBU.
BCG
MATRIX
with
CASH
FLOW
BENEFITS LIMITATIONS
BCG MATRIX is simple and easy to BCG MATRIX uses only two
understand. dimensions.
it helps you to quickly and and Problems on getting data on market
simply screen the opportunities share and market growth.
open to you, and helps you think High market share does not men
about how you can make the most profits all the time.
of them. Business with low market share can
it is use to identify how corporate be profitable too.
cash can best be used to maximize PRACTICAL USE
MEHINDRA & MEHINDRA
a company’s future growth and
HLL
profitability.
IES
BCg MATRIX
Star Question Marks
Cash Cows Dogs
CONCLUSION
Through BCG MATRIX has its
limitations it is one of the most
FAMOUS AND SIMPLE portfolio and
planning matrix use by large
companies having multiple product.
