BCG MATRIX

Presentation by
Pratik Shirsat - 19020841030
Shreyas T. – 19020841032
Siva Sravan V. - 19020841033
Created by the Boston Consulting Group, the BCG matrix –
also known as the growth share matrix – provides a
framework for analyzing products according to growth and
market share.

In this four-quadrant chart, market share is shown on the

horizontal line (low left, high right) and growth rate along
the vertical line (low bottom, high top). The four quadrants
are designated

• Stars (upper left),

• Question Marks (upper right),
• Cash Cows (lower left),
• Dogs (lower right).
STARS
• leaders in the category
• operate in high growth industries and maintain high market share
• cash generators and cash users

QUESTION MARKS
• have high growth prospects but a low market share
• consume a lot of cash but bring little in return
• have the potential to turn into stars

CASH COWS
• contains the most profitable brands and should be “milked” to provide as much cash as possible
• usually large corporations or SBUs that are capable of innovating new products or processes
• provides the cash required to turn question marks into market leaders, cover the administrative costs of
the company, fund research and development, service the corporate debt
• cash gained from “cows” should be invested into stars to support their further growth

DOGS
• low market share compared to competitors and operate in a slowly growing market
• not worth investing in because they generate low or negative cash returns
• Strategic choices are retrenchment, divestiture
PEPSICO A perfect example to demonstrate BCG matrix could be the
BCG matrix of Pepsico. The company has perfected its 
product mix over the years according to what’s working and
what’s not.
Here are the four quadrants of Pepsico’s growth-share
matrix:
• Cash Cows – With a market share of 58.8% in the US,
Frito Lay is the biggest cash cow for Pepsico.
• Stars – Even though Pepsi’s share in the market has been
reduced to 8.4%, it’s still the star for Pepsico because of
its brand equity. Other stars are Aquafina (biggest selling
mineral water brand in the USA), Tropicana, Gatorade,
and Mountain Dew.
• Question Marks – Since it’s a mystery whether the diet
food and soda industry will boom in the future and will
Pepsico’s products will find their place or not, Diet Pepsi,
Pepsi Max, Quaker, etc. fall in the question marks section
of the Pepsico’s BCG matrix.
• Dogs – As of now, there isn’t any product line that falls in
the dogs section of the Pepsico’s BCG matrix. However,
seasonal and experimental products like Pepsi Real
Sugar, Mtn Merry Mash-up can be inserted in this section.
 USING THE BCG MATRIX TO STRATEGIZE
Build: Increase investment in a product to increase its market share. For example, you can push a question
mark into a star and, finally, a cash cow.

Hold: If you can't invest more into a product, hold it in the same quadrant and leave it be.

Harvest: Reduce your investment and try to take out the maximum cash flow from the product, which
increases its overall profitability (best for cash cows).

Divest: Release the amount of money already stuck in the business (best for dogs).
 LIMITATIONS OF THE ANALYSIS
• Business can only be classified to four quadrants. It can be confusing to classify an SBU that falls right
in the middle.
• It does not define what ‘market’ is. Businesses can be classified as cash cows, while they are actually
dogs, or vice versa.
• Does not include other external factors that may change the situation completely.
• Market share and industry growth are not the only factors of profitability. Besides, high market share
does not necessarily mean high profits.
• It denies that synergies between different units exist. Dogs can be as important as cash cows to
businesses if it helps to achieve competitive advantage for the rest of the company.