Boston Consulting Group (BCG) Matrix

1 Boston Consulting Group (BCG) Matrix The BCG matrix is used for categorizing strategic business units according to the performance in the market. The BCG is crucial in making business decisions regarding investment, divestment, liquidation, and harvesting. The matrix has axes for business growth rate and relative market share. The business growth rate shows how a strategic business unit is growing. On the other hand, the relative market share is computed by dividing the SBU’s sales by the competitors’ sales. The market share of A is computed as 100/600=0.17. The market share of B is 10/300=0.03, C has a market share of 50/25=2, and D has a market share of 200/15=13.3. The BCG matrix for the strategic business units is shown below.

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D has a market growth rate of 17% and a market share of 13.3, the highest among the business units. As such, the company should invest in D because it has achieved a large market share, and its market is growing fast. As such, the unit needs much support for promotion and continued high income for the company (Mohajan, 2018). On the other hand, C has a low business growth rate and a high relative market share. The unit generates cash that is higher than they need in its operations. Thus, C needs a little cash to run its operations and generate high income for other units (Mohajan, 2018). B has a low relative market share and a high business growth rate. Thus, SBU C does not generate enough cash commensurate with the market in which they operate, and they need to be liquidated because they are expensive to run (Mohajan, 2018). Incidentally, A has a low relative market share and business growth rate. A cannot generate income, nor does it require much money. The unit should be avoided, and the money invested in the unit can be invested in other profitable units (Mohajan, 2018).

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References Mohajan, H. (2018). An Analysis of BCG Growth Sharing Matrix. Noble International Journal of Business and Management Research, 2(1), 01–06, https://www.researchgate.net/publication/322695566_An_Analysis_on_BCG_Growth_S haring_Matrix.

The BCG matrix, also known as the Boston Consulting Group matrix, is a strategic tool used to analyze a company's portfolio of products or services and make decisions about resource allocation and growth strategies. The matrix is based on two dimensions: market growth rate and relative market share.

4 Market growth rate is a measure of how quickly the overall market for a product or service is growing. Relative market share is a measure of a company's market share relative to its competitors in the same market.