What are the keys to be successful in business? It’s the question that persistently keeps on alarming in the minds of a young entrepreneur. Remember! There isn’t any rocket science behind being a successful entrepreneur. Instead, it’s a simple approach, but many authors, business tycoon, and management gurus complicate it in their business management article, books, or in interviews. To give your competitors, fierce competition constantly keeps on evaluating market trends and changes. You can find lots of business tools online to conduct competitor analysis, market research, evaluating product performance, etc. Business models aim to provide products and services that are profitable for the business; it also attempts to identify the changes that can keep business profitable in the future.
If you are working with a product portfolio, you will have multiple tools to scale how one or group of products are performing. You can consider using the product life cycle model. But if you want to get a current snapshot of how your product is performing and how it could benefit more in the future, then you should try using BCG Matrix Model. Boston Group Matrix assists the business with the task of analyzing their product line or services.
The BCG Matrix, also known as Boston Growth-Share Matrix, is a portfolio management matrix that helps organizations prioritize their different businesses. BCG Matrix assesses the company product portfolio. After assessments guide the management in their long-term strategic planning of the company's portfolio. The model indicates where to invest, which product to discontinue or develop products.
The matrix represents the company’s product and services using graphical representation to help the company make exemplary decisions on where to invest, what to keep, or sell.
The graph divides the matrix into four quadrants and 2 dimensions based on market growth and relative market share. Each quadrant is classified into high and low performing. The first dimension looks at the product or service basic level of growth in the general market. The second share calculates the product’s market share relative to its biggest competitors. Analysis of the product in such a way gives the management insight about the opportunities and the problems with the product.
Boston growth-share matrix is a business model used to evaluate the business portfolio’s strategic position and its potential. The business methodology was developed by a clever chap and founder of Boston Consulting Group, Bruce Henderson, in the year 1986. It was published in BCG’s shorts called Perspectives. Since then, it was widely used by most of all fortune 500 companies. And still being taught in business school on strategy. The BCG business models helped the businesses gain insight into which products best help them capitalize on market share growth and gain competitive advantage.
The Boston matrix projects companies’ products using a graphical representation, where the horizontal axis of the graph represents product market share and its strength in the market. But using relative market share helps the analyst to scale business competitiveness. In contrast, the vertical axis represents the product’s growth rate and its potential to grow in the market. If you struggling to map Boston Matrix in your presentation, then check out of the best BCG Matrix Templates.
Let’s Drill down the topic and have a concise study of the four quadrants of the BCG matrix.
Although the Boston growth-share matrix has lost its importance due to limitations. But it can be useful too if you follow these steps:
Since 1986 BCG Matrix has been used by many fortunes and even small businesses to analyze their products and determine which product to invest and let go. It’s the most simplistic business model available to evaluate a product. But do remember to use this method cautiously; recklessly using it without precise analysis can end up giving misleading analysis and generating losses.
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