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Lecture#2

The document discusses the Boston Consulting Group (BCG) matrix, which classifies business units into four categories based on their relative market share and market growth rate. The categories are: stars (high share, high growth), cash cows (high share, low growth), question marks (low share, high growth), and dogs (low share, low growth). Stars generate cash but also require investment. Cash cows are profitable but mature. Question marks have potential but also risk. Dogs produce little cash and are candidates for divestment. The BCG matrix helps identify strategic investment opportunities but only considers two factors and data can be difficult to obtain.

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Hani Zaib
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38 views

Lecture#2

The document discusses the Boston Consulting Group (BCG) matrix, which classifies business units into four categories based on their relative market share and market growth rate. The categories are: stars (high share, high growth), cash cows (high share, low growth), question marks (low share, high growth), and dogs (low share, low growth). Stars generate cash but also require investment. Cash cows are profitable but mature. Question marks have potential but also risk. Dogs produce little cash and are candidates for divestment. The BCG matrix helps identify strategic investment opportunities but only considers two factors and data can be difficult to obtain.

Uploaded by

Hani Zaib
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Marketing

Lecture 2
Boston Consulting Group (BCG)
• Matrix is developed by Bruce Henderson of
the Boston Consulting Group in the early
1970’s
• According to this technique, business or
products are classified as low or high
performance depending upon their market
growth rate & relative market share.
Boston Consulting Group (BCG)
• RELATIVE MARKET SHARE & MARKET GROWTH
• To understand the Boston Matrix you need to understand
how market share & market growth are interrelated.
• RELATIVE MARKET SHARE: It is the percentage of the
total market that is being serviced by your company
measured either in the revenue terms or unit volume
terms.
• MARKET GROWTH RATE: Market Growth is used as a
measure of a market’s attractiveness. Individual Sales this
year
Boston Consulting Group (BCG)
•  It is portfolio planning model which is based
on the observation that company’s business
unit can be classified in to four categories:
• Question Marks
• Stars
• Cash cows
• Dogs
Boston Consulting Group (BCG)
STARS (HIGH GROWTH, HIGH MARKET
SHARE)
• Stars generate large sums of cash because of
their strong relative market share, but also
consume large amounts of cash because of
their high growth rate.
• If a star can maintain its large market share it
will become a cash cow when the market
growth rate declines.
CASH COWS ( LOW GROWTH, HIGH MARKET
SHARE)
• They are foundation of the company & often
the stars of yesterday.
• They generate more cash than required.
• They generate more cash than required.
• They extract the profits by investing as little
cash as possible.
• They are located in an industry that is mature
not growing or declining.
DOGS (LOW GROWTH, LOW MARKET
SHARE)
• Dogs have a low market share and a low
growth rate and neither generates nor
consumes a large amount of cash.
• Dogs are the cash traps
• Dogs do not have potential to bring
• High cost – Low quality
• Business is situated at a declining stage
QUESTION MARKS ( HIGH GROWTH, LOW
MARKET SHARE) 

• Most business start of as question marks


• They will absorb great amount of cash if the
market share remains unchanged (low)
• Question marks have potential to become star &
evenly cash cow but can also become dog.
• Investment should be high for question marks.
BCG Matrix for UNILEVER
BCG Matrix for Pak Suzuki Motors
LIMITATIONS OF BCG MATRIX
• BCG matrix uses only two dimensions relative
market share & market growth rate.
• Problem of getting data on market share &
market growth.
• High market share does not mean profits all
time.
• Business with market share can be profitable
too.

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