These products tend to be a drain on cash flow due to the high rate of market growth but are unlikely to be highly profitable due to the low market share. Question Marks - high rate of market growth but low market share The barrier to entry into a stable market is likely high enough to deter most potential competition. As such, they are likely highly profitable and require little investment. In the future, as the market slows, Stars will likely have the opportunity to become Cash Cows, so the current market share must be protected.Ĭash Cows - low rate of market growth and high market shareĬash Cows are the market leaders within a stable market. Investment should be made in Star businesses to ensure enough resources are available to secure the current market-leading position and explore opportunities for further growth. Stars - high rate of market growth and high relative market shareīusiness lines within this quadrant are likely to be highly profitable but will likely need investment to maintain growth and challenge new and existing competitors. Boston Consulting Group (BCG) Growth-Share Matrix The model requires each business line to be placed in one of four quadrants, depending on the rate of market growth and current relative market share. There is a direct positive correlation between increased market share and profit.Market growth harms cash flow due to the requirement for investment in manufacturing facilities, equipment and marketing.Two key assumptions form the core of the BCG Matrix: describe the market environments in which different lines of business operate.help managers decide which businesses to consider for further investment and which to consider for divestment.The BCG Growth-Share Matrix can be used to: Several models were proposed, including the General Electric/McKinsey matrix, the BCG Matrix, with its focus on cash flow rather than profits, being one of the most popular. In the 1970s, marketing managers began to recognise that companies' shift towards more diversified product offerings required new planning models to provide a means for analysing investment opportunities. The BCG Growth-Share Matrix provides a simple tool to get a high-level overview of a corporate portfolio, acting as an input into strategic investment decision making.

As firms diversify, it can be challenging to maintain a balanced portfolio and set priorities for future investment.

Bcg growth matrix