BCG or Growth-share matrix is a framework created by Boston
Consulting Group to evaluate the strategic position of the business
brand portfolio and its potential. Is a corporate planning tool, which
is used to portray firm’s brand portfolio or SBUs (strategic
business unit) on a quadrant along relative market share axis
(horizontal axis) and speed of market growth (vertical axis) axis.
Each of the four quadrants resulting on the matrix represents a
specific combination of Relative market share, higher corporate’s
market share results in higher cash returns, and Market growth
rate, high market growth rate means higher earnings and
sometimes profits but it also consumes lots of cash, which is used
as investment to stimulate further growth.
1. Low Growth, High Share. Companies should milk these
“cash cows” for cash to reinvest.
2. High Growth, High Share. Companies should significantly
invest in these “stars” as they have high future potential.
3. High growth, High Share. Companies should invest or
discard these “question marks” depending on their chances
to becaming “stars”.
4. Low Share, Low Growth. Companies should liquídate, divest
(despojarse, sell off ) or reposition these “dogs”
Product value depends entirely on whether or not a company is able
to obtain a leading share of its market before growth slows. All
products will eventually become either cash cows or dogs. Dogs are
unnecessary, they are evidence of failure to either obtain a
leadership position or to get out and cut the losses.
It classifies business portfolio into four categories based on
industry attractiveness (growth rate of that industry)
and competitive position (relative market share). These two
dimensions reveal likely profitability of the business portfolio in
terms of cash needed to support that unit and cash generated
by it. The general purpose of the analysis is to help
understand, which brands the firm should invest in and which
ones should be divested.
The four quadrants into which firms brands are classified:
Dogs. Dogs hold low market share compared to competitors
and operate in a slowly growing market. In general, they are
not worth investing in because they generate low or negative
cash returns. Therefore, it is always important to perform
deeper analysis of each brand or SBU to make sure they are
not worth investing in or have to be divested.
Strategic choices: Retrenchment, divestiture(sell of, to get rid
of), liquidation
Cash cows. Cash cows are the most profitable brands and
should be “milked” to provide as much cash as possible. The
cash gained from “cows” should be invested into stars to
support their further growth. According to growth-share matrix,
corporates should not invest into cash cows to induce growth
but only to support them so they can maintain their current
market share. Strategic choices: Product development,
diversification, divestiture, retrenchment
Stars. Stars operate in high growth industries and maintain
high market share. Stars are both cash generators and cash
users. They are the primary units in which the company should
invest its money, because stars are expected to become cash
cows and generate positive cash flows. Strategic choices:
Vertical integration, horizontal integration, market penetration,
market development, product development
Question marks. Question marks are the brands that require
much closer consideration. They hold low market share in fast
growing markets consuming large amount of cash and
incurring losses. It has potential to gain market share and
become a star, which would later become cash cow. Question
marks do not always succeed and eventually become dogs.
Therefore, they require very close consideration to decide if
they are worth investing in or not.
Strategic choices: Market penetration, market development,
product development, divestiture
BCG matrix is a business tool, which uses relative market
share and industry growth rate factors to evaluate the potential
of business brand portfolio and suggest further investment
strategies.
¿Para qué sirve la Matriz BCG?
El principal objetivo de la Matriz BCG es que nos ayude
a determinar en cuáles de nuestros productos debemos de
invertir más recursos.
Es decir, con esta matriz vamos a analizar nuestra cartera de
negocios para determinar cuáles son nuestros mejores y peores
recursos en términos de retorno de la inversión.
En base a este podremos llevar a cabo 4 tipos de estrategias de
inversión en marketing:
Aumentar la cuota de mercado.
Defender la cuota de mercado.
Estrategia de cosecha.
Estrategia de eliminación..
