BCG (Boston Consulting Group)
Business Portfolio Matrix
A two-dimensional grid that compares
the strategic positions of each of the organisation’s businesses.
BCG- Matrix:
A business portfolio matrix that
uses market growth rate and relative market share as the indicators of the firm’s
strategic position. (Lewis, et al, 2007)
Figure: BCG matrix. [Adapted from: Lewis, et
al, 2007, p.168]
Limitations of BCG matrix:
-
The use of highs and
lows to form four categories is too simplistic.
-
The link between
market share and profitability is questionable. Low-share business can also be
profitable.
-
Growth rate is only
one aspect of industry attractiveness.
-
Product lines or
business units are considered only in relation to one competitor: the market
leader. Small competitor with fast-growing market shares are ignored.
-
Market share is only
one aspect of overall competitive position. (Wheelen, Hunger, and Rangarajan, 2006)
Bibliography:
Lewis, P., Goodman, S., Fandt, P.,
and Michlitsch, J. (2007), Management: Challenges for Tomorrow’s Leaders, 5th
ed, USA: Thomson South-Western
Wheelen, T. L., Hunger, J. D. and
Rangarajan, K. (2006), Concepts in Strategic Management and Business Policy, 9th
ed, India: Dorling Kindersley (India) Pvt. Ltd.
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