BCG Growth Share Matrix

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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. Market Share

    The percentage of an industry or market's total sales that is ...
  3. Cash Cow

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

    A legal entity that is separate and distinct from its owners. ...
  5. Star

    1. A type of candlestick formation that is identified when a ...
  6. Growth Rates

    The amount of increase that a specific variable has gained within ...
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