Product portfolio analysis flashcards

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BCG axes?

Market growth rate (vertical) vs Relative market share (horizontal).

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Star strategy?

Invest to maintain/grow leadership; may need cash support until market matures.

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Cash cow strategy?

Harvest cash with minimal investment; fund stars and question marks.

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Question mark strategy?

Build share (invest) or divest if unlikely to become star.

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Dog strategy?

Divest, harvest, or maintain for niche/coverage — free resources elsewhere.

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Relative market share?

Firm's share vs largest competitor — proxy for cost/experience advantage.

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Limitation of BCG?

Oversimplifies; ignores synergies; market share ≠ profitability; subjective classification.

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Link to 10.4 strategy?

Portfolio decisions align with divestment/investment at A Level.

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Star (BCG Matrix)

A product with high market share in a high-growth market. It requires significant investment to maintain growth but also generates high revenue. The recommended strategy is to 'hold' or 'build' its position.

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Cash Cow (BCG Matrix)

A product with high market share in a low-growth (mature) market. It generates more cash than it consumes, funding other parts of the portfolio. The recommended strategy is to 'hold' or 'harvest'.

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Question Mark / Problem Child (BCG Matrix)

A product with low market share in a high-growth market. It has potential but requires significant investment to grow share. The strategic choice is to 'build' it into a star or 'divest'.

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Dog (BCG Matrix)

A product with low market share in a low-growth market. It typically generates low profit or a loss and has a weak competitive position. The recommended strategy is to 'divest' or 'harvest'.

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What is the primary purpose of the Boston Matrix?

To help a business with a range of products (a portfolio) analyse their strategic position based on market share and market growth, in order to make decisions on resource allocation and achieve a balanced portfolio.