Boston Consulting Group (BCG) Matrix

Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2

* 2 matrix) developed by BCG, USA. It is the most renowned corporate
portfolio analysis tool. 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. It is a two
dimensional analysis on management of SBU’s (Strategic Business Units).
In other words, it is a comparative analysis of business potential and the
evaluation of environment.
BCG matrix has four cells, with the horizontal axis representing relative
market share and the vertical axis denoting market growth rate. The mid-
point of relative market share is set at 1.0. if all the SBU’s are in same industry,
the average growth rate of the industry is used.
Figure: BCG Matrix

 Stars- Stars represent business units having

large market share in a fast growing industry.
They may generate cash but because of fast
growing market, stars require huge
investments to maintain their lead. Net cash
flow is usually modest. SBU’s located in this
cell are attractive as they are located in a
robust industry and these business units are
highly competitive in the industry. If
successful, a star will become a cash cow
when the industry matures.
Figure: BCG Matrix
 Cash Cow
Mirabella Cosmetic (Martha Tilaar) consists of hair care,
lipstick, makeup base. These are products with a high share of
a slow growth market. Mirabella cosmetic, Mirabella at
product business product portfolio is categorized as a cash
cow BCG matrix. There are several factors that make
Mirabella cosmetics categorized as a cash cow product:
◦ In terms of marketing; packaging products presented are still
adjusting mid-market conditions. Although no large-scale
promotion, product Mirabella still quite well known. Mirabella
ensure the products are offered as products up-to-date with low
price
◦ In terms of quality of goods, Mirabella still provide good enough
quality so that satisfied buyers. Therefore, despite its low growth
business, there is no innovation, diversification, but Mirabella still
be an option
Figure: BCG Matrix
 Question marks (also known as problem children) are
growing rapidly and thus consume large amounts of cash, but
because they have low market shares they do not generate
much cash. The result is large net cash consumption. A
question mark has the potential to gain market share and
become a star, and eventually a cash cow when the market
growth slows. If the question mark does not succeed in
becoming the market leader, then after perhaps years of cash
consumption it will degenerate into a dog when the market
growth declines. Question marks must be analyzed carefully
in order to determine whether they are worth the
investment required to grow market share.
 There is no product of Martha Tilaar categories as question
mark.
Figure: BCG Matrix