BCG Matrix

1. BCG Matrix

2. Contents Emergence of BCG Matrix Approaches of BCG Matrix ? Components of BCG Matrix Applications of BCG Matrix Advantages of BCG Matrix Limitations of BCG Matrix

3. The BCG Matrix . . . The Boston Consulting Group (BCG), founded in 1963, was a pioneering consulting. It introduced various concepts like ”experience curve” and ”growth-share matrix” High The experience curve says that the cost would come down to certain extent cumulative production is doubled. May establishments got an idea to minimize their cost and expand their capacity aggressively. Business growth rate Low However, when inevitable market downturns occured or innovative products were introduced, the flaws of this approach became apparent High Low Companies found themselves with excess capacity and outdated product designs, as well as reduced capacity for innovations given their previous focus on cost-cutting Relative position (Market Share)

4. Components of BCG Matrix Each of the four quadrants of the grid has different implication for the SBUs that fall into the category Question marks Stars ? Stars are SBUs that compete where there is high market share and high-growth industries. Question marks are SBUs which have weak market shares but they compete in high-growth industries. Cash cows Dogs Dogs are SBUs which operate in low-growth industries with weak market shares. Cash cows are SBUs which operate in high market shares but in low-growth industries.

5. BCG Matrix application High Invest if needed to create cash cow Select a few Divest the others Liquidate Business growth rate Low High Low Relative position (Market Share)

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