In 1970, Bruce Henderson of Boston Consulting Group (BCG) developed the Growth-Share Matrix as a way of evaluating the relative attractiveness of different businesses, products, or markets within a corporation.

The tool plots the different businesses against two distinct measures — relative market share (your market share divided by your biggest competitor’s market share) and market growth rate (see chart below). The relative size of each business (typically measured in gross sales) is represented by the size of the bubble for that business on the chart. The two axes typically cross at or near the median values of each other, creating four quadrants. The four quadrants have been given names to reflect the attractiveness of businesses in each.

A business that has low market share and is in a market that is not growing as fast as others in which the corporation participates (Business A in the diagram) is called a “Dog.”

One that has low share, but in a growing market (Business B) is called a “Question Mark.”

A business with high share in a high growth market (Business C) is called a “Star.”

One with high share, but in a low growth market (Business D) is called a “Cash Cow.”

Corporations will often maintain a portfolio of businesses that are spread across the four quadrants, but the amount and nature of investments can be shaped by understanding the implications of each.

Tools for creating a BCG Growth-Share Matrix coming soon!