The prevalence of the BCG matrix should be the same as that of SWOT analysis, which is also a common method of analysis for marketing and business administration students. As the name suggests, the Boston Consulting Group has established the BCG matrix, also known as the market growth market share matrix.
BCG matrix can be used to determine the performance and prospects of each Strategic Business Unit , control cash flow, and maximize profits by optimizing the business. Strictly speaking, enterprises rely on their own competitive advantage and market attractiveness to invest in operating assets and business.
Competitive advantage is related to market share, and market attractiveness is related to market growth. Therefore, this analysis matrix is formed.
What is BCG Matrix?
According to BCG matrix, product life cycle can be divided into four quadrants (or 2 x 2 matrix), namely "problem child", "Star", "cash cow" and "dog" as follows:
Problem child business (the first stage of the product life cycle) - The products of the problem child business are still in a relatively high growth stage, but the market share is low.
Star business (the second stage of the product life cycle) - The products of star business have high growth rate and high market share.
Cash cow business (the third stage of the product life cycle) - The products of the cash cow business often have a low growth rate and a high share.
Old dog business (the fourth stage of the product life cycle) - The products of the old dog business have entered the end of their life cycle, not only have a low growth rate, but also a low share, so they have not made much contribution to the company.
