This document summarizes the Boston Consulting Group's product portfolio matrix model, which helps firms decide how much to invest in product lines based on their market share and growth rate. The matrix categorizes product lines as stars, cash cows, dogs, or question marks. It then provides recommendations for investment, development, or divestment for each category based on their relative market share and growth. The model is meant to help firms allocate resources but has some limitations in only using two factors and assuming independence between product lines.

1. (Boston Consultancy Group’s Matrix)

2. • A portfolio planning model
• Helps firm to decide how much money to invest in product line,
based on growth rate & market share

3. Growth rate (%)
Relative Market Share
Low
High
LowHigh
Star
Cash Cows Dogs
Question Mark

4. Star DogsCash Cows
Question
Mark

6. Question Mark
• Investment should be high
• Market penetration
• Market development
• Product development
• Divestiture
• Keep it going and improve OR sell it
High growth, low market share

7. Star
• Market penetration
• Market development
• Product development
• Backward, forward, horizontal integration
• Invest for growth
High growth, high market share

8. Cash Cows
• Product development
• Diversification
• Divestiture
• Retrenchment
• ‘milk’ to fund other business
Low growth, high market share

9. Dogs
• Divestiture
• Retrenchment
• Liquidation
• Divest it as soon as they get the best price
Low growth, low market share

10. • Only 2 factors (market share, growth rate)
• High market share not the only success factor
• Market growth not the only indicator for attractiveness of a market
• No clear definition on what constitute a market
• Assume each SBU is independent, but dogs might helping other SBU to gain
competitive advantage

11. Prepared by: Loi Wai Yee