SUBJECT MATTER

PRESENTATION ON BCG MATRIX

BY:- SUBHASISH

BHATTACHARJEE

HISTORY OF The Boston Consulting Group or BCG is a

global management consulting firm with offices in 41 countries. It is recognized as one of the most prestigious management consulting firms in the world. 

The company was formed by Bruce D. Henderson.

The BCG Matrix was created by The Boston Consulting Group (BCG) and it became one of the most well-known portfolio management Decision Making Tool in the early 1970’s.

COMPANY PROFILE

Type- PartnershipIndustry- Management consultingFounded- 1963Headquarters-Boston, Massachusetts, United

States, 71 offices in 41 countriesKey people- Hans-Paul Bürkner, President &

CEOProducts- Management consulting servicesRevenue- US$ 2.75 billion (2009)Employees- 4,400 (consultants)Website- bcg.com

ALLOCATION OF RESOURCES

High market share in a high growth market are designated as Stars.

High market share in a low growth market are designed as Cash Cows.

Low market share in a high growth market are designated as Question Marks or Problem Children.

Low market share in a low growth market are designated as Dogs.

BCG MATRIX GRAPH

Segments in the BCG matrixCash Cows (high market share, low growth) - Keep investments low,

while keeping profits high. Profits and cash generation should be higher because of low growth.

Dogs (low market share, low growth) - Liquidate, if they are not delivering cash. Avoid and reduce the number of these an organization maintains. Keep an eye out for expensive revival strategies - a dog is typically always a dog.

Stars (high market share, high growth) - Invest further in these - they incur high costs, but they are market leaders and should also generate lots of cash. Stars may balance on net cash flow, but the organization should try to maintain market share on this would because rewards are likely

Question marks (low market share, but high growth) - These have poor cash inflow, but have high demands and low returns due to low market share. Efforts should be made to change market share. If this isn’t possible, this will likely turn into a dog as growth slows.

ADVANTAGES OF BCG MATRIXTo evaluate balance in the firm’s current

portfolio of Stars, Cash cows, Question marks & Dogs

To decide & prepare for future actions

Applicable for large companies that seeks volume & experience effects

It is simple & easy to understand

Limitations of BCG MatrixBCG matrix classifies businesses as low

and high, but generally businesses can be medium also.

Market is not clearly defined in this model.

High market share does not always leads to high profits. There are high costs also involved with high market share.

Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability.