The Growth-Share Matrix, also known as the Boston Consulting Group (BCG) matrix, is a strategic planning tool used by businesses to analyze and categorize their product portfolio based on market growth rate and relative market share. The matrix classifies products into four quadrants, each with its own strategic implications.
| High Share | Low Share | |
|---|---|---|
| High Growth | Stars | Questions |
| Low Growth | Cash Cows | Dogs |
Stars = High market growth rate and high relative market share. Businesses typically allocate substantial resources to support and develop stars, to increase growth and share, with the goal of turning them into cash cows in the future.
Cash Cows = Low market growth rate and high relative market share. Cash cows require relatively low investment and are considered a source of funds for investing in other products or businesses.
Questions = High market growth rate and low relative market share. These require careful consideration as they have the potential for future growth, but also pose the risk of not achieving market dominance. Strategic decisions involve determining whether to invest to increase market share or divest if the market potential is uncertain.
Dogs = Low market growth rate and low relative market share. Dogs generate minimal profit and may not have strong growth prospects. Businesses may choose to divest or minimize investment in dogs unless they serve a strategic purpose.
The Growth-Share Matrix provides a framework for identifying growth opportunities, managing cash flow, and making informed decisions about investment, divestment, or product development.