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Bcg Growth Share Matrix

Decent Essays

Dublin Institute of Technology

MSc COMPUTING SCIENCE
(Information Technology for Strategic Management)

BCG Growth Share Matrix

Research Assignment No. 2 The BCG Growth-Share Matrix
The BCG Growth-Share Matrix is a portfolio planning model that was developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that organisations business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor. Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these …show more content…

The cash cow generates a relatively stable cash flow; its value can be determined with reasonable accuracy by calculating the present value of its cash stream using a discounted cash flow analysis.

Under the growth-share matrix model, as an industry matures and its growth rate declines, a business unit will become either a cash cow or a dog, determined solely by whether it had become the market leader during the period of high growth.

While originally developed as a model for resource allocation among the various business units in a corporation, the growth-share matrix also can be used for resource allocation among products within a single business unit. Its simplicity is its strength - the relative positions of the organisations entire business portfolio can be displayed in a single diagram.

Reference:
Internet Center for Management and Business Administration Inc, 2003, BCG Growth Share Matrix, Available [Online]:

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