The BCG matrix is the method or tool for companies to evaluate their product portfolio and business units to develop the best business strategy possible. The BCG Matrix was developed by the Boston Advisory Group to help companies and the company manage their product and business portfolios.
The BCG matrix is a four-cell grid, with each cell associated with a name. Here are the names of four cells in BCG Matrix.
• Milk cows
• Polling points
The purpose of marking BCG matrix cells is to classify products or business units according to their relative market share and the growth rate of the sector.
Products or activities with a high relative market share and a low growth rate in the industry fall into the cows' cell. These business entities generate more inflows with less investment. The cow market share is high, but the growth of the industry is slow compared to that of the stars.
Stars are commercial entities with high market share and sector growth. Cash inflows are high, but on the other hand, large investments are needed to cover marketing, distribution, research and development and other business expenses.
As noted, the question marks are commercial entities with a high growth rate and a low market share. It may fall in either Stars and Dogs, the company must make the decision to invest more on the question marks or eliminate by selling to other companies.
Dogs are commercial entities with a low market share and growth rate. No business wants to dog in his business or product portfolio as they only eat meat in the form of money and have minimal cash income. The best thing the company can do to liquidate dogs to minimize risk.