BCG is founded by Bruce D. Henderson as the management and consultant division of the Boston Insurance Deposit and Trust Company itself a subsidiary of the Boston company. A former bible seller
Henderson had earned an undergraduate degree in engineering from Vanderbilt University before attending Harvard Business School.
the-bcg-matrix-how-profitable-is-my-company-1CONCEPT
The BCG matrix graphically shows the differences between the divisions, in terms of the relative part of the market they are occupying and the growth rate of the industry. The BCG matrix allows a multidivisional organization to manage its business portfolio by analyzing the relative part of the market it is occupying and the industry growth rate of each of the divisions in relation to all other divisions of the organization.
THE STARS
Businesses located in Quadrant 1 (often called stars) represent the best opportunities for long-term growth and profitability for the company. Divisions that have a considerable relative market share and a high growth rate for the industry must attract enough investment to maintain or strengthen their dominant positions.
THE QUESTIONS
Divisions in Quadrant 2 occupy a relatively small market position, but compete in a high-growth industry. As a general rule, these companies need a lot of money, but they generate little cash. These businesses are called question marks, because the organization has to decide whether to reinforce them through intensive strategy (market penetration, market development, or product development) or to sell them.
THE MONEY COWS
Divisions located in Quadrant 3 have a relatively large share of the market, but compete in an industry with little growth. They are called money cows because they make more money than they need and are often “milked”. Many of today's money cows were stars yesterday.
DOGS
The divisions of the organization located in quadrant 4 have relatively little market share and compete in an industry with little or no market growth; They are the dogs in the company's portfolio. Due to their weak position, internal and external, these businesses are often liquidated, discarded or cut through the entrenchment.
ELABORATION CRITERIA
The growth-share matrix is based on two main dimensions:
-The industry growth rate, which indicates the annual growth rate of the industry market to which the company belongs.
-The relative participation in the market, which refers to the market share of the Strategic Business Unit in relation to its most important competitor. It is divided into high and low and is expressed on a logarithmic scale.
THE COMPANY
The concept of Strategic Business Unit (SBU) appears here, which has three characteristics:.
-It is a single business of the company or a set of its interrelated businesses, which the company can plan separately from the rest of the company.
-Has its own competitors
-The Unit is in charge of a manager responsible for its operation and its economic results, to whom the casabase assigns strategic planning objectives and appropriate resources.
