The BCG MATRIX

Well BCG matrix is based on the product life cycle theory that can be used to what priorities should be given to products in the portfolios of a business unit
To ensure a long term Value Creation , a Company should have high growth products for cash inputs and slow growth products for large cash Creation
Basically it has two dimensions :
1)Market Share
2)Market Growth

The Basic Idea behind is that , Greater The market share or market growth better is for Product and company
Placing products in the BCG matrix results in 4 categories in a portfolio of a company
1)Stars(=High Growth , High market share)
-Use large amounts of cash and leaders in the business so that they can also generate large amount of cash
- Frequently roughly in balance sheet on net cash flow , However if needed , any attempt should be made to hold share , Because the rewards will be the cash cow if market share is kept
2 Cash Cows(=low growth, high market share)
-Profits and cash generation should be high , and because of the low growth , investments needed should be low , keep profits high
-Foundation of a company
3 Dogs(=low growth , low market share )
-Avoids and minimize the number of dogs in a company
-Beware of expensive ‘turn around plans’
-deliver cash, otherwise liquidate
4 Question Marks(=high growth , Low market share)
-have the worst cash characteristics of all , because high demands and low returns due to low market share
-either invest heavily or sell off or invest nothing and generate whatever cash it can .Increase market share or deliver cash

The BCG matrix can help understand a frequently made strategy mistake :having a one size –fit all approach to strategy ,such as a generic growth target (9% per year ) or a generic return on capital of say 9.5% say for the entire corporation
In Such a Scenario
A) Cash cow Business units will beat there profit target easily ;their management has an easy job and often praised any how .Even worse they are even allowed to reinvest substantial cash amounts in their business units which are mature and not growing any more
B) Dog Business units fight an impossible battle and even worse investment are made and hopeless attempt to turn the business around
C) As a result all (all question markets and star business units get mediocre size investments .In this way they are unable to catch up with the cash cows .These inadequate invested sums of money are a waste of money .Either these SBU’s should get the enough pie to achieve a real market dominance and become a cash cow. Otherwise companies are suggested to disinvest and to get what ever possible cash out of the question marks that were not selected

Well sincere attempt have been poured to Understand the Nitti grit tie’s of Strategies , there are many more and The BCG is among the pioneer among those