Transcript Guide to Business Planning

Guide to
Business
Planning
The Boston Consulting Group Box or Growth - Share Matrix
The growth-share matrix allows you to
visualise which products within a portfolio
are cash generating and which products are
cash absorbing. This is helpful to
understanding:
 and which products should be divested.
Problem Child
Low
The matrix relates market growth to relative
market share. Depending on the position of
the products they are classified as stars,
problem children, dogs or cash cows.
Star
Low
High
change the strategic position of products
High
Market Growth
 where resources should be allocated to
Relative Market Share
Cash Cow
Dog
.The purpose of the matrix is to analyse a firm's product portfolio, where the term product
portfolio refers to a portfolio of Strategic Business Units (SBU). The objective of the analysis
is to gain strategic insight as to which products require investments, which should be
divested and which are sources of cash. It illustrates that if a business pays out too much
cash to investors it will not retain sufficient funds to invest in future growth areas.
© Guide to Business Planning