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BCG Matrix |
Product Portfolio Management: Summary of the BCG Model. Abstract |
Placing products in the BCG matrix results in 4 categories in a portfolio of a company: 1. Stars (=high growth, high market
share) The BCG Method can help understand a frequently made strategy mistake: having a one-size-fits-all-approach to strategy, such as a generic growth target (9 percent per year) or a generic return on capital of say 9,5% for an entire corporation. In such a scenario: A. Cash Cows Business Units will beat their profit target easily; their management have an easy job and are often praised anyhow. Even worse, they are often allowed to reinvest substantial cash amounts in their businesses which are mature and not growing anymore. B. Dogs Business Units fight an impossible battle and, even worse, investments are made now and then in hopeless attempts to 'turn the business around'. C. As a result (all) Question Marks and Stars Business Units get mediocre size investment funds. In this way they are unable to ever become cash cows. These inadequate invested sums of money are a waste of money. Either these SBUs should receive enough investment funds to enable them to achieve a real market dominance and become a cash cow (or star), or otherwise companies are advised to disinvest and try to get whatever possible cash out of the question marks that were not selected. Some limitations of the Boston Consulting Group Matrix include:
Book: Carl W. Stern, George Stalk - Perspectives on Strategy from The Boston Consulting Group
Compare with the BCG Matrix: GE / McKinsey Matrix | ADL Matrix | Core Competence | Bass Diffusion model | Relative Value of Growth | STRATPORT | Profit Pools | Product Life Cycle | Blue Ocean Strategy | Four Trajectories of Industry Change | Positioning
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