Having a high growth rate and not maintaining a large market share means that stars consume large amounts of company resources. Investing in these business units is a waste as they are part of a mature market with low growth.

Use cash cows to fund stars and question marksĬash cows can be milked continuously with minimum investment and should be used to fund stars and question marks, which are likely to become cash cows in the future.

This allows you to balance your cash flow, as high growth products (stars) need input to grow, input obtained from low growth products that generate excess cash (cash cows).

Use the matrix to navigate product lifecycleĪpplying this framework is an ongoing process that understands that products have a lifecycle and their position in your portfolio will shift over time.Ī company should ideally have a portfolio of products with different growth rates and market shares.

Other related models include Cost-Benefit Analysis to help establish where products fall on the grid Diversitifcation to take a strategic view of products, and the Opportunity Cost to weigh up alternative investments. A more complex, perhaps more robust alternative, is the GE McKinsey Nine Box Matrix. The BCG Growth-Share Matrix reveals that product value is influenced by the company's ability to obtain a leading share before growth slows down and that all products eventually become either cash cows or pets.Īlternative names for this model include the Boston Matrix the Boston Consulting Group analysis and the Boston box and it remains an important tool to support companies to strategically manage cash flow. Pets have both low share and growth and should be liquidated or repositioned.Question marks: high growth and low share, choose to invest or discard.Stars: high growth and high share, with high potential and worthy of investment.Cash cows: low growth and high share, they should be ‘milked’ for cash to reinvest.This framework assigns each business unit in a corporation to one of the four quadrants in a chart: The BCG Growth-Share Matrix is a simple framework to assess and prioritise a company's product lines based on their level of growth versus market share. This model is used for strategic planning and weigh up growth opportunities by prioritising product initiatives.

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