Boston Consulting Group Matrix
Boston Consulting Group Matrix
The Boston Consulting Group Matrix is designed specifically to enhance a multidivisional firm’s efforts to formulate strategies. The Boston Consulting Group is a private management consulting firm based in Boston that employs about 4,300 consultants worldwide. The Boston Consulting Group Matrix or BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate.
The major benefits of The Boston Consulting Group Matrix are that it draws attention to the cash flow, investment characteristics, and needs of an organization’s various divisions. Another benefit is that the BCG-Matrix is helpful for managers to evaluate balance in the company’s current portfolio of Stars, Cash Cows, Question Marks and Dogs. Lastly other benefits include the following: the model is simple and easy to understand, it provides a base for management to decide and prepare for future actions, and if a company is able to use the experience curve to its advantage it should be able to manufacture and sell new products at a price that is low enough to get early market share leadership, also once it becomes a star, it is destined to be profitable. All analytical techniques have some kind of limitation, including the BCG-Matrix. One major limitation is that The Boston Consulting Group Matrix views every business as either a Star, Cash Cow, Dog, or Question Mark which is an oversimplification. Many businesses fall right in the middle of the BCG Matrix, thus they are not easily classified. Another limitation is that the BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. The Boston Consulting Group Matrix has no temporal qualities, but rather it is a snapshot of an organization at a given point in time. Lastly, the model uses only two dimensions – market share and growth rate. This may tempt management to emphasize a particular product, or to deprive
The Boston Consulting Group Matrix is designed specifically to enhance a multidivisional firm’s efforts to formulate strategies. The Boston Consulting Group is a private management consulting firm based in Boston that employs about 4,300 consultants worldwide. The Boston Consulting Group Matrix or BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate.
The major benefits of The Boston Consulting Group Matrix are that it draws attention to the cash flow, investment characteristics, and needs of an organization’s various divisions. Another benefit is that the BCG-Matrix is helpful for managers to evaluate balance in the company’s current portfolio of Stars, Cash Cows, Question Marks and Dogs. Lastly other benefits include the following: the model is simple and easy to understand, it provides a base for management to decide and prepare for future actions, and if a company is able to use the experience curve to its advantage it should be able to manufacture and sell new products at a price that is low enough to get early market share leadership, also once it becomes a star, it is destined to be profitable. All analytical techniques have some kind of limitation, including the BCG-Matrix. One major limitation is that The Boston Consulting Group Matrix views every business as either a Star, Cash Cow, Dog, or Question Mark which is an oversimplification. Many businesses fall right in the middle of the BCG Matrix, thus they are not easily classified. Another limitation is that the BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. The Boston Consulting Group Matrix has no temporal qualities, but rather it is a snapshot of an organization at a given point in time. Lastly, the model uses only two dimensions – market share and growth rate. This may tempt management to emphasize a particular product, or to deprive