Question

Compare and contrast the BCG Matrix and the IE Matrix.

What are the benefits and limitations of each?

Answer 1

Both BCG and IE matrix are the tools used to plot organizational units in a schematic way where each bubble represents sales and profit contribution of each unit in percentage or pie slices. Whereas, both uses different axes and the implication of both BCG and IE matrix are different on organizational strategic plan. The BCG matrix offers benefits in terms of organizational requirements at business unit level, cash flow and investment portfolios but it has limitations of viewing of business units in terms of star performer or a cash cow, etc. and it offers the snapshot of the organization at the given point and it also needs information on market share and industry growth rate to make strategic decisions. Whereas, IE matrix is easy to understand and offers the distinction of the business in terms “grow and build”, “hold and maintain” and “harvest and divest” and considers weighted scores while focusing on internal factors but it’s limitation is not directly help in the strategy formation and can be replaced by any other tool.