Growth-Share Matrix

What it is

A two-by-two matrix for conducting portfolio analysis of different market offerings and/or business lines within one organization, based on relative market share and growth rate of each. This is the oldest framework we’re including on the site, dating back to 1970 (!) at Boston Consulting Group (BCG) but still very relevant and useful. Any MBA student or graduate should recall the catchy names in the four quadrants of the matrix: Stars (high growth, high market share), Cash Cows (low growth, high share), Question Marks (high growth, low share), and Pets (low growth, low share). 

When to use

When your business or organization consists of a portfolio of offerings of service lines with different profiles in terms of their overall contribution to profit and growth.

When not to use

When your business or organization is dominated by one core offering (e.g., with 80% or more of total revenues).

Tradecraft tips

In some ways, this may be the easiest framework here to use… Of course, there will be close borderline judgment calls on which quadrant some offerings fall into, but the basic analysis part is straight forward. Rather, the real difficulty is in accepting the strategic and organizational implications of the analysis. For example, leaders of “cash cow” businesses need to accept that they’re not going to get investment funds to grow but rather need to focus on “milking” the cow. Now, that’s hard! 

Source

The BCG website has a nice, short intro to the matrix on their website, with links to additional resources.