What does the BCG matrix analyze?

The BCG matrix, also known as the Boston Consulting Group matrix, is a strategic tool that helps businesses analyze their product lines or business units based on two dimensions: market growth rate and relative market share. This approach allows organizations to assess their position within a competitive landscape and identify the best opportunities for investment and development.

By categorizing business units into four quadrants—Stars, Cash Cows, Question Marks, and Dogs—the BCG matrix provides insights into where resources should be allocated. For example, "Stars" are units with high market share in a fast-growing market and typically require heavy investment to promote further growth. In contrast, "Cash Cows," which have a high market share in a slow-growing market, are often key sources of cash flow that can fund other areas of the business.

In summary, the BCG matrix's focus on market growth and share allows companies to strategically prioritize investments and resources, making it a valuable tool for business analysis and decision-making.