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In: Operations Management

how to fill out a bcg matrix

how to fill out a bcg matrix

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Expert Solution

BCG matrix was invented by Boston Consulting Group in 1970s so that organization can manage their portfolio strategy effectively. There are two inputs that form the BCG framework. They are market growth and market share to a portfolio of segments, products or business. This helps the business to draw conclusion on allocation of resources across the portfolio.

The four quadrant/ business units of BCG are: -

  • Star - This represent the business units which has large market share in the fast growing industry and require lots of investment in order to generate cash and to stain its market leader position. The business units are highly competitive and on maturity of industry it may become a cash cow.
  • Cash cows - This represent the business units which has large market share in a mature and slow growing industry. The investment requirement is little and the cash generated are used for investment in other businesses units. They implement stability strategies and are the base of an organization.
  • Question mark - These are the business units with low market share and are placed in a high growth industry. In order to gain market share, the cash requirement is very high. There is no fixed strategy as such and based on the market shares it adopt strategy like with dominant market share it adopt expansion strategy and with less market share it adopt retrenchment strategy.
  • Dog - These are the business unit which has very less market share and are placed in low-growth markets. These unit does not require huge cash investment nor generate cash. These units face cost disadvantages due to low market share so they adopt retrenchment strategies in order to gain market share. Organization should avoid number of dogs and should focus on minimizing it.

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