The managing director receives the following (fictitious) values: The BCG matrix first of all needs an analysis of the market and the competition in order to calculate the market growth and relative market share figures. Bob’s Butchers has two competitors: Brenda’s Butchers and Barry’s Butchers. The company currently has six products on the market: beef goulash, pheasant, chicken, pepperoni, chorizo, and a vegetarian sausage. With the help of the Boston Consulting Group matrix, the managing director of the company wants to review the portfolio and develop sustainable strategies. We’ll use a fictional company: Bob’s Butchers.
The capital contained in these products is extracted again in order to have more liquid funds. Companies must pursue a divestment strategy when the product can sustain itself no longer. As a result, products like these are barely self-sustaining. The relative market share is also low: compared to the market leaders, hardly any sales are generated with these products. Market growth is low, stable, or even declining. “Poor dogs” are products or services that a company is phasing out. On the contrary: Products found in the cash cow area of the portfolio matrix generate the financial means that are invested in question marks or stars. They generate a very high and steady cash flow even without any investments.
Products or services known as “(dairy) cows“ also have a relatively high market share, but are in a market that is growing very slowly or not at all. If stars maintain their high market share over a longer time, they can become cash cows. Therefore, it’s not a problem to continue investing in these products and therefore ensure long-term success. As market leaders, these “stars” have a high return on investment (ROI). Stars have both a high market share and high market growth. A company cannot afford to fund every business unit in this area and must choose exactly which product it wants to invest money in. The strategy is therefore very clear: selection. The problem is that it requires a lot of investment to make a question mark product more successful because the item can’t support itself. to move into the “stars” category – entrepreneurs have to invest a great deal. In order for the products to be successful in the long term – i.e. These products are called question marks because it’s impossible to estimate any future development. These are generally new products and services that still have a small market share compared to that of the competition, but are in a rapidly growing market. Products in the “question mark” category are characterised by high market growth combined with a low market share. Depending on which zone the product is located in, different strategies can be established for your further planning.
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