Bcg strategic environments matrix

The four quadrants of the growth-share matrix. Growth-share 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.

Bcg strategic environments matrix

It is the most renowned corporate portfolio analysis tool. In other words, it is a comparative analysis of business potential and the evaluation of environment. According to this matrix, business could be classified as high or low according to their industry growth rate and relative market share.

The analysis requires that both measures be calculated for each SBU. The dimension of business strength, relative market share, will measure comparative advantage indicated by market dominance.

The key theory underlying this is existence of an experience curve and that market share is achieved due to overall cost leadership. BCG matrix has four cells, with the horizontal axis representing relative market share and the vertical axis denoting market growth rate.

The mid-point of relative market share is set at 1. Resources are allocated to the business units according to their situation on the grid.

Boston Consulting Group - Wikipedia

The four cells of this matrix have been called as stars, cash cows, question marks and dogs. Each of these cells represents a particular type of business. BCG Matrix Stars- Stars represent business units having large market share in a fast growing industry.

They may generate cash but because of fast growing market, stars require huge investments to maintain their lead.

Bcg strategic environments matrix

Net cash flow is usually modest. If successful, a star will become a cash cow when the industry matures.

Boston Consulting Group's Advantage Matrix - Wikipedia

Cash Cows- Cash Cows represents business units having a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be utilized for investment in other business units. They are the base of an organization.

These businesses usually follow stability strategies. When cash cows loose their appeal and move towards deterioration, then a retrenchment policy may be pursued. Question Marks- Question marks represent business units having low relative market share and located in a high growth industry.

They require huge amount of cash to maintain or gain market share.

Understanding the tool

They require attention to determine if the venture can be viable.Boston Consulting Group, Inc. (BCG) is an American multinational management consulting firm with more than 90 offices in 50 countries.

Founded in by Bruce D. Henderson, it advises clients in management decisions across private, public, and Nonprofit organization sectors around the world, including more than two-thirds of the Fortune After its well-known growth-share matrix, the Boston Consulting Group developed another, much less widely reported, matrix which approached the economies of scale decision rather more directly.

This is known as their Advantage Matrix. The matrix was published in a Perspective titled "Strategy in the s" by Richard Lochridge. Please refer to the discussion titled "BCG's Strategic Environments Matrix," on pages Learning Objective: 2 Identify some critical limitations and shortcomings of the portfolio approach to strategic analysis.

Please refer to the discussion titled "Limitations of Portfolio Analysis," on pages Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by BCG, USA.

It is the most renowned corporate portfolio analysis tool. . They see their strategic-planning approach as too rigid, bureaucratic, reactive, and disconnected from execution. Confronted with faster-changing environments, they doubt their process can see around the bend to reveal the big, disruptive opportunities that will drive long-term value creation.

- These consist of the three techniques of: The BCG Growth-Share Matrix, The Industry Attractiveness-Business Strength Matrix, & BCG's Strategic Environments Matrix. market growth rate •The projected rate of sales growth for the market being served by a particular business.

Strategic Planning to Drive Long-Term Value & Growth