BCG Growth Share Matrix


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.

BREAKING DOWN '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.

  1. Dog

    One of the four categories or quadrants of the BCG Growth-Share ...
  2. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes ...
  3. Cash Cow

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

    A business strategy in which a business offers a product or service ...
  5. Corporation

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

    The amount of increase that a specific variable has gained within ...
Related Articles
  1. Investing

    How To Create a Winning Elevator Pitch

    Whether you are talking to potential investors, partners, customers or employees, the skill of being able to concisely summarize your business is critical.
  2. Investing

    Ten Productivity Apps for Finance Profesionals

    10 powerful apps that can help financial professionals save time and boost productive output.
  3. Economics

    Explaining Efficiency

    Efficiency refers to the ability to make something with the fewest resources possible.
  4. Economics

    Explaining Enterprise Resource Planning

    Enterprise resource planning (ERP) is management software that integrates a business’ essential departments.
  5. Economics

    What is a Code of Ethics?

    A code of ethics is a collection of principles and guidelines an organization expects its employees to follow.
  6. Economics

    Explaining the Balanced Scorecard

    A balanced scorecard is a metric that measures a business’ performance.
  7. Professionals

    How Agile Principles Are Used in Holacracy

    Holacracy itself has been an actively utilized management system since 2007 with its framework rooted in agile methodology.
  8. Economics

    How Does a Credit Facility Work?

    A credit facility is a loan or collection of loans a business or corporation takes to generate capital over an extended period of time.
  9. Personal Finance

    The Top 5 Most Unionized Industries

    Unions don't have the membership numbers that they once did, but they are still a vital part of several different important industries.
  10. Fundamental Analysis

    Calculating the Capacity Utilization Rate

    Capacity utilization rate is a ratio used to compare a current usage level against a maximum potential level.
  1. How do companies with a large product portfolio use BCG Analysis?

    BCG analysis is used to evaluate an organization's product portfolio in sales planning and marketing. It is specifically ... Read Full Answer >>
  2. What is the difference between a Debit Order and a Standard Order in a bank reconciliation?

    While both debit orders and standard orders represent recurring transactions that must be considered in bank reconciliations, ... Read Full Answer >>
  3. How can a company execute a tax-free spin-off?

    The two commonly used methods for doing a tax-free spinoff are either to distribute shares of the spinoff company to existing ... Read Full Answer >>
  4. How often should a small business owner go through a bank reconciliation process?

    Small business owners should go through the bank reconciliation process at least monthly, and many business consultants recommend ... Read Full Answer >>
  5. How is the marginal cost of production used to find an optimum production level?

    The marginal cost of production can be tracked to show the optimal production level where per-unit production cost is lowest ... Read Full Answer >>
  6. What are the typical ratios for a reverse stock split?

    Common share swap ratios used in a reverse stock split are two-to-one, 10-to-one, 50-to-one and 100-to-one. There is no set ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  2. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  3. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  4. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  5. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  6. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!