Updated: Aug 19
As an entrepreneur or a wannapreneur, ever wondered how to understand the growth of your company or for that matter, any other company by just understanding their market share and the market growth?
If so, the answer is BCG Matrix. BCG(Boston Consulting Group) matrix is a portfolio evaluation matrix which takes into consideration the Strategic Business Unit of a company. SBU or Strategic Business Unit is an independent functional unit of a business that has its own objectives.
BCG Matrix consists of 4 elements:
Stars: Stars are the highest growth, highest share businesses or products. They often need heavy investments for rapid growth and eventually they become Cash cows.
Cash Cows: Cash cows are those businesses or products whose business is less lucrative and as a result their business growth lessens but, the market share of these businesses or products are high and they continue to make gains.
Question marks: Question marks have high market growth but, their market share is very low. In fact, these businesses or products are weak performers in spite of lucrative market.
Dogs: Dogs have low market growth and low market shares. They are loss making businesses or products which eventually have to undergo complete overhaul for it to have relevance or get wrapped up.