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Methods and concepts for Value Based Management (VBM)

Boston Consulting Matrix

The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company.
Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

Stars (=high growth, high market share)

Cash Cows (=low growth, high market share)

Dogs (=low growth, low market share)

Question Marks (= high growth, low market share)

The BCG Matrix method can help understand a frequently made strategy mistake:
having a one-size-fits-all-approach to strategy, such as a generic growth target (9 percent per year) or a generic return on capital of say 9,5% for an entire corporation.

In such a scenario:

Some limitations of the Boston Consulting Group Matrix include: