BCG Matrix

Contents

Emergence of BCG Matrix

Approaches of BCG Matrix

Components of BCG Matrix

Applications of BCG Matrix

Advantages of BCG Matrix

Limitations of BCG Matrix

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The BCG Matrix . . .

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The Boston Consulting Group (BCG), founded in 1963, was a pioneering consulting. It introduced various concepts like ”experience curve” and ”growth-share matrix”

The experience curve says that the cost would come down to certain extent cumulative production is doubled. May establishments got an idea to minimize their cost and expand their capacity aggressively.

However, when inevitable market downturns occured or innovative products were introduced, the flaws of this approach became apparent

Companies found themselves with excess capacity and outdated product designs, as well as reduced capacity for innovations given their previous focus on cost-cutting

Components of BCG Matrix

Each of the four quadrants of the grid has different implication for the SBUs that fall into the category

Stars are SBUs that compete where there is high market share and high-growth industries.

Question marks are SBUs which have weak market shares but they compete in high-growth industries.

Cash cows are SBUs which operate in high market shares but in low-growth industries.

Dogs are SBUs which operate in low-growth industries with weak market shares.

Stars

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marks

Cash cows Dogs

BCG Matrix application

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Invest if needed to create cash cow Select a

fewDivest the others

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