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. Short Sale Strategies For Buyers And ...
    Investing

    Short Sale Strategies For Buyers And ...

  2. Rewrite Your Finance Industry Resume ...
    Personal Finance

    Rewrite Your Finance Industry Resume ...

  3. Understanding Intellectual Property
    Investing

    Understanding Intellectual Property

  4. Capital Structure
    Investing

    Capital Structure

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center