Understanding cash flow is the key to making the most of the BCG matrix. These business units are the most important candidates for divestiture. They are generally regarded as money traps because companies have tied up money in them, even though they are basically not bringing anything back. If it is considered in the product life cycle, this product is in the degeneration phase. The Poor Dog is simply the obsolete model in the product portfolio. Poor Dogs have both a low market share and a low growth rate. Companies are advised to invest in cash cows to maintain current levels of productivity. They provide the means to turn question marks into market leaders, cover the company's administrative costs, finance research and development, service the company's debt and pay dividends to shareholders. The profits generated do not need to be reinvested to consolidate or increase market share or growth. Products in this quadrant have successfully completed the start-up phase and are finally in the saturation phase of their lifecycle. Companies are recommended to invest in stars.Ĭash Cows have a low market growth but a high relative market share. Stars can develop into cash cows if they can maintain their success until the market growth rate drops. As a rule, this leads to the same amount of money being invested and earned. However, due to their high growth rate, stars consume large amounts of cash. Ideally, they are in the growth phase of the product life cycle. Stars convince through both high market growth and a high relative market share. Companies are recommended to invest in question marks if the product has the potential for growth, or to sell if it does not. Thus the investment costs are immensely high and it requires special attention by the management. It is in the introductory phase of its product life cycle. Although it has a high market growth, it is questionable whether it can prevail against the competing products. The development of this product is in the stars. Question marks are new products that are introduced to the market after development. Place each of your products in the appropriate box depending on where they stand for market share and growth.

The four quadrants are called question marks (top right), stars (top left), poor dogs (bottom right) and cash cows (bottom left). The four quadrant chart shows the market share on the horizontal line (bottom left, top right) and the growth rate on the vertical line (bottom bottom, top right).

The matrix gathers data on the market share and growth rate of your products or services. The Matrix has been used since 1968 to help companies gain insight into which products best help them take advantage of market share growth opportunities. It provides a framework for the analysis of products according to growth and market share. The BCG matrix or portfolio analysis was developed by the Boston Consulting Group.

Star bcg matrix