The BCG matrix, Salvador Trinxet

The BCG matrix, Salvador Trinxet

Title: Key management model

Key management models

Author: Steven ten Have Wouter ten Have, frans Stevens and Marcel van der Elst with Fiona Pol- Coyne

Isbn:-10: 0-273-66201-5

Isbn-13: 978-0-273-66201-3

Editorial: Prentive Hall , Financial Times

Book:

To ensure long-term success, a company should have a portfolio of prod­ucts that contains both high-growth products in need of cash inputs and low-growth products that generate excess cash. Or at least, that is the assumption made by the Boston Consulting Group (BCG) underlying its popular matrix.

The BCG matrix helps to determine priorities in a product portfolio. Its basic premise is that it makes more sense to invest where there is (eco­nomic) growth from which you can benefit. A rating of products on two dimensions, market share and market growth, creates four qualifications of products in your portfolio: stars, cash cows, question marks (or wild cats) and dogs.

 

When to use it

For each product or service in your portfolio (or scope of analysis), deter­mine (a measure or rating of) expected relative market growth.

Next, what is your relative market share for each product? Apply a per­centage or a rating.

Plot all products on the two dimensions and apply a division on both dimensions, based on a arbitrary, but consistent difference between rela­tively big and relatively small. This is the hardest part. Predetermined criteria can help. For example: our market share is small when our share is less than one-third of that of the biggest competitor. Or for the other dimension: the market’s growth rate is high when annual rev­enues grow by more than 10 per cent after correction for inflation. It is important to not change these criteria around in order to shift ‘pet’ proj­ects and products into more favorable grounds, thereby defeating the purpose of the exercise.

Stars are products that enjoy a relatively high market share in a strongly growing market. They are (potentially) profitable and may grow further to become an important product or category for the company. You should focus on and invest in these products.

Although the market is no longer growing, your cash cows have a relatively high market share and bring in healthy profits. No efforts or investments are necessary to maintain the status quo.

Although their market share is relatively small, the market for ques­tion marks is growing rapidly. Investments to create growth may yield big results in the future, though this is far from certain. Further investi­gation into how and where to invest is advised.

Drop or divest the dogs when they are not profitable. If profitable, do not invest, but make the best out of its current value. This may even mean selling the product’s operations and/or brand.

More information:

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The BCG matrix, Salvador Trinxet

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8 Responses to “The BCG matrix, Salvador Trinxet”

  1. […] Orientación hacia el cliente Orientación hacia el mercado Key management Marketing y los clientes The bcg matrix Belbims team Benchmarking Management model Business process redesign The capability maturity model […]

  2. Pablo Michel dice:

    Me gustan los artículos de Salvador Trinxet, ya he tenido oportunidad de leer algunos cuantos con anterioridad, sin embargo yo no soy muy hábil en eso del inglés y creo que este tema es muy interesante. Hayl alguna manera de que me puedan proporcionar más información pero en castellano?? Gracias…

  3. international dice:

    Es un artículo muy interesante ya que este modelo de negocio es ampliamente reconocido por empresarios y emprendedores

  4. Elí Almirez dice:

    He leído con anterioridad de este modelo y que bien que Salvador Trinxet lo tome en consideración ya que es todo un profesional especializado en estos temas

  5. Dear Salvador Trinxet, good description -although maybe too short one- of the BCG matrix.

  6. Nevertheless, I do not agree with “Although their market share is relatively small, the market for ques­tion marks is growing rapidly.” I think it grow in the past, not now, actually.

  7. But I agree with the other content of this Salvador Trinxet¨s article.

  8. […] The BCG matrix, Salvador Trinxet « Book Blog The BCG matrix, Salvador Trinxet. Title: Key management model. Key management models. Author: Steven ten Have Wouter ten Have, frans …   […]