Growth-share matrix

Many organizations use additional analysis to evaluate their products and portfolios. A popular methodology was developed by the Boston Consulting group in the 1970s, and is also known as the BCG model. This model helps companies analyze their businesses and product lines and ranks their products on the basis of relative market share and growth rates using a 2x2 matrix as shown in the following diagram. The analysis group's products into four different categories (Cash Cows, Dogs, Questions Marks/Problem Children, and Stars) based on these variables:

Figure 3.7: Growth share matrix

Cash Cows are where a company has a high market share in a low or slow growing industry. These products typically are in a mature market and require little investment, resulting in cash generation well in excess of the amount of investment required to maintain the products. The term is derived from the concept of "milking" these products as they require little investment and yield good returns...