BCG Product Portfolio Matrix
Summarized by Sam Mishra, MBA (MIT Sloan)
For an established business with multiple product lines / portfolios, it can be an useful exercise to evaluate the portfolios in the context of relative market shares and growth rates. For example, in the following 2 x 2, market growth rates of 15 % and above have been put in a different category compared to market growth rates of 15 % and below. This will typically be the case for a business in a high-growth environment, i.e., Internet media. For a business in a more mature industry,
the metrics will be different. For example, if the auto industry is considered instead, a market growth rate of up to 10 % can be considered, instead of the 30 % as depicted above.
Similarly, relative market share will vary from industry to industry. For a very fragmented industry, a relative market share of 10% will be plenty to depict, because no business will have more than 10%. As opposed to this, for a consolidating industry, a business can have up to 20% market share, and the scale shown in the matrix above is an example.
Finally, the circles represent the size of the business unit / product portfolio. So, in the above depiction, the product portfolio / business line which is the cash cow for the company is the biggest business, and the two small circles in the "Dogs" quadrant are the two smallest product portfolios / business units.
If the above analysis is done thoroughly, product lines that fall in the "Dogs" and "Question Marks" quadrants can be scrutinized for further action.
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