It's a strategic framework that is almost as famous as SWOT and has been commonly used since the late 1960s, let's find out more about this famous matrix...
The BCG Growth-Share Matrix is a framework used to classify products or services in order to aid decision making. The model is presented as a 2x2 matrix and can be applied to any product or service.
The two measurement dimension are Market Share and Growth Rate, using a combination of these provides four quadrants:
These are given the terms:
A Star is a High Growth, High Share. Companies are advised to invest in these as they have significant potential in the future. In an ideal situation all of your products and services would migrate towards Star.
This is the toughest quadrant as there may be great potential in these items, or they may be not worth the investment. A company should decide if they are to continue investment here depending on the chance of them moving to a Star.
Cash Cow products and services generate significant revenue but may be coming to the end of their life, hence slow growth. Companies should take the revenue generated and look to invest it in to other products in an attempt to create future Star or Cash Cows.
Pet products and services are low growth and low market share, and can often drag a business down in resources, focus and energy. The suggested approach is to divest or retire the items in this quadrant, as they will not be adding value to the business.
The BCG Growth-Share Matrix has several advantages:
While it’s a great tool, BCG Growth-Share Matrix has some shotfalls:
One of the main alternatives to the BCG Growth-Share Matrix is the ADL Matrix, otherwise known as the Strategic Condition Matrix.
The BCG Growth-Share Matrix was created by Bruce Henderson in 1968, published in a short essay called Perspectives.
To complete a BCG Growth-Share Matrix correctly you should have prepared the following on each of your products and services:
The BCG Growth-Share Matrix is best updated whenever a company is reviewing their full portfolio and approach to market.
Get the latest strategy insights and tips from Lucidity twice a month. We never spam and you can unsubscribe any time.