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So be careful to determine the products or business units that you want to analyze and classify.Īn incorrectly defined market can lead to a poor classification of products.

The choice of the unit impacts the whole analysis. Step 1: Identify your products or business unitsīCG matrix can be used to analyze Business Units, separate brands, products, or a firm as a unit itself. The following shows the six basic processes of creating a BCG matrix diagram: Businesses may consider divesting or discontinuing dogs if they are not strategically valuable. However, the low market share means that wrong investments can downsize them to Dogs significantly after loads of speculation.ĭogs do not have strong prospects for growth or profitability and may drain resources from the organization. Since the development rate is high here, with the correct strategies and ventures, they can turn into Cash Cows and even Stars in the end. While Cash Cows operates in a matured market and may not have significant growth prospects, they generate stable and positive cash flow, contributing to the financial stability of the organization. Usually, these products finance other activities in progress (including stars and question marks).ģ) Question Marks (or Problem Children) - High Growth, Low Market Share They have the potential to generate substantial returns and are considered strategic assets for the organization.Ģ) Cash Cows - Low Growth, High Market Share These quadrants are: Stars, Cash Cows, Question Marks (or Problem Children), and Dogs.ġ) Stars - High Growth, High Market Share The BCG matrix categorizes products or business units into four quadrants based on their market growth and relative market share. It was developed by the Boston Consulting Group in the 1970s and is widely used for strategic planning and decision-making regarding investment in competitiveness and market attractiveness. As the name suggests, it is a framework for portfolio management used to prioritize different products. The Boston Consulting Group Matrix (BCG Matrix) is also called Growth/Share Matrix. Published on Jul 12, 2023, updated on What is the BCG matrix?