The BCG Matrix – Growth/Share Matrix – Strategic Analysis
Posted: Tue Dec 17, 2024 6:39 am
The Strategic Analysis Matrix designed in the 1970s by the Boston Consulting Group and better known as the BCG Matrix , fundamentally measures the participation of the various strategic business units that the company or its products have in a given market based on two variables: growth and participation .
It is perhaps the strategic analysis matrix most used since then by marketing consultants , professionals, students and entrepreneurs to graphically show their business or product portfolio in the market and, based on this, subsequently carry out the strategic planning necessary to advance their corporate objectives.
It is also, from my point of view, the strategic analysis matrix that presents the most shortcomings in current competitive environments, since to graphically represent the position of cash app data businesses or products and to carry out a subsequent assessment of that position, much more is needed than a 2x2 matrix and 4 possible scenarios.
In the 80s, there were already many detractors of the BCG matrix (an opinion that I share), mainly for the following reasons:
1. Growth and profitability are not always so closely linked. In reality, they tend to compete with each other or be in opposition.
2. Good planning cannot ignore investment opportunities that promise adequate profitability.
3. The best business portfolios are generally not those that the strategist balances taking into account internal cash flow.
Basically, the BCG approach consists of comparing the SBUs with each other using a matrix based on two dimensions: relative market share and high growth.
German Pineiro's BlogThe image provided provides an example of such a matrix. The horizontal dimension measures relative market share; the vertical dimension measures industry growth rate. Each circle represents a SBU. The center of each circle corresponds to the SBU's position in the two dimensions of the matrix. The size of each circle is proportional to the sales revenue earned by each business in the firm's portfolio. The larger the circle, the greater the size of a SBU relative to total corporate revenue.
The BCG matrix graphically shows the differences among divisions in terms of their relative market share and industry growth rate. The BCG matrix enables a multi-divisional organization to manage its business portfolio by analyzing the relative market share and industry growth rate of each division relative to all other divisions in the organization.
It is perhaps the strategic analysis matrix most used since then by marketing consultants , professionals, students and entrepreneurs to graphically show their business or product portfolio in the market and, based on this, subsequently carry out the strategic planning necessary to advance their corporate objectives.
It is also, from my point of view, the strategic analysis matrix that presents the most shortcomings in current competitive environments, since to graphically represent the position of cash app data businesses or products and to carry out a subsequent assessment of that position, much more is needed than a 2x2 matrix and 4 possible scenarios.
In the 80s, there were already many detractors of the BCG matrix (an opinion that I share), mainly for the following reasons:
1. Growth and profitability are not always so closely linked. In reality, they tend to compete with each other or be in opposition.
2. Good planning cannot ignore investment opportunities that promise adequate profitability.
3. The best business portfolios are generally not those that the strategist balances taking into account internal cash flow.
Basically, the BCG approach consists of comparing the SBUs with each other using a matrix based on two dimensions: relative market share and high growth.
German Pineiro's BlogThe image provided provides an example of such a matrix. The horizontal dimension measures relative market share; the vertical dimension measures industry growth rate. Each circle represents a SBU. The center of each circle corresponds to the SBU's position in the two dimensions of the matrix. The size of each circle is proportional to the sales revenue earned by each business in the firm's portfolio. The larger the circle, the greater the size of a SBU relative to total corporate revenue.
The BCG matrix graphically shows the differences among divisions in terms of their relative market share and industry growth rate. The BCG matrix enables a multi-divisional organization to manage its business portfolio by analyzing the relative market share and industry growth rate of each division relative to all other divisions in the organization.