The BCG Growth-Share Matrix is an analytical tool used to help develop an understanding of a company's product portfolio. It is designed to analyze how each of a company’s products contribute to overall growth and identify patterns in investments, potential opportunities, and weaknesses. This article will explain the four categories of the BCG Matrix and how to use the matrix for product portfolio analysis.

What is the BCG Growth-Share Matrix?

The acronym BCG stands for Boston Consulting Group. The Matrix was created by the BCG in the 1970s to help businesses analyze their product lines and manage their investment portfolios. The matrix categories are based on two variables: market growth rate and market share relative to the largest competitor. The four categories of the matrix are Stars, Cash Cows, Question Marks, and Dogs.

How to use the BCG Matrix to understand the product portfolio?

  • Stars – Products that generate the most income that have high growth rate and market share.
  • Cash Cows – Products with low growth rate but high market share.
  • Question Marks – Products with high growth rate but low market share.
  • Dogs – Products with low growth rate and low market share.

Using the BCG Matrix, companies can identify which products would be most beneficial for their portfolio and where to focus future investments. Through careful analysis, companies can identify profitable product lines that should be maintained and which products may need to be cut.

Advantages of the BCG Matrix

The BCG Matrix is a portfolio management tool used by companies to help determine the optimal allocation of resources to maximize growth potential and profitability. Understanding how to leverage resources is a key component of efficient portfolio management, and the BCG Matrix helps organizations do just that.

A. Identify Cash Cows, Stars, Dogs, and Question Marks

The BCG Matrix is a visual representation of a company’s product portfolio. It plots four categories that can be used to classify the various products in the portfolio: Cash Cows, Stars, Dogs, and Question Marks. Cash Cows are products that generate revenue but do not have high potential for growth. They are the most reliable source of revenue for the company. Stars, on the other hand, are products that have high potential for growth but require high amounts of resources from the company to reach this potential. Dogs are products that have low revenue and low growth potential, while Question Marks are products that have uncertain prospects but could potentially generate high growth.

B. Understand how to maximize resources

The BCG Matrix provides a method for examining how to efficiently allocate resources in a portfolio. First, Cash Cows should be leveraged for revenue generation, as they will bring in the most revenue with the least amount of effort. For Stars, resources should be allocated to ensure that their growth potential can be realized, as they will eventually become Cash Cows. The resources allocated to Dogs should be minimized, as they are not likely to ever achieve growth potential, while Question Marks should be evaluated carefully to determine if they are worth investing in. By understanding how to best utilize resources in the portfolio, companies can maximize growth potential and profitability.

The BCG Matrix is an effective tool for product portfolio analysis due to its ability to quickly identify and classify products in the portfolio. By understanding how to allocate resources according to the categories of the BCG Matrix, organizations can maximize their growth potential and profitability.

Step-by-Step Guide to Using the BCG Matrix

The BCG Matrix, also known as the Boston Consulting Group Matrix, is a tool used for analyzing products in a business portfolio. This approach can help an organization identify which products are underperforming and which may require additional resources. It can also help organizations determine which products are the most profitable and which should be discarded. Here is a step-by-step guide to using the BCG Matrix for product portfolio analysis.

Determine the Relative Market Share of Organization’s Products

The first step in product portfolio analysis is to determine the relative market share of each product. This can be done by looking at the total market share of the product and comparing it to the total market share of competing products. The relative market share of each product is the share of the total market that the product holds. Calculate the relative market share of the organization’s products to establish a baseline.

Compare the Product's Market Share with Market Growth Rates

The next step is to compare the product’s market share with the market growth rate. To do this, calculate the market share index for each product. This index is the ratio of the products market share to the market growth rate. Products with a market share index of 1.0 or above are considered to be stars, while products with a share index between 0.5 and 0.99 are considered to be question marks. Products with a share index of 0.5 or below are considered dogs.

The analysis should also take into account any changes in the growth rate of the market. If the market growth rate drops, the relative market share of the product may also drop, and this should be taken into account when analyzing the product.

Case Study: Microsoft

Assess the contribution of different products to company success

Microsoft is a worldwide leader in numerous technology and software fields. The company is constantly striving to provide cutting-edge products and services to customers, and is one of the most prominent names in computing technology. In order to ensure success, Microsoft continually assesses the contribution of each of its products to the company’s overall success, especially in the context of its portfolio of products. One method of assessing the contribution of products to company success is through the use of the BCG Matrix.

Define the life cycle of products

The BCG Matrix is a tool used to classify products according to their stage in the product life cycle. Developed by the Boston Consulting Group, this tool defines four stages of product development: growing products, cash cows, dogs and problem children. Each stage in the product life cycle will help Microsoft identify the products which are contributing the most, or least, to company success, providing a useful way to assess its portfolio.

Growth products are characterized by high market share and high growth of the market. Cash cows are characterized by high market share and low or zero growth of the market. Dogs are characterized by low or zero market share and low or zero growth of the market. Finally, problem children are characterized by low market share but high growth of the market.

Using the BCG Matrix, Microsoft can accurately and strategically assess the contribution each of its products makes to company success. The company can then use this information to adjust the product portfolio to maximize their return on investment. By doing so, Microsoft can ensure that it remains a leader in the technology sector, while also ensuring its continued profitability and success.

Business Goal: Amazon

Amazon is the world’s most successful online retailer, and its business goal is to deliver the right mix of products and services to its customers in order to generate the maximum return on investment. In order to do this, Amazon needs to effectively manage its product portfolio and use methods such as the BCG Matrix to analyze which products and services will yield the highest returns.

Portfolio Analysis

The BCG Matrix (or the Boston Consulting Group matrix) is a tool used to analyze a company's product portfolio and determine which products should be given priority based on their growth rate and market share. With the BCG Matrix, products are categorized into four types: Stars, Cash Cows, Dogs, and Question Marks. Stars are products that have a high market share and a high growth rate, Cash Cows are products that have a high market share but have a low growth rate, Dogs are products that have a low market share, and Question Marks are products that have a low market share but have a high growth rate.

The goal of portfolio analysis is to analyze the products in order to identify the products that will help the company most in achieving its business goals. In Amazon's case, this means identifying the products that will bring in the most revenue and make the most profit in the shortest amount of time. This can be done by selecting the products that fall into the Star and Cash Cow categories of the BCG Matrix.

Prioritization and Valuation

Once the products that are most likely to yield the highest returns have been identified, Amazon must prioritize them by assigning a value to each one. This value should take into account the amount of resources that will be required to achieve each product's potential and the expected return on investment. This will help Amazon prioritize its resources and focus on the products that will provide the biggest returns. This process can also help Amazon assess which products should be discontinued or sold to another company if they are not expected to yield significant returns.

Once the products have been prioritized and valued, Amazon must then allocate resources to the top priorities and make sure that they are adequately supported. This will help ensure that the products have the best chance to succeed and that Amazon achieves its business goals.

Challenges with the BCG Matrix

The BCG Matrix provides a powerful tool for analyzing a company’s product portfolio, but it is not without its challenges. As with all strategies, there are potential risks and challenges, related to the accurate interpretation of data and estimated performance of individual products.

Assuring Accurate Data and Estimations

When utilizing the BCG Matrix, one of the primary challenges is ensuring that the data and estimations used to gauge the performance of products are accurate. If the assumptions used to classify a product into a certain category are inaccurate, the analysis may yield a misleading result. To avoid this, companies should take the time to evaluate individual products carefully and ensure that the data used for analysis is up-to-date.

Costs of Resources to Maintain a Portfolio

The BCG Matrix is an effective tool for managing portfolios, but it may also be costly. Companies that use the BCG Matrix may find themselves allocating significant resources towards maintaining the portfolio, including funds, personnel, and technology. This can be especially challenging for smaller companies that may not have the necessary resources to invest. It’s important for companies to carefully weigh the costs and benefits of implementing the BCG Matrix before making any decisions.

When used correctly, the BCG Matrix can be an invaluable tool for managing product portfolios. However, to get the most out of the strategy, companies must be aware of the potential challenges and risks that accompany its implementation. With sufficient planning and consideration, the BCG Matrix can help companies optimize their portfolios and gain competitive advantage in their respective markets.


Case studies are an effective way to better understand a topic. The analysis of a product portfolio by applying the BCG Matrix is essential to assessing the trends and patterns of the marketplace. With this tool, you can determine which products are succeeding and failing, as well as establish strategies on how these products should be managed.

Benefits of the BCG Matrix

  • Provides a simple framework for analyzing a product portfolio
  • Offers insight into trends and patterns of the marketplace
  • Gives you a holistic view of the product portfolio
  • Evaluates the potential future impact of the product portfolio

Overview of the Steps to Apply the BCG Matrix to Product Portfolio Analysis

  • Gather information on the products in the portfolio
  • Plot the products on the BCG Matrix, taking into account their relative market share and market growth
  • Assign a course of action to each product in the portfolio
  • Monitor the products and their performance within the portfolio

The BCG Matrix is an effective tool for analyzing product portfolios. With this approach, you can gain a better understanding of your products’ performance in the marketplace, enabling you to make informed decisions on their strategy, positioning, and resources allocation.

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