What is the bcg matrix?


Boston consultancy group (BCG) USA has developed a 4 cell matrix for corporate portfolio analysis which is called BCG matrix. BCG matrix provides company’s different businesses portfolio or SBU’s  in graphical representation on the basis of their relative market share and industry growth rates. In brief, it gives comparative analysis of market potential and environment.

BCG matrix compares businesses on market share growth vs market share of strategic business units.

what is bcg matrix
bcg matrix

Calculation of Market Share(Relative) = Revenue of SBU current year leading competitors revenue.

Market Growth Rate = Industry revenue (current -last year)

This analysis needs both values to be calculated for each business unit for which BCG matrix need to be filled. BCG matrix consist of four cells, with x axis as relative market share and y axis as market growth rate. Mid of relative market share is 1.0. if all BU’s are in same industry,average growth rate of industry is used. Mid is set to growth rate for the economy if all BU’s are from different industry.

BU’s are assigned with organization resources as per situation on the matrix. Four cells of matrix are called as stars, cash cows, question marks and dogs.


  1. Leading market share in highly growing market.
  2. Need lot of resources to maintain lead.
  3. Highly competitive market
  4. Will become cash cows when market matures

Cash cows:

  1. Large market share in mature industry
  2. Cash generated by these can be used in business growth in other areas
  3. Growth is slow in these markets

Question marks:

  1. Low market share in high growth industry
  2. Analysis need to be done for feasibility to grow or sell
  3. Need huge resources to gain market share


  1. Weak market share in less growth market
  2. First priority for liquidation as high cost, poor quality and ineffective marketing is hampering it

Now we will look at BCG matrix sample. This example of BCG matrix is of BMW.

bcg matrix example bmw

bcg matrix example

One thought on “What is the bcg matrix?

  1. I normally consider this to be heavy-duty content, but you’ve made it so clear I understand it. The factors you make are extremely logical.

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