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ANKIT GOEL 6B
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Introduction
It is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the
early 1970s
It classifies a companys SBU into 4 categories based on combination of market growth rate and
relative market share
Market growth serves as a proxy for industry attractiveness and relative market share serve as a
proxy for competitive advantage
The matrix helped companies decide which markets and business units to invest in on the basis
of two factorscompany competitiveness and market attractiveness
The logic was that market leadership, expressed through high relative share, resulted in sustainably
superior returns
In the long run, the market leader obtained a self-reinforcing cost advantage through scale
andexperiencethat competitors found difficult to replicate
High
Question Mark
Dog
Cash Cow
Low
MARKET GROWTH
Star
High
Low
It also provided companies with a simple but powerful tool for maximizing the
competitiveness, value, and sustainability of their business by allowing them to
strike the right balance between the exploitation of mature businesses and the
exploration of new businesses to secure future growth