History[ edit ] The company was founded by Bruce D. After many years in the purchasing department of Westinghouse in Pittsburgh where pricing behavior gave him the idea of the experience curvehe joined Arthur D. Little in Cambridge, Massachusetts. Inhe was recruited by The Boston Safe Deposit and Trust Company to form an internal consulting arm for the organisation.
The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. BCG Growth-Share Matrix Resources are allocated to business units according to where they are situated on the grid as follows: Cash Cow - a business unit that has a large market share in a mature, slow growing industry.
Cash cows require little investment and generate cash that can be used to invest in other business units. Star - a business unit that has a large market share in a fast growing industry.
Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
Question Mark or Problem Child - a business unit that has a small market share in a high growth market. These business units require resources to grow market share, but whether they will succeed and become stars is unknown.
Dog - a business unit that has a small market share in a mature industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
The BCG matrix provides a framework for allocating resources among different business units and allows one to compare many business units at a glance. However, the approach has received some negative criticism for the following reasons: The link between market share and profitability is questionable since increasing market share can be very expensive.
The approach may overemphasize high growth, since it ignores the potential of declining markets. The model considers market growth rate to be a given.
In practice the firm may be able to grow the market. The Product Portfolio - introduces the growth-share matrix and its dynamics, including the success sequence and the disaster sequence. Cash Traps - explains why the majority of products are cash traps. The Star of the Portfolio - and why market share is so important.
Anatomy of the Cash Cow - including the buying and selling of market share for cash cows. The Corporate Portfolio - discussing the advantages of diversified companies.The BCG Growth-Share Matrix It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share".
Boston Consulting Group, Inc. (BCG) is an American multinational management consulting firm with more than 90 offices in 50 countries. Founded in by Bruce D. Henderson, "Growth-share matrix" BCG matrix of example data set.
In , BCG created the "growth-share matrix", a simple chart to assist large corporations in deciding how to. From this reasoning, the BCG Growth-Share Matrix was born. The four categories are: Dogs - Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash.
The BCG Growth Matrix automatically propagates in all the information for up to 10 different investments.
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BCG Growth-Share Matrix Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 's the Boston Consulting Group developed a model for managing a portfolio of different business units (or major product lines).
BCG Growth Share Matrix What is a 'BCG Growth Share Matrix' The Boston Consulting Group (BCG) growth share matrix is a planning tool that uses graphical representations of a company’s products and services in an effort to help the company decide what it should keep, sell or invest more in.