These units should be ‘milked’ extracting the profits and investing as little as possible. Star examples: iPhone of Apple, Vitamin Water of Coca-Cola, LED lamp from PhilipsĪs leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. If a star can maintain its large market share it will become a cash cow when the market growth rate declines. So, the cash being spent and brought in approximately nets out. Stars generate large sums of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate. Question mark examples: Mac Book Air of Apple, FUZE Healthy Infusions of Coca-Cola, tablet from Philips. New assets enter the market as Question Marks. Question marks need to be analysed carefully to determine if they are worth the investment required to grow market share. Question marks are products that grow rapidly and as a result, consume large amounts of cash, but because they have low market shares, they don’t generate much cash. Cash cows – Low Growth, High Market Share (most profitable).Stars – High Growth, High Market Share (high competition).Dogs – Low Growth, Low Market Share (less profitable).Question marks – High Growth, Low Market Share (uncertainty).The BCG growth-share matrix breaks down products into four categories: The BCG matrix has two dimensions: relative market share (indicating profitability, through economies of scale) and market growth rate (indicating market attractiveness). The purpose of the BCG Matrix (or growth-share matrix) is to enable companies to ensure long-term revenues by balancing products requiring investment with products that should be managed for remaining profits. The Boston Consulting Group (BCG) Matrix is a simple corporate planning tool, to assess a company’s position in terms of its product range. It is also referred to as the BCG growth-share matrix. The Boston Consulting Group (BCG) Matrix is a portfolio management tool created in 1970 by Bruce Henderson.

Bcg matrix explained