The Boston Consulting group (BCG) Approach


The Boston Consulting Group Approach

"A portfolio-planning method that evaluates a company's strategic business units in terms of their market growth rate and relative market share. SBUs are classified as stars, cash cows, question marks, or dogs".


Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs according to the growth-share matrix.

Stars
*
*
Question marks
?
?
?
O
o


Cash Cows

o
O
o
Dog
Market Growth Rate

High





Low


                High                                        Low

Relative market share

Stars:

Stars are high-growth, high-share businesses or products. They often need heavy investment to 
finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

Cash Cows:

Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold thir market share. Thus, they produce lot of cash that the company uses to pay its bills and to support other SBUs that need investment.

Question Marks:

Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it.Management needs to think hard about which question marks it should try to build into stars and which should be phased out.

Dog:

Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.
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