Building a BCG matrix in Microsoft Excel. BCG matrix: an example of construction and analysis. BCG matrix. Marketing tools

The BCG matrix, also called "growth - market share", is a simple and visual tool for portfolio analysis. Accessibility, originality of the names of the chart sectors made it very popular among marketers and managers. Consider the example of building a matrix in Excel.

Application examples of the BCG matrix

Using the Boston Consulting Group (BCG) matrix, you can quickly and visually analyze product groups, branches of an enterprise or company based on their share in the relevant market segment and market growth rate. The application of the tool is based on two hypotheses:

1. The market leader has a competitive advantage in production costs. Therefore, the leading company has the highest profitability in the segment.
2. To work effectively in a fast-growing market, an enterprise needs to invest a lot in the development of its product. Presence in a segment with a low growth rate allows the company to reduce this cost item.

Using the BCG matrix, you can quickly identify the most promising and the “weakest” products (branches, companies). And already on the basis of the data received, make a decision: which assortment group (division) to develop, and which one to liquidate.

All the analyzed elements, after the work done on the analysis, fall into one of four quadrants:

1. "Problems". Products present in high-growth industries but with low market share. Significant financial investments are needed to strengthen their position in the market. When an assortment group or division falls into this quadrant, the enterprise decides whether it has sufficient funds for the development of this direction. Without cash injections, the product does not develop.
2. "Stars". Lines of business and products are leaders in a rapidly growing market. The task of the enterprise is to support and strengthen these products. They should be allocated best resources, because it is a stable source of income.
3. "Money Bags" Products with a relatively high market share in a slow growing segment. They do not need high investments and are the main generator of funds. The proceeds from their sale should go to the development of "stars" or "wild cats".
4. "Dead weight". Feature– relatively low market share in a slowly growing segment. These directions do not make sense to develop.

BCG matrix: an example of construction and analysis in Excel

Consider the construction of the BCG matrix on the example of an enterprise. Training:

Construction of the BCG matrix

In Excel, a bubble chart is best suited for this purpose.

Through the "Insert" add a construction area to the sheet. Enter the data for each row as follows:

On the horizontal axis - the relative market share (we set up a logarithmic scale: "Layout" - "Format of the horizontal axis"). On the vertical - the rate of market growth. The chart area is divided into 4 identical quadrants:

The central value for the market growth rate is 90%. For relative market share - 1.00. Based on these data, we will distribute the product categories:

Findings:

1. "Problems" - Goods 1 and 4. Investments are needed for the development of these items. Development scheme: creation of a competitive advantage - distribution - support.
2. "Stars" - Goods 2 and 3. The company has such categories - and this is a plus. At this stage, only support is needed.
3. "Cash Cows" - Good 5. Brings in a good profit that can be used to finance other products.
4. "Dead weight" was not found.

Material from the site

Brief information about the tool

Method BCG Matrix (BCG Matrix) is one of the most famous business management tools. BCG was created by Bruce D. Hendersen, founder of the Boston Consulting Group, in the early 1970s. The purpose of this matrix is ​​to analyze the relevance of the company's products depending on the growth of the market for these products and their share. The BGK matrix has another name - "Growth - market share".

Corporate Portfolio Management

The BCG model is a fairly well-known business portfolio optimization tool that focuses on the following questions:
1) Portfolio balance.
2) Achieving a certain market position as a formulated goal for a particular business in a given strategic perspective.
3) The attractiveness of the products in the portfolio in terms of profitability or growth rate.
4) In what specific areas of activity should investments or revenues be directed in this strategic period?
5) The level of compliance with other types of business in terms of creating synergies.
Also known as the "market share - growth rate" matrix, as it represents a mapping of the position of a particular business in a strategic space. This matrix shows the relative share of a particular product of a company in a particular market for that product. As well as measuring the growth rate of the market for the corresponding product, that is, the growth in consumer demand for a particular product.

Construction of the BCG matrix

It represents the intersection of the axes, where the horizontal axis corresponds to relative market share. It is calculated as the ratio of own sales to sales of the strongest competitor or the three strongest competitors, depending on the degree of concentration in a particular market.

The vertical axis corresponds to the growth rate of the market.

Thus, four quadrants are obtained in the BCG matrix, each of which contains different companies.

The Boston Matrix is ​​based on the product life cycle model. It is based on two assumptions.

1. A business with significant market share gains a competitive cost advantage as a result of the experience effect. It follows that the largest competitor has the highest profitability when selling at market prices and for him financial flows maximum.
2. Presence in a growing market means increased demand for financial resources for its development, i.e. renewal and expansion of production, intensive advertising, etc. If the market growth rate is low, such as a mature market, then the product does not need significant financing.

Four stages of the BCG matrix

Access to the market

1. Access to the market (product - "problem"). This item is also called "Difficult Children", "Question Marks", "Wild Cats", "Dark Horses". A characteristic feature is a low share in a rapidly growing market. This is a weak position that requires big investments and does not give tangible profits. In this situation, you need to either make serious investments in the business, or sell it, or invest nothing and get a possible residual profit. But you need to remember that under certain conditions and competent investments, the goods of this group can become "Stars".

Growth

1. Growth (product-"Star") These are leaders in a rapidly growing market. They give high profits, but they need investments to maintain their leading positions. When the market stabilizes, they can move into the category "Cash Cows".

Maturity

1. Maturity (product - "Cash cow"). This product is also called "Money Bags". As a rule, these are yesterday's "Stars", which constitute the main asset of the company. The products have a high market share in the markets and do not rapidly development. The profit from Cash Cows is greater than the investment. It is expedient to allocate proceeds from the sales of "Cash Cows" to the development of "Difficult Children" and to support the "Stars".

recession

1. recession (product-"dog"). This item is also called "Lame Ducks", "Dead Weight". The product is characterized by a low growth rate and does not a large share market. Usually goods are unprofitable and need additional investments to maintain their positions. "Dogs" are supported by large firms if they are associated with their direct activity. If there is no such need, then it is better to get rid of them or minimize their presence in the company's assortment policy.

BCG matrix quadrant

The quadrant of the BCG matrix is ​​a typical set of strategic decisions for specific business segments:
Stars are divisions that have a relatively high market share in high-growth industries. Therefore, they must be strengthened and protected. That is, to maintain or increase the appropriate share of the business in a given market.
"Cash cows" - since these business units bring more profit than they require investment, therefore, one must take advantage of these opportunities, but not forget about control. You should also not forget about a certain share of investments and costs for this business segment, but the amount of investment should be set optimal.
The excess cash that cows give is also not worth spending thoughtlessly. This money should be used for a strategic perspective, that is, directed to the development of other areas of business.
“Difficult children” or “question marks” need a special approach. This segment of the business is worth studying, analyzing, and predicting its prospects. It is quite possible that with the help of targeted investments this segment of the business can be transferred to the "stars". In the most unoptimistic case, this market share can be reduced, but it must be retained, in no case liquidated.
“Dogs” are weak growth prospects and lagging market positions compared to its leaders, which limits the size of their profits. Therefore, they should be disposed of. In the strategic period, the relevant lines of business are either liquidated or reduced.

The company's portfolio, taking into account the parameters of the BCG matrix

To ensure a long-term value creation process, a company must have a range of products - both products with high growth potential that require investment of cash, and products with low growth potential that supply cash.

Disadvantages and advantages of BCG

Like every business tool, the Boston Matrix has its advantages and disadvantages that must be considered when planning a business.

So, its unconditional virtues we can consider the visibility and simplicity of construction, as well as the objectivity of the analyzed parameters (relative market share and market growth rate.

To shortcomings can be attributed to the fact that it simplifies the complex decision-making process. In practice, there are many situations where the recommendations made on its basis are unacceptable. For example, it is often important for consumers to see some products from the "Dogs" category in the assortment, and their removal can lead to an outflow of customers.

It is also unattractive to assume that market share corresponds to profit, since this rule may be violated when a new product is introduced to the market with large investment costs. It is not always true and the assumption that the market decline is caused by the end of the product life cycle.

Boston Consulting Group Matrix Limitations

The practice of using the BCG model has its pros, cons, and clear boundaries of its application.
Significant limitations of the BCG model include the following:
1) The strategic outlook for all of the organization's portfolios must be commensurate with growth rates. This requires that the relevant products in the considered strategic perspective remain in stable phases of their life cycle.
2) The high market share that has been achieved is not the only success factor, and not necessarily high level profitability.
3) To develop competition and determine the future market position of the organization, it is enough to know the value of the relative market share according to the methodology of the BCG model.
4) Sometimes "Dogs" can bring even more profit than "Cash Cows". This means that the quadrant of the matrix is ​​information with relative truthfulness.
5) When difficult conditions competition requires other tools of strategic analysis, i.e. another model for building an organization's strategy.

Links

This is a stub for an encyclopedic article on this topic. You can contribute to the development of the project by improving and supplementing the text of the publication in accordance with the rules of the project. You can find the user manual

BCG has a very strong employer brand. In 2017, Fortune magazine ranked us among the top three employers in the world for the fourth time in a row. BCG pays close attention to attracting, developing and retaining the most the best people On the market. This is achieved through programs aimed at maintaining a balance between work and personal life. Since the work is project-based, it is possible to take a vacation for necessary period. Another program allows you to set rules for working within projects and make the consultant's work schedule more predictable, or work on a flexible schedule, devoting the remaining time to family or personal development.

About career growth

Consulting careers are dynamic, and for consultants we have a clear career ladder: You can grow from junior consultant to partner in less than 10 years. The career development of consultants is based on the Up-or-Out principle. This means that the consultant must constantly develop, however, if he does not demonstrate the necessary skills to move to the next career level, he will have to leave the company. Every six months there is an evaluation of the work on different criteria: for example, working on projects and helping to develop key platforms within the company (recruiting, training or career development).

About who gets into the company

The company provides support to its candidates at all stages: from events at universities to receiving a job offer. Special attention is given to preparing for a case interview - a very important and most difficult stage of selection. After getting into BCG, each employee devotes the first two weeks to local and international trainings to develop hard skills (operational and technical activities) and soft skills (communication skills). We are looking for people who, on the one hand, have developed analytical thinking. On the other hand, they are creative enough to come up with innovative solutions that will help customers become better. And on the third hand, they know how and love to communicate with people.

What is important in consulting

People coming from the industry are expected to understand both the business as a whole and its specifics - even if they lack certain technical skills. An entrepreneurial approach is important, because in consulting you yourself decide what to do to solve the problem, and a large share of success depends on this ability. The ability to communicate with people at different levels of the hierarchy in the company is also important.

About the benefits of an MBA

The decision to get an MBA was my first step towards consulting. I have been involved in various industries: transportation, metallurgy, business development, worked in China for twelve years, started own business. However, I did not have an understanding of how the industry works in the corporate segment, especially in Russia. Despite my experience, there was nothing to do in consulting without technical knowledge, and the easiest way to get it was an MBA.

Why BCG

The first time I came to the Moscow office of BCG for a meeting organized for MBA students: they talked about the company's activities, introduced me to the employees, and even then I was inspired by the atmosphere. Later, as part of the MBA program, I ended up in the BCG office in Boston and made sure that I wanted to work in this particular company. Once in the team, I quickly adapted, because they helped at all levels: from junior consultants to directors. The people working here approach all processes in a structured way: both at the project level and in solving all current work issues. Positive communication is also important to me: despite the fact that employees spend many hours at work, they do not lose their sense of humor, remain cheerful and open.

About the difference between analytics and consulting

The main difference is that each analyst specializes in their own sector, and since all projects are different, there is always the opportunity to study your sector in depth. The work of a consultant involves moving from one sector to another. As a result, a positive synergistic effect is achieved, which allows optimal and various forms combine analytical knowledge of the sector with the experience of consultants from other projects and sectors.

About caring for others

I am a member of the charity committee - this is an association of volunteers who are driven by the desire to change the world for the better, to make a positive contribution to society. As part of the committee, I am leading a project on the adaptation of children from orphanage: we help children enter universities and build their future. It includes payment for psychologists and tutors, summer internships, trips for career guidance weeks

About what you like about work

In my work, there is not a single day with the same set of tasks. All clients and projects are unique, so you learn something new every day. BCG also provides many development opportunities: local and global trainings, close work with international teams and projects in different countries.

What skills should an analyst have?

First of all, this is expert knowledge and a thorough understanding of the sector in which a person comes to work. It is very important to understand all the mechanisms and risks in order to give the consultant the right guidance at the right time. We also expect a person to be open both to other people and to new experiences.

About social responsibility

BCG is actively involved in charitable projects in Russia and around the world. The company cooperates with the Tretyakov Gallery: it is engaged in fundraising and organizational transformation projects, including digital and customer service tools. BCG also launched the todogood platform, which brings together those who wish to share their professional skills for free and solve large-scale social problems. We were able to make it so that now specialists outside our company are involved in this project. For many years we have had an informal charitable committee, which is supported by the company by doubling the donations collected by the committee and providing a platform for work within the organization. The committee works in different directions: collection of clothes and food, marathons, support for orphanages and other charitable initiatives. In addition, twice a year office building“Donor Day” is organized, where employees of various organizations are invited.

About hobby

Three and a half years ago, we created a musical group within the company. At first they played at their corporate parties, then they grew up to tour in Berlin and Sochi. As it turned out, there are such groups in BCG offices around the world - several times we organized joint concerts. One of the brightest things we have done is White Collar Fest. This is an event where "corporate" music bands. They invite their colleagues and acquaintances, and the result is a big celebration for 1000-1500 spectators, where the musicians can feel like real stars.

About self-realization

Some completely dissolve in work, and this is enough for them, and some, in addition to work, need to realize themselves in something else. From here come hobbies: music, charity and much more. Despite the fact that I love and do a variety of things, BCG is at the center of everything, one way or another, because my work is opportunities, projects, trainings and even hobbies. The company provides ways for self-realization in various and unexpected areas.

The matrix method was proposed in the 50s by the American economist I. Ansoff. The most famous BCG matrix, (Boston Consulting Group Matrix, Strategic Matrix, Boston Matrix, Growth-Share Matrix), is built on two factors: the pace of market development (industry) and the market share occupied by the firm. Using this matrix, you can analyze the company's products, company lines of business, business units, projects, etc.

The method consists in assessing the share of each product in the market and assessing the degree of growth of the corresponding market (industry). Market share estimation is the result of analyzing the sales of all industry participants and determining the share of these sales attributable to the company. The share is expressed as a percentage of the market volume. The assessment of market growth is the result of a time series analysis showing in retrospect the sales of this type of product. Growth rates are expressed as a percentage of the previous period.

The BCG matrix is ​​used in the process of strategic analysis and planning of the product program (product range), allows you to correctly allocate resources between the available products. Re-construction of the BCG matrix after a certain period of time can be useful in the process of operational assortment management.

The Boston Matrix is ​​based on a product life cycle model, according to which a product goes through four stages in its development: entry into the market (product - "difficult child"), growth (product - "star"), maturity (product - "cash cow"). ") and recession (product-"dog"). The BCG matrix is ​​a graphical display of the positions of a particular type of business in the strategic space "growth rate / market share".

The horizontal axis on the graph corresponds to the market share occupied by the products. When moving from right to left, market share decreases. The vertical axis corresponds to the growth rate of the market. The extreme upper point corresponds to the maximum growth rate, the extreme lower point corresponds to the minimum. The lowest point can have negative meaning- this means that there is a product whose market is declining. When moving from top to bottom, the growth rate decreases. In the market share/market growth coordinate axes, each product is fixed as a circle, the center of which has coordinates corresponding to the received estimates of market share and market growth, and the radius is proportional to the share of the product in the company's sales volume.

Further, the entire range of market shares of products is divided into two parts - a high share (the right side of the range) and a low share (the left side of the range). The range of growth rates is also divided into two parts - high rates ( top part range) and low tempos (lower range). As a result, we will get a matrix like the one shown below.

The role of the product is determined by its place in the matrix. In total, there are four quadrants, and, accordingly, four types of products:

Zvezda is a product that has a significant share in a growing market. The circle representing this product is in the upper right quadrant of the matrix. A company that has such products, especially if they have significant shares in the company's sales (that is, the radii of the circles depicting these products are large), spends a lot of money on maintaining these products. In the fashion business, such products require special handling: you should correctly predict the time of the fall of the "star".

A cash cow is a product that has a significant market share in a low-growth or shrinking market. The product circle is located in the lower right quadrant of the matrix. The need for maintenance and marketing costs for such a product is low, and due to its high market share, such a product generates income. Such a product is usually a donor of funds for the development of new products. At garment factories, "cash cows" can be different kinds special clothes, products classic design etc.

Question Mark (Difficult Child, Wild Cat, Dark Horse) is a product with low market share in a rapidly growing market. The product circle is located in the upper left quadrant of the matrix. The market (that is, the need) for such a product is growing, but significant funds are required to increase its production and capture a significant market share. These funds can be obtained from "cash cows". However, a decision to withdraw such a product may also be made.

"Dog" ("Lame Duck") - a product with a low share in a stable or declining market. The product circle is located in the lower left quadrant of the matrix. As a rule, such products require disproportionately large amounts of resources. In clothing companies, these products may include image products that support the sale of other products (accessories) or innovative products that are still being tested by customers. Experts propose to allocate such products to a separate innovative group.

Depending on the combination of market share and growth, an individual marketing strategy. One possible strategy is to constantly create products that are in demand. The money generated by such popular products can be invested in "problems" in order to achieve their transformation into "stars". As the market matures, the "stars" become popular "cash cows" and the process repeats. Graphically, the matrix is ​​shown in Fig. 8.1

Rice. 8.1. BCG matrix

The advantages of the BCG matrix are its visibility. The matrix allows you to see the structure of the product portfolio on one sheet of paper and determine the sources financial resources(that is, which products are donors and which are acceptors of financial resources), as well as make decisions about the withdrawal and development of certain products.

The disadvantage of the matrix is ​​its conditionality. It is difficult to answer the question - where to draw a dividing line between "high" and "low" market shares, as well as another question - which growth rates are considered "high" and which "low". The positions of the boundaries of the matrix quadrants and, consequently, the assignment of products to certain classes depend on the answers to these questions. The method does not answer these questions, leaving them to the conscience of experts. Hence, the estimates obtained are largely subjective.

The justifications for decisions made on the basis of the method also look unclear. Let's say the product is defined as "Dog". What follows from this? It depends to a large extent on what the forecast for the contraction of the market is. If the market shrinks to zero, that is, a product of this type ceases to be in demand at all, then the decision should be in favor of withdrawing the product. If the market shrinks to natural consumption (say, there is a reduction in rush demand caused by fashion or prestige), and competitors remove similar products, then the option of reducing product output to a minimum is possible.

The classic BCG matrix is ​​difficult to use in the domestic market for the following reasons:

We do not have reliable information about the market shares of competitors;

Most domestic firms have a history of only a few years, which does not allow us to operate with the concept of an average annual growth rate;

Fashion goods are not similar, as a result of which data is needed not just for some type of product, but for its specific model.

As a result, the concept of market share loses the significance that the developers of the matrix originally attached to it. Therefore, an adapted version of the BCG matrix for domestic enterprises is proposed.

To this end, it is proposed:

Choose indicators that most fully characterize the activities of the company (revenue, profit, income, etc.);

As one parameter, you should use the annual (rather than the average annual) growth rate of the selected indicator (to calculate it, you should choose a sliding period of time equal to 12 months preceding the date of analysis, and use the least squares method to calculate the annual growth rate using 12 points);

It is advisable to set the interface for the first parameter at the level of the annual inflation rate for this type of product (or the average inflation rate); * as the second parameter, you should use the share (in%) of each product (object) in the total sales volume of the company;

The boundary for the second parameter should be determined using the Pareto law (20: 80). To do this, you need to sum the shares of products, ranked in descending order. The boundary is drawn at the value of the share of the product, at which the sum of the shares exceeds 80%.

It is also proposed to characterize the “share of the market” as the share that it occupies in general sales(profit) of the company this product (HCP):

K \u003d Yi / Yo * 100%; where

Yo - total sales in monetary terms for the base period;

Yi - sales volume of products of the i-th group of goods for the same period.

At the same time, when analyzing a separate model, one should take its sales in relation to the given assortment group as a whole, and not to the entire assortment as a whole.

As the second characteristic of the product group (the vertical axis of the matrix), the parameter " specific gravity product groups in the rate of change in the sales volume of the enterprise "during the base period of time along a linear trend.

The linear trend of the sales function is proposed to be calculated according to the equation:

Yo \u003d Ao * X + Bo; where

Yo - estimated sales volume;

X - billing period(month);

Ao - estimated change (increase or decline) in sales compared to the previous billing period.

The division of products (objects) into groups of the BCG matrix should not serve as a basis for categorical conclusions. For each group, a plan for additional analysis and development of activities should be developed and taken under control. Since the results of the analysis using the BCG matrix will inevitably affect the personal (career) interests of specific people, it is necessary to prevent attempts to discredit the results and the method itself on their part.

Such a consideration gives meaning to the dynamics of the movement of representative points from quadrant to quadrant and allows us to outline the optimal behavior of the company, based on an understanding of the logic of the natural processes occurring in it.

Thus, using the BCG matrix at a sewing enterprise, it is possible to determine:

Leading product type in comparison with competitors;

Market dynamics.

The matrix is ​​based on the assumption that the greater the share of products in the market, the lower the relative costs and the higher the total profit. An analysis of the received portfolio of orders shows how realistic the marketing plan is. Such a sequence of stages allows the manufacturer of new products to accelerate the promotion of goods from the first stage of the life cycle to the last and form optimal structure assortment.

It is perhaps difficult to give an example of a more famous, visual and simple portfolio analysis tool than BCG matrix. The chart, divided into four sectors, with original memorable names (“Stars”, “Dead Dogs”, “Difficult Children” and “Cash Cows”) is known today to any marketer, manager, teacher or student.

The matrix developed by the Boston Consulting Group (USA) quickly gained popularity due to the simplicity and clarity of the analysis of products, divisions or companies based on two objective factors: their market share and market growth rate. And today, the BCG matrix is ​​among the minimum amount of knowledge that any economist should learn.

BCG matrix: concept, essence, developers

Matrix BCG (BCG Matrix) is a tool for strategic portfolio analysis of the position in the market of goods, companies and divisions based on their market growth and market share.

A tool such as the BCG matrix is ​​currently wide application and in management, and in marketing, and in other areas of the economy (and not only). The BCG matrix was developed by experts Boston Consulting Group ("Boston Consulting Group"), engaged in management consulting, in the late 1960s, under the leadership of Bruce Henderson. It is to this company that the matrix owes its name. In addition, the matrix of the Boston Consulting Group became one of the first portfolio analysis tools.

BCG matrix. Here the horizontal axis (relative market share) is inverted: big values located on the left, smaller ones on the right. In my opinion, this is illogical and confusing. Therefore, the direct order of the axis values ​​will be used below: from smallest to largest, and not vice versa, as here.

Why do you need a BCG matrix for a company? Being simple but effective tool, it allows you to identify the most promising and, on the contrary, the “weakest” products or divisions of the enterprise. Having built a BCG matrix, a manager or marketer gets a clear picture, on the basis of which he can decide which products (divisions, assortment groups) should be developed and protected, and which should be eliminated.

Graphically, the BCG matrix represents two axes and four square sectors enclosed between them. Consider the phased construction of the BCG matrix:

1. Collection of initial data.

The first step is to make a list of those products, divisions or companies that will be analyzed using the BCG matrix.
Then for them you need to collect data on sales and / or profits for a certain period (say, for the past year). In addition, you will need similar sales data for a key competitor (or a set of major competitors).

For convenience, it is desirable to present the data in the form of a table. This will make them easier to handle.

The first step is to collect all the initial data and group them in the form of a table.

2. Calculation of the market growth rate for the year.

Then, for each analyzed product (division), the market growth rate is calculated.

3. Calculation of the relative market share.

Having calculated the market growth rate for the analyzed products (divisions), it is necessary to calculate the relative market share. There are several ways to do this. Classic variant- take the sales volume of the analyzed product of the company and divide it by the sales volume of a similar product of the main (key, strongest) competitor.

For example, the sales volume of our product is 5 million rubles, and the strongest competitor selling a similar product is 20 million rubles. Then the relative market share of our product will be - 0.25 (5 million rubles divided by 20 million rubles).

The next step is to calculate the relative market share (relative to the main competitor).

On the fourth last step the actual construction of the matrix of the Boston consulting group. From the origin we draw two axes: vertical (market growth rate) and horizontal (relative market share).

Each axis is divided in half, into two parts. One part corresponds to low values ​​of indicators (low market growth rate, low relative market share), the other corresponds to high values ​​(high market growth rate, high relative market share).

An important question to be solved here is what values ​​of the market growth rate and relative market share should be taken as central values ​​dividing the axes of the BCG matrix in half? Standard values the following: for market growth rate – 110% , for relative market share – 100% . But in your case, these values ​​\u200b\u200bmay be different, you need to look at the conditions of a particular situation.

And the final action is the construction of the BCG matrix itself, followed by its analysis.

Thus, each axis is divided in half. As a result, four square sectors are formed, each of which has its own name and meaning. We will talk about their analysis later, but for now it is necessary to put the analyzed goods (divisions) on the field of the BCG matrix. To do this, sequentially mark on the axes the market growth rate and the relative market share of each product, and draw a circle at the intersection of these values. Ideally, the diameter of each such circle should be proportional to the profit or revenue corresponding to this product. So you can make the BCG matrix even more informative.

Analysis of the BCG matrix

Having built the BCG matrix, you will see that your products (divisions, brands) ended up in different squares. Each of these squares has its own meaning and a special name. Let's consider them.

The field of the BCG matrix is ​​divided into 4 zones, each of which corresponds to its own type of product / division, development features, market strategy, etc.

STARS. They have the highest market growth rates and hold the largest market share. They are popular, attractive, promising, rapidly developing, but at the same time require significant investment in themselves. That's why they are "Stars". Sooner or later, the growth of the "Stars" begins to slow down and then they turn into "Cash Cows".

CAIRY COWS(aka "Money Bags"). They are characterized by a large market share, with a low rate of its growth. Cash cows do not require expensive investments, while bringing a stable and high income. The company uses this income to fund other products. Hence the name, these products literally "milk".

WILD CATS(also known as "Dark Horses", "Problem Children", "Problems" or "Question Marks"). They have it the other way around. The relative market share is small, but the sales growth rate is high. It takes a lot of effort and expense to increase their market share. Therefore, the company must conduct a thorough analysis of the BCG matrix and assess whether the "Dark Horses" are capable of becoming "Stars", whether it is worth investing in them. In general, the picture in their case is very unclear, and the stakes are high, which is why they are "Dark Horses".

DEAD DOGS(or "Lame Ducks", "Dead Weight"). They are all bad. Low relative market share, low market growth. Their income and profitability are low. They usually pay for themselves, but nothing more. There are no prospects. Dead Dogs should be disposed of, or at least their funding stopped if they can be dispensed with (there may be a situation where they are needed for the Stars, for example).

BCG matrix scenarios (strategies)

Based on the analysis of goods according to the matrix of the Boston Consulting Group, the following main strategies of the BCG matrix can be proposed:

INCREASE MARKET SHARE. Applied to "Dark Horses" in order to turn them into "Stars" - a popular and well-selling item.

KEEP MARKET SHARE. Suitable for "Cash Cows" as they bring good stable income and it is desirable to maintain this state of affairs as much as possible.

REDUCING MARKET SHARE. Perhaps in relation to "Dogs", unpromising "Difficult Children" and weak "Cash Cows".

LIQUIDATION. Sometimes the liquidation of this line of business is the only reasonable option for "Dogs" and "Difficult Children", which, most likely, are not destined to become "Stars".

Conclusions on the BCG matrix

Having built and analyzed the matrix of the Boston Consulting Group, a number of conclusions can be drawn from it: 1. Management and commercial decisions should be made in relation to the following groups of the BCG matrix:
a) Stars - maintaining leading positions;
b) Cash cows - getting the maximum possible profit, over the longest possible period of time;
c) Wild cats - for promising products investment and development;
d) Dead dogs - termination of their support and / or withdrawal from the market (removal from production).

BCG matrix. The orange arrow shows the life cycle of a product that passes through all stages, from being in the status of "Wild Cats" to becoming "Dead Dogs". Purple arrows depict typical investment flows.

2. Measures should be taken to form balanced portfolio according to the BCG matrix. Ideally, such a portfolio consists of 2 types of goods:

a) Goods that bring income to the company in present time. These are "Cash Cows" and "Stars". They are making a profit today, right now. The money received from them (primarily from Dairy Cows) can be invested in the development of the company.

b) Goods that the companies will provide income in the future. These are promising "Wild Cats". Currently, they can generate very little income, not at all, or even be unprofitable (due to investment in their development). But in the future, under favorable conditions, these "Wild Cats" will become "Cash Cows" or "Stars" and begin to bring in a good income.

This is what a balanced portfolio should look like according to the BCG matrix!

Advantages and disadvantages of the BCG matrix

The BCG matrix, as a portfolio analysis tool, has its pros and cons. Let's list some of them.

Benefits of the BCG Matrix:

• thoughtful theoretical basis (the vertical axis corresponds to the life cycle of the product, the horizontal axis corresponds to the economies of scale of production);
• objectivity of the estimated parameters ( market growth rate, relative market share);
• ease of construction;
• clarity and clarity;
• great attention is paid to cash flows;

Disadvantages of the BCG matrix:

• it is difficult to clearly define the market share;
• only two factors are evaluated, while other equally important ones are overlooked;
• not all situations can be described within the 4 studied groups;
• does not work when analyzing industries with a low level of competition;
• the dynamics of indicators, trends are almost not taken into account;
• the BCG matrix allows you to develop strategic decisions, but says nothing about tactical moments in the implementation of these strategies.

Download ready template for BCG matrix in Excel format

Galyautdinov R.R.

© Copying material is allowed only if you specify a direct hyperlink to