BCG Growth Share Matrix – The BCG growth share matrix was developed by Henderson of the BCG group in 1970′s. The matrix classifies businesses / SBU’s by
1) Relative Market Share – The market share of the business / SBU / Product in the market as compared to its competitors and overall product / category.
2) Market growth rate – The growth rate of the industry as a whole is taken into consideration from which the growth rate of the product is extrapolated. This growth rate is then pitched on the graph.
The quadrants of the matrix are divided into
1) Cash Cows – High market share but low growth rate (most profitable).
2) Stars – High market share and High growth rate (high competition)
3) Question marks – Low market share and high growth rate (uncertainty)
4) Dogs – Low market share and low growth rate (less profitable or may even be negative profitability)
On the basis of this classification, strategies are decided for each SBU / Product/ Service Lines.