These products or SBUs tend to be loss makers, but might provide small amounts of cash long term their potential is usually weak. Having completed the growth/share matrix, each SBU may be classified as follows:Īs the term implies, these products or SBUs generate more cash than they use and can be used for funding other products or SBUs. We can also calculate the value of the turnover of each SBU or product and denote this by using circles, where the area of the circle is proportionate to its turnover.Īn illustration of a completed growth/share matrix. We now have all the information we need to position our SBUs or products in the matrix. Normally a relative market share of 10 per cent is required to fall into the ‘high’ category. According to relative market share, determine the extent to which this is ‘high’ or ‘low’.
Normally this is calculated on the basis of market share compared to that of the largest competitor. For each SBU or product determine relative market share.Normally, growth rates of 10 per cent or more are considered ‘high’. According to this growth rate, next determine the extent to which the growth rate is ‘high’ or ‘low’.For each strategic business unit (SBU) or product determine annual growth rate in the market.The completion of the matrix is straightforward. The essentials of BCG’s growth/share matrix. Building on previous work and evidence relating to the experience curve effect BCG developed a simple, but potentially powerful, framework for analysing an organization’s business with a view to providing strategic guidelines. In the mid 1960s the Boston Consulting Group (BCG) was founded to provide advice to strategic marketing planners.
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