THE BCG MATRIX

Called the Boston Group Matrix, this model helps businesses assess the various investments in their portfolio and identify areas of reinvestment or liquidation. It facilitates the ranking of product lines based on market growth and share. The BCG Matrix is divided into four quadrants with the horizontal axis measuring from low market share (left) to high (right), and low market growth (bottom) to high (top). Let’s take a look at each quadrant:

• QUESTION MARKS - Feature high growth potential but own a low end of the market share. These areas have potential to become stars but require a lot of resources.

• DOGS - These units hold a small market share in a saturated market. They are front line candidates for liquidation, although in practice it’s not always an easy answer. They can be loss leaders or hold a competitive advantage by some other metric.

• CASH COWS - Feature high market share leadership and low growth potential. They generate high revenue, which can be funneled into other areas such as the Question Mark.

• STARS - These hold high market share and growth. Naturally they generate the most revenue but require a lot of resources to sustain that growth rate. Eventually Stars become Cash Cows as growth slows down.