BCG Growth Share Matrix

The BCG growth share matrix is a planning model created to establish what precedence should be given in the product portfolio of a business unit. To create long term value, a firm’s product portfolio should consist of high growth products requiring cash inputs and low growth products producing great profit. The BCG matrix consists of market shares and market growth. The more market share or the faster the market grows, the better it is for the firm. The BCG matrix consists of four quadrants, Stars, Cash Cows, Question Marks and Dogs. They illustrate the market growth rate of a firm vs. its market shares in relation to competing firms.
Cash cows are businesses with huge market shares in mature but slow growing industries. They are market leaders

Related diversification is when a firm expands its product or services with newer but similar products. Cash cows operate in mature but slow industries, so this strategy can aid the firm in penetrating new markets and possibly developing a powerful and leading brand. An equipment rental company can introduce related products and services to its current line such as, decorating the event venues they supply equipment to and also providing relevant staff to accommodate these events. By diversifying products and services, the company can potentially eliminate some competitors. Also, utilizing their skills in addition to renting equipment, the company can create new demands for and interests in its products and services, transfer skills into new areas and gain more control of risks, as it would no longer be dependent on a single

They experience low growth and low market shares due to giant competitors acquiring the majority of market shares. The company is forced to implement defensive strategies to survive or may be forced to exit the industry. Retrenchment is a defensive strategy that may be employed in this instance. Retrenchment allows the company to cut costs, reduce assets and discontinue the sale of certain products in order to, reverse deteriorating sales and regain competitiveness. A small independent movie theatre experiencing long term declines in ticket sales, losses, constant costs and increased competition, may consider retrenchment as appropriate because, the need is to reduce expenses in order to gain financial stability. Management may make specific job positions redundant, terminate some employees, reduce expenses or sell some assets. This is a feasible strategy which can help the business to continue operating a little longer with the possibility of improving or may intensify its difficulties and impede its