Boston Consulting Group Matrix and Business Units Portfolio

The consideration of the balance and business portfolio by Boston consulting group (BCG)/growth/share matrix in terms of market share and market growth that form the two fundamental dimensions of Boston consulting group (BCG)/growth/share matrix. This is because “the BCG matrix method is based on product life cycle theory that can be used to determine the priorities that should be given in the product portfolio of a business unit.” In addition to the above, this is based on the understanding that it is best for a company to have two products with aspects of high-end growth in demand for cash inputs and low growth products that has the capacity to generate cash. According to Barnwell, “the basic idea behind this is that the bigger the market share a product has or, the faster the product’s market grows, the better it is for the company.”

The consideration of this method is, therefore, to create a balance between the two dimensions of business and ensure a perfect balance of the business portfolio. An analysis of the Boston consulting group (BCG) share matrix indicates the placement of products in four categories in a portfolio of a company. The first category encompasses the stars that are high growth and high market share category and involves users of large amounts of cash which must, in turn, generate a lot of cash for the balance of the portfolio. “The second category is the cash cows that are characterized by low growth and high market share.” These form the foundations of a company and have the capacity to generate cash.

However, the problem posed by low growth within this category calls for a slow pace in investments to keep the profit margin high. The third category of dogs is characterized by low growth and low market share that forms a group that should be avoided and minimized in the company because they can sink in a lot of cash needed by the stars or cash cows and can lead to an expensive turn around plans. If they cannot deliver cash, the dogs are best liquidated.

The last category is the question marks, as demonstrated by Barnwell by illustrating that “it comprises of a group with the worst cash characteristics because of the high demand and low returns precipitated by low market share.” “If nothing is done to change to the market share, question marks will simply absorb great amounts of cash and later, as growth stops, end up as dogs.” It can be discerned from the above discussion that Boston consulting group (BCG)/growth/share matrix considers the balance and development of a portfolio of business units to achieve a successful business model capable of generating cash.

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