Bcg Matrix

Topics: Product management, Management, Growth-share matrix Pages: 3 (780 words) Published: July 30, 2013
BCG matrix has been a tool for Malaysian brands to classify and evaluate the products and services of a business. It is a decision making tool in order to balance the activities of a company among those which make profits, those who ensure growth, those which constitute the future of the firm or those who are its heritage. With this tool one is able to define the development policy of the company. The matrix will position the products/services in two ways which are the rate of growth of the market and the market share of a product/service offered facing the competitors. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. There are four type of categories which explains the BCG matrix:

Question marks are products that grow rapidly and as a result consume large amounts of cash, but because they have low market shares they don’t generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If it doesn’t become a market leader it will become a dog when market growth declines. Question marks need to be analyzed carefully to determine if they are worth the investment required to grow market share.

Dogs have a low market share and a low growth rate and neither generates nor consumes a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture. Stars generate large sums of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate. So the cash being spent and brought in approximately nets out. If a star can maintain its large market share it will become a cash cow when the market growth rate declines.

As leaders in a mature market, cash cows exhibit a...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Boston Matrix Research Paper
  • Directional Policy Matrix Research Paper
  • BCG Matrix Essay
  • The Bcg Matrix Essay
  • BCG matrix Essay
  • Matrix Essay
  • Plato, Descartes and the Matrix Essay
  • Essay on Postmodernism and the Matrix

Become a StudyMode Member

Sign Up - It's Free