BCG (Boston Consulting Group) Matrix – Product Portfolio Method

The BCG matrix is ​​the method or tool for companies to assess their product portfolio and business units to develop the best possible business strategy. The BCG Matrix was developed by the Boston Consulting Group to make it easier for companies and corporations to manage their product and business portfolio.

The BCG matrix is ​​a grid of four cells, each cell has an associated name. The following are the names of four cells in the BCG Matrix.

• Cash cows
•Stars
•Question marks
•Dogs

The purpose of BCG matrix cell labeling is to classify products or business units based on relative market share and industry growth rate.

Milky cows
Products or businesses with a high relative market share and low industry growth rate fall into the dairy cow cell. These business entities generate more cash flow with less investment requirements. Dairy cows have a high market share, but the growth of the industry is slow compared to the stars.

stars
The stars are the business entities with high market share and industry growth. The cash inflows are high but on the other hand, it also requires a large investment to cover the expenses of marketing, distribution, R&D and other business operations.

Question marks
As the name suggests, the question marks are the business entities with a high growth rate and low market share. It can fall into Stars and Dogs, the company has to make the decision to invest more in the question marks or eliminate by selling to other companies.

dogs
Dogs are the business entities with low market share and growth rate. No company wants dogs in their business or product portfolio because they only eat meat in the form of cash and have minimal cash inflows. The best the company can do is liquidate the dogs to minimize risk.