The BCG Model is based on products rather than services, however, it does apply to both. Dogs can be as important as cash cows to businesses if it helps to achieve competitive advantage for the rest of the company. It denies that synergies between different units exist.Besides, high market share does not necessarily mean high profits. Market share and industry growth are not the only factors of profitability.Does not include other external factors that may change the situation completely.Businesses can be classified as cash cows, while they are actually dogs, or vice versa. It can be confusing to classify an SBU that falls right in the middle. Business can only be classified to four quadrants.Growth-share analysis oversimplifies the factors involved in assessing the future of a business portfolio. It’s a good starting point prior to further analysis.Helps to understand the strategic positions of a business portfolio.Advantages and disadvantages of the BCG Matrix The company Procter & Gamble which manufactures Pampers nappies to Lynx deodorants has often been described as a ‘cash cow company’. The simple rule here is to ‘ Milk these products as much as possible without killing the cow! Often mature, well-established products. They generate more ROI than other product categories. Star productsĬan be the market leader though require ongoing investment to sustain. Despite a serious amount of investment, it flopped and failed to compete against the established players such as Apple and Samsung. For example, Amazon (see the Amazon business model)developed the Firephone but failed to gain traction in the smartphone market. The challenge is that a lot of investment may be required to get a return. Question mark productsĪs the name suggests, these products often require significant investment to push them into the star quadrant. After SAAB ceased trading and producing new cars, a whole business emerged providing SAAB parts.
For example, in the automotive sector, when a car line ends, there is still an after-market i.e. However, this can be an over-simplification since it’s possible to generate ongoing revenue with little cost. The recommended advice is to remove any dogs from your product portfolio as they are a drain on resources. Think of the BCG Matrix as mapping a portfolio of products or services. In other words, eighty per cent of profits come from twenty per cent of the products and therefore the BCG matrix provides a method to analyse your portfolio and decisions. The BCG is more relevant to larger organizations with multiple services and markets. However, smaller businesses that have a broad range of products can use this to analyse their products. Each quadrant represents a relative position based on market growth and relative market share. It’s also known as the Growth/Share Matrix. The Boston Consulting Group’s product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products.
#BCG MATRIX WORD TEMPLATE HOW TO#
Stars: Products in high growth markets with high market share.Ĭash cows: Products in low growth markets with high market share How to use the BCG Matrix model Question marks or Problem Child: Products in high growth markets with low market share. THE BCG Matrix What are the four quadrants of the BCG Matrix?ĭogs: These are products with low growth or market share.
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