Boston

Consulting Group Approach

STARS QUESTION MARKS

MARKET
GROWTH

RATE

CASH COwS DOGS

High Low

RELATIVE MARKET SHARE

Boston Consulting Group approach is popularly also called as the growth share matrix. Based
on the market share and market growth rate, the location of each SBU is located on the
matrix. The matrix has 4 cells, each indicating a different type of business.

Question marks
Businesses in high growth markets, but low market share. Needs high investment and cash,
leaders. The company
people, marketing, etc.Only with this can it catch up with the market
this business.
has to really take a decision whether it needs to keep on pouring money in

Stars
t the question marks are successful they become stars. It is the market leader with high
other investments must be made in the
growth rate and high market shares. Money and
Dusiness to fend off attacks from competitors.

Cash Cows
money for the
market leader, generates enough
Ket growth rate has fallen, but still a so additional
needed, economies ofscale are available,
co
pny.Capacity additions are not
other businesses. If the
needed. The cash is used to suppot
e y and investments not the company will to pump
in money to get
cas relative market share,
starts losing devolves intoa dog.
a cash cow, otherwise
Share back. If it manages, it remains

83
Ools for
Strategid Analysis and Choice
 Dogs
Generate low profits or losses.
markets,
Businesses with weak market share in low growth or sentimental reasons.

business for r e a s o n s like an

expected revival
Company may hold this
Otherwise get out of this business.
needs to assess the health of
the matrix, a company
Arter plotting the various businesses on dogs and question
have too many
portfolio would
tne portolio of the business. An unhealthy
marks and few stars and cash cows.

Four strategies can be pursued with this analysis:

share
increase market
Build-appropriate for question marks, objective to
share
maintain market
Hold-appropriate forcash cows, objective is to
cash flows, irrespective of
increase short-term
Harvest-appropriate for dogs, objective is to and whatever can be salvaged
Investment is normally stopped
ne long-term consequences.
question marks.
is salvaged. Can also be used for
liquidate the business so that
marks. Sell or
Divest- appropriate for dogs and/or question
resources can be used elsewhere.

Gap Analysis

Present Desired performance

performance Gap
Performance

Time
T1 T2

Analyze gap between desired performance and projected performance to find the rightstratege

84 Policy
a n d Business
Stratenic Mananement
General Electric Model

INVEST
PROTECT TO BUILD
High
SELECTIVELY
POSITION BUILD

INDUSTRY
ATTRACTIVENESS
SELECTIVELY LIMITED
BUILD
/MANAGE EXPANSION
Medium SELECTIVELY
OR HARVEST
FOR
EARNINGS

PROTECT MANAGE
FOR DIVEST
AND FOCUS

Low
EARNINGS

Weak
Strong Average
AND COMPETITIVE POSITION
BUSINESS STRENGTHY

business strength. To
market attractiveness and
Each business is rated on two dimensions,
each dimension
dimensions strategic planners identify the factors underlying
m e a s u r e the two
combine them into an index.
This leads to planners
them and
and find a way to
m e a s u r e
actual or potential business.
GE matrix is divided into
an
looking at more factors evaluating zones. The upper left corner where the SBU is strong
in
3 major
nine cells, which in tum fall into cells are medium overall, thus
should invest to grow. The diagonal
indicates that the company divest or harvest.
them. For the others they should
pursue
the company should selectively

and Choice 85
Tools for Strategic Analysis