This approach is use for classifing all SBUs of a company. In this approach, vertical axis of the matrix shows market growth rate that provides a measure of market attractiveness; & horizontal axis shows market share that serves as a measure of company strength in the market.This matrix defines four types of SBUs.They are:
1. Stars: It has high market growth rate & high market share of products. They need to huge investments to cooperate their rapid growth. If it is not possible to invest enough ,they will slow down & turn into cash cows.
2. Cash cows: It has high market share but low market growth of products.They need less investments to hold their market share. Cash cows produce a lot of cash,through this company pay its bills & support other SBUs that need investment.
3. Question marks: It has low market share but high market growth of products. Its need a lot of cash to hold their present market share .It is hard for manager about which question marks should keep or which one should phased out.
4. Dogs: It has low market growth & low market share of products but it generate enough cash to maintain themselves . It Can be said that dogs don't promise to be large sources of cash.
The BCG growth share matix has 10 circles. That represents 10 SBUs of a company like company has two stars, two cash cows, tree question marks & three dogs. Circles define per doller sales of SBUs. 2+2+3+3 = 10 circles also say, the company is in fair shape but not in good shape.Company wants to invest more on question marks to turn them into stars; they carefully maintain stars otherwise they will turn into cash cows; income from cash cows help finance the question marks,stars & dogs. Any company needs to take a single decisive action between question marks or dogs.
Company carefully take their decision about what role each will play in the future. Investing money, it depends on management decision, whether they will invest a single SBUs or more to build their share. But they invest enough to keep their present market share. It can harvest the SBUs or divest the SBUs by selling it or phasing out.
Day by day ,SBUs change their position in the matrix. Many units turn into question marks ; & many question marks turn into stars. If the market growth of cash cows falls, they turn into dogs the end of their life cycle or die off. Then company add new products & units; hoping that some are become stars & eventually cash cows help them to finance
1. Stars: It has high market growth rate & high market share of products. They need to huge investments to cooperate their rapid growth. If it is not possible to invest enough ,they will slow down & turn into cash cows.
2. Cash cows: It has high market share but low market growth of products.They need less investments to hold their market share. Cash cows produce a lot of cash,through this company pay its bills & support other SBUs that need investment.
3. Question marks: It has low market share but high market growth of products. Its need a lot of cash to hold their present market share .It is hard for manager about which question marks should keep or which one should phased out.
4. Dogs: It has low market growth & low market share of products but it generate enough cash to maintain themselves . It Can be said that dogs don't promise to be large sources of cash.
The BCG growth share matix has 10 circles. That represents 10 SBUs of a company like company has two stars, two cash cows, tree question marks & three dogs. Circles define per doller sales of SBUs. 2+2+3+3 = 10 circles also say, the company is in fair shape but not in good shape.Company wants to invest more on question marks to turn them into stars; they carefully maintain stars otherwise they will turn into cash cows; income from cash cows help finance the question marks,stars & dogs. Any company needs to take a single decisive action between question marks or dogs.
Company carefully take their decision about what role each will play in the future. Investing money, it depends on management decision, whether they will invest a single SBUs or more to build their share. But they invest enough to keep their present market share. It can harvest the SBUs or divest the SBUs by selling it or phasing out.
Day by day ,SBUs change their position in the matrix. Many units turn into question marks ; & many question marks turn into stars. If the market growth of cash cows falls, they turn into dogs the end of their life cycle or die off. Then company add new products & units; hoping that some are become stars & eventually cash cows help them to finance
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