The Boston Matrix assumes that the higher your market share the more profitable your product or business unit will be. Because of this their growth-rate going forward is unclear and further investigation is needed to decide what to do with these products. This is the best sequence which really gives a boost to the companies profits and growth. These are mature, successful products with relatively little need for investment. The BCG matrix is a matrix designed by the Boston Consulting group back in 1970’s. Often Stars need heavy investment to sustain growth. If you look at any top 5 telecom company, the market share is good but the growth rate too is good. For example, when Boeing launch … the definition of Stars & Question mark is right on small definition. For example, dogs can be profitable, and stars can have a high market share and high growth but be operating in an extremely low margin industry and therefore never be particularly profitable. Thus for any company, the cash cows are the ones which require least investment but at the same time give higher returns. while incorrect in the detailed explanation. Let’s discuss the characteristics and strategies of each quadrant in detail for BCG Matrix. in product development, promotion) across the portfolio. Market share doesn’t actually predict how much cash a product generates. Benefits of the BCG-Matrix: The BCG-Matrix is helpful for managers to evaluate balance in the companies’s current portfolio of Stars, Cash Cows, Question Marks and Dogs. This is not always the case. The company cannot invest or it has other investment commitments due to which it holds the product in the same quadrant. Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs. Interpreting this diagram we can see that most products will start life as question marks. Another key factor the matrix is unable to take into account is the characteristics of the particular industry sector you operate in. These products might become stars, but equally, they might crash and burn as it’s not easy to spot a future star. This is because in cash cow, already these strategies have been used and they have resulted in the formation of a cash cow. In essence, the former category covers the approach described in the more popular growth-share matrix, while the latter represents the approach (described by Michael Porter) of differentiating products so that they do not compete head-on with their competitors. It doesn’t look to see what is likely to happen to a market in the future. It divides a market on the basis of its relative growth rate and market share and comes up with 4 Quadrants – Cash cow, Stars, Question marks and Dogs. Another innovation down the line can completely kill Desktop computers. That could lead to stars? Jim co-founded tutor2u alongside his twin brother Geoff! Having both types of products will ensure long-term business success.eval(ez_write_tag([[300,250],'expertprogrammanagement_com-box-4','ezslot_4',195,'0','0'])); The BCG Matrix is a simple grid with Market Growth Rate on one axis, and Relative Market Share on the other.