Boston consulting group (BCG) matrix is

developed by Bruce Henderson of the Boston

consulting group in the early 1970s
It provides a graphic representation for an

organization to examine different businesses

in its portfolio on the basis of their related
market share and industry growth rates.
According to this matrix, business could be

classified as high or low according to their

industry growth rate and relative market
share.

Relative Market Share & Market

Growth Rate
To understand the Boston Matrix you need to understand how
market share and market growth interrelate.

MARKET SHARE
Market share is the percentage of the total
market that is being serviced by your company,
measured either in revenue terms or unit volume
terms.
RELATIVE MARKET SHARE RMS=
Business unit sales this year
Leading rival sales this year

The higher your market share, the higher

proportion of the market you control.

MARKET GROWTH RATE

Market growth is used as a measure of

a markets attractiveness.

MGR = Individual sales - Individual sales

this year
last year
Individual sales last year

Markets experiencing high growth

are ones where the total market share
available is expanding, and theres
plenty of opportunity for everyone to
make money.

THE BCG GROWTH-SHARE

MATRIX
It is a portfolio planning model which is based on

the observation that a companys business units

can be classified in to four categories:
Stars
Question marks
Cash cows
Dogs
It is based on the combination of market growth
and market share relative to the next best
competitor.

BCG Matrix
Star

20%

18%

3
5

6%
4%
2%

Cash
Cow

Dog

(Cash
Traps)

Low

8%

12%
10%

Market Growth Rate

(Annual/ Currency)

16%
High 14%

Question
Mark

| |
10

|
4

8
| |
2 1. 5 1

| | | | | | |
0.5 0.4 0.3 0.2 0.1

High
Low
Relative Market Share

STARS

High growth, High market share Stars

Leaders in business.
They also require heavy investment,

to maintain its large market share.

It leads to large amount of cash

consumption and cash generation.

Attempts should be made to hold

the market share otherwise the star

will become a CASH COW.

CASH COWS

Low growth , High

market share

They are foundation of the

company and often the stars of

yesterday.

They generate more cash than

required.

They extract the profits by

investing as little cash as

possible.

They are located in an industry

that is mature, not growing or

declining.

DOGS

Low growth, Low market share

Dogs are the cash traps.

Dogs do not have potential to

bring in much cash.

Number of dogs in the company

should be minimized.
Business is situated at a declining

stage.

QUESTION MARKS

High growth , Low

market

Most businesses start of as question

marks.

They will absorb great amounts of cash

if the market share remains unchanged,

(low).

Why question marks?

Question marks have potential to

become star and eventually cash cow

but can also become a dog. Investments
should be high for question marks.

WHY BCG MATRIX ?

To assess :
Profiles of
products/businesses.

The cash demands of

products.
The development

cycles of products.

Resource allocation and

divestment decisions

MAIN STEPS OF BCG

MATRIX
Identifying and dividing a company into SBU.

Assessing and comparing the prospects of each

SBU according to two criteria :

1. SBUS relative market share.
2. Growth rate OF SBUS industry.
Classifying the SBUS on the basis of BCG

matrix.
Developing strategic objectives for each SBU.

BENEFITS BCG MATRIX

It is simple and easy to understand.
It helps you to quickly and simply

screen the opportunities open to

you, and helps you think about
how you can make the most of
them.
It is used to identify how

corporate cash resources can best

be used to maximize a companys
future growth and profitability.

LIMITATIONS BCG MATRIX

It uses only two dimensions.
Relative market share and

market growth rate. Problems

of getting data on market share
and market growth.

High market share does not

mean profits all the time.

Business with low market

share can be profitable too.

BCG-Mahindra & Mahindra

Mahindra & Mahindra Limited (M&M) is

an Indian multinational automobile

manufacturing corporation headquartered
in Mumbai.
It is a US $6.3 billion conglomerate with

employee strength of over 50,000.

The Brand Trust Report ranked M&M as

India's 68th Most Trusted Brand in 2011

(from 16000 brands analyzed) and 66th Most
Trusted Brand in 2012.

SBU OF M&M
Tractors
Two Wheelers
Utility Vehicles

PLACE OF TRACTOR
Market share of M&M = 29% (Market

Leader)
2 nd largest player is Tafe group (messy

tractor) Market share of Tafe group =

23%.
RMS of M&M Tractor = 1.26x

20
%
18%

14%
12
%
10
%
8%
6%
4%

Relative Market share

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

2x

0%

4x

2%
10
x

Business growth Rate

16%

PLACE OF TWO WHEELERS

Market Share of M&M two Wheelers

= 1%
Market Share of Hero Honda = 52%
RMS of M&M two wheelers = 0.02x

0%
Relative Market share

14%

12
%
10
%
8%

6%

4%

TRADITIONAL BCG MATRIX

HIGH 16%

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

2x

4x

LOW

10
x

Business growth Rate

20
%
18%

2%

PLACE OF UTILITY VEHICLES

Market Share of M&M Utility Vehicle

= 42% (Market Leader)

Market Share of Tata Motors in UV =

21%
RMS of M&M Utility Vehicle = 2x

0%
Relative Market share

14%

12
%
10
%
8%

6%

4%

TRADITIONAL BCG MATRIX

16%

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

2x

4x

10
x

Business growth Rate

20
%
18%

2%

CONCLUSION
SBU

M&M mkt
Share (a)

Largest
Competitor
Mkt. share
(b)

X = a/b

1.26

TRACTORS

29%

23% (TAFE)

TWO WHEELERS

1%

52% (HERO

UTILITY
VEHICLES

42%

HONDA)

21% (TATA

MOTORS)

0.02

2.00

0%
Relative Market share

12
%
10
%
8%

6%

4%

TRADITIONAL BCG MATRIX

HIG 16%
H
14%

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

2x

4x

LO
W
10
x

Business growth Rate

20
%
18%

2%

APPROPRIATE STRATEGIES
TRACTORS (STAR)
HOLD STRATEGY (Invest to
protect)
Build capacity expansion
Increase investment
Increase advertisement and

promotion
Increase market reach

CONT
TWO WHEELERS (QUESTION MARK ?)
Exceptional case (Money hogger)

Product is in early stage

Try to build it and turn in to STAR

Invest intensively

CONT

UTILITY VEHICLES (CASH COW)

HOLD STRATEGY (INVEST TO PROTECT)

Increase advertisement and promotion

Increase market reach
Increase Investment

BCG OF TELECOM PLAYERS

BHARTI AIRTEL
Bharti Airtel is the market leader in the telecom sector

with a market share of 31%. The market challenger in this

industry is Vodafone. So we plot the BCG matrix of Airtel
with respect to Vodafone. Taking the market share of
Vodafone (i.e. 23%) , the relative market share of Airtel
comes as 1.35X. The BCG matrix of Airtel wrt to
Vodafone will look as under:

20
%
18%

12
%
10
%
8%
6%
4%

Relative Market share

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

0%

2x

2%
4x

LOW

14%

10
x

Business growth Rate

HIGH 16%

Analysis of BCG matrix:

In the above matrix, Bharti Airtel
falls in the quadrant of STAR
with respect to the market
challenger. The circle size
represents the absolute market
share (i.e. 31%) of Airtel in the
telecom sector.

VODAFONE
Vodafone is the market challenger in the

telecom sector with a market share of 23%.

The market leader in this industry is
Vodafone and so we plot the BCG matrix of
Vodafone with respect to Airtel. Taking the
market share of Airtel (i.e. 31%) , the relative
market share of Vodafone comes as 0.74X.
The BCG matrix of Vodafone wrt Airtel will
look as under:

20
%
18%

12
%
10
%
8%
6%
4%

Relative Market share

3x
0.
2x
0.
1x

0.
5x
0.
4x
0.

1x

0%

2x

2%
4x

LOW

14%

10
x

Business growth Rate

HIGH 16%

Analysis of BCG matrix:

In the above matrix, Vodafone falls in

the quadrant of QUESTION MARK

with respect to the market LEADER.
The circle size represents the
absolute market share (i.e. 23%) of
Vodafone in the telecom sector.

GE(General Electric) MATRIX

Developed by McKinsey & Company in

1970s.
GE is a model to perform business portfolio
analysis on the SBUs.
GE is rated in terms of Market Attractiveness
& Business Strength
It is an Enlarged & Sophisticated version of
BCG.

MARKET ATTRACTIVENESS
Annual market growth

rate
Overall market size
Historical profit margin
Current size of market
Market structure
Market rivalry
Demand variability
Global opportunities

BUSINESS STRENGTH
Current market share
Brand image
Production capacity
Corporate image
Profit margins relative
to competitors
R & D performance
Promotional
effectiveness

GE Nine Cell Matrix

Grow Business units that fall under grow attract high

investment. Firms may go for product differentiation or Cost

leadership. Huge cash is generated in this phase. Market leaders
exist in this phase.
Hold Business units that fall under hold phase attract moderate

investment. Market segmentation, Market penetration, imitation

strategies are adopted in this phase. Followers exist in this phase.
Harvest - Business units that fall under this phase are

unattractive. Low priority is given in these business units.

Strategies like divestment, Diversification, mergers are adopted
in this phase.

ADVANTAGES
Decision of invest on different SBUs.
Knowledge for innovation
Decide which product to be discontinued .
Better than Boston Consulting Group Matrix.
WHY BETTER ?
Broad Field of Study that point the reason for

such Status of SBU .

Specialized than BCG 3 X 3 is more detailed
than 2 X 2.

EXAMPLE OF GE NINE CELL

MATRIX

About Maruti Udyog

Founded in 1981.
Products are Maruti 800, Omni, Alto,SX4,Swift Desire, Swift, A-star,

Gypsy, Wagon R ,Ritz others.

VISION The Leader in the Indian Automobile Industry, Creating

Customer Delight and Shareholders Wealth a Pride of India

Core Values : Our Core Values drive us in every endeavor Customer Obsession,
Fast, Flexible & first mover,
Innovation & creativity
Networking & Partnership
Openness & Learning