BCG Growth Share Matrix

AAA

DEFINITION of 'BCG Growth Share Matrix'

A planning tool that uses graphical representations of a company’s products and services in an effort to help the company decide what it should keep, sell or invest more in. The BCG growth share matrix plots a company’s offerings in a four square matrix, with the y-axis representing rate of market growth and the x-axis representing market share. The BCG growth share matrix was developed by the Boston Consulting Group (BCG) in the 1970s.

INVESTOPEDIA EXPLAINS 'BCG Growth Share Matrix'

The BCG growth share matrix breaks down products into four categories: dogs, cows, stars and “unknown”. If a company’s product has low market share and is in a low rate of growth market, it is considered a “dog” and should be sold off. Products that are in low growth areas but which the company has a large market share are considered “cows”, meaning that the company should “milk” the “cash cow” for as long as it can. Products that are both in high growth markets and make up a sizeable portion of that market are considered “stars”, and should be invested in more. Questionable opportunities are those in high growth rate markets, but in which the company doesn’t maintain a large market share. Products in this quadrant are to be analyzed more.

The matrix is a decision making tool and is does not necessarily take into account all the factors that a business ultimately must face. For example, increasing market share may be more expensive than the additional revenue gain from new sales. The matrix is not a predictive tool: it neither takes into account new, disruptive products entering the market, or rapid shifts in consumer demand. Because product development may take years, businesses must plan for contingencies carefully.

RELATED TERMS
  1. Dog

    One of the four categories or quadrants of the BCG Growth-Share ...
  2. Cash Cow

    1. One of the four categories (quadrants) in the BCG growth-share ...
  3. Corporation

    A legal entity that is separate and distinct from its owners. ...
  4. Growth Rates

    The amount of increase that a specific variable has gained within ...
  5. Loss Leader Strategy

    A business strategy in which a business offers a product or service ...
  6. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes ...
Related Articles
  1. Supply Chain Management Jobs Are Booming
    Personal Finance

    Supply Chain Management Jobs Are Booming

  2. Using Appreciative Inquiry To Solve ...
    Investing Basics

    Using Appreciative Inquiry To Solve ...

  3. How to Register Your Trademark
    Investing

    How to Register Your Trademark

  4. Filing A Patent
    Investing

    Filing A Patent

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center