Boston Consulting Group Matrix

Boston Consulting Group Matrix
BCG Matrix

The BGC matrix or The Boston Consulting Group Matrix is a graphic that shows the Relative Market Share Rate of each company’s product on the horizontal axis and their respective Market Growth Rate on the vertical axis.

The Relative Market Share for each product is calculated dividing the sales of each product, in units or dollars, against the sales of the largest competitor in a specific market. The Market Growth Rate for each product is given or estimated from statistic data of the market or industry.

This spreadsheet explains the graphic procedure:  BGM

How to read the graphic:

My personal point of view is this: Just look at each product category as your children:

The Starts: Are those products that have a promising career, but they are not producing enough money yet. You need to invest on them to make sure they develop all their potential and eventually they will provide cash for the company.

Cash Cows: They the ones that work hard to sustain the company’s expenses, including the support for the rest of the products in the company, so your job is to take care they do their job.

Question mark or problem children: These are products that even though they are in a growing market, for some reason, they are not performing well.  So eventually the company has to decide if they spend more money reforming these products or stop supporting them.

Dogs: They are mediocre products. Usually they pay their expenses but don’t provide too much or nothing for the rest of the company, and you have the restriction of the market, is not growing fast.  Here you may have a few alternatives; leave them alone, find a better market niche or change slightly so they can improve their performance.

The Boston Consulting Group Matrix is also related to the Product Life Cicle. Consider introductory products as “problem childs”, products in the growth stage as “stars”, products in the maturity stage as “cash cows” and products in the decline stage as “dogs”.    

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