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BCG Matrix
= « Photography » of the Position of The Company’s Products
What is the BCG Matrix?
The BCG matrix, invented by the Boston Consulting Group, is a tool that allows 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: the rate of growth of the market ; the market share of a product/service offered facing the competitors
Golden Rules
Positioning = the company has to place each of its products/services on the matrix. Thus it is able to obtain information on the market share of the product or service and the market growth.
Creating long-term value = the company should have a product portfolio that includes products with high growth where it is necessary to inject cash and products where growth is weaker but which generate a lot of cash.
Growth in market
Slow
Question marks
Need investment, but emit more liquidity
Need to develop liquidity,
Brings in nothing
Cash Cows
Strong
Stars
Dogs
Realizes a lot of liquidities, they finance other activities
Difficulties to survive, reduce all costs or stop the product.
Strong
Weak
Market share on product
© Copyright 2008
LUXINNOVATION G.I.E.,
The National Agency for Innovation and Research in Luxembourg
1/2
BCG Matrix
= « Photography » of The
Position of the Company’s Products
Structure of the BCG Matrix
Question marks
They do not generate profits unless the company decides to invest resources to maintain and even increase the market share (become potential stars). They have a high demand for liquidity and the company must ask the question: Invest or give up the product?
Stars
These
= « Photography » of the Position of The Company’s Products
What is the BCG Matrix?
The BCG matrix, invented by the Boston Consulting Group, is a tool that allows 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: the rate of growth of the market ; the market share of a product/service offered facing the competitors
Golden Rules
Positioning = the company has to place each of its products/services on the matrix. Thus it is able to obtain information on the market share of the product or service and the market growth.
Creating long-term value = the company should have a product portfolio that includes products with high growth where it is necessary to inject cash and products where growth is weaker but which generate a lot of cash.
Growth in market
Slow
Question marks
Need investment, but emit more liquidity
Need to develop liquidity,
Brings in nothing
Cash Cows
Strong
Stars
Dogs
Realizes a lot of liquidities, they finance other activities
Difficulties to survive, reduce all costs or stop the product.
Strong
Weak
Market share on product
© Copyright 2008
LUXINNOVATION G.I.E.,
The National Agency for Innovation and Research in Luxembourg
1/2
BCG Matrix
= « Photography » of The
Position of the Company’s Products
Structure of the BCG Matrix
Question marks
They do not generate profits unless the company decides to invest resources to maintain and even increase the market share (become potential stars). They have a high demand for liquidity and the company must ask the question: Invest or give up the product?
Stars
These