BCG Matrix – an Ultimate Guide to Craft It Effectively
BCG matrix is a portfolio planning tool used to study and analyze the products of the business based on their growth and relative market share.
This model is categorized into four elements such as:
- Stars
- Cash cows
- Dogs
- Question marks
- Stars
In the category of the BCG matrix of tesla, stars are the leaders. These products have:
- A highly competitive market share, therefore, they give most cash to the company.
- A competitive great growth potential that boosts further cash flow
With the passage of time, when the market gets matured, these stars take the position of cash cows that maintain great market shares in a comparatively low growth market.
These cows can be funded with new products to craft them into new stars.
- Cash Cow
The products that have high ROI but functioning in a comparatively matured market which do not have growth and innovation fall under the umbrella of the cash cow. As compared to its consumers, these products usually generate more cash.
- Dogs
Dogs do not have a high market share and function in a marketplace with a low growth rate. They neither generate cash nor need huge cash.
Due to their negative cash returns, they are not worth investing in. Additionally, they face several cost disadvantages.
- Question Marks
This element of the BCG framework has high growth potential and low market share. This condition makes the future for this area doubtful.
Due to the high growth rates, you can make its cash cow and star. Furthermore, wrong investments can downgrade it.
How to craft an effective BCG matrix?
You should consider these five processes in order to craft a custom BCG framework:
- Choose the product
- Define the marketplace
- Determine and calculate the relative market share
- Identify the market growth rate
- Draw specific circles on a framework