BCG growth-share matrix
Classify businesses by market growth and relative market share, then examine resource choices and uncertainty.
Use the growth-share matrix when several businesses compete for resources. Define each market and observation period before placing businesses in the four categories. Combine that view with cash flow, strategic relevance, and practical constraints.
Business units or products, market growth estimates, relative market share, thresholds, and resource constraints.
A portfolio view with provisional categories and questions about investment, maintenance, or exit.
On this page
How to use it
- Define the businesses, relevant markets, region, and observation period.
- Calculate relative share as your market share divided by the largest competitor’s share in the same market.
- State growth and share thresholds; place only businesses with sufficient information.
- Check cash flow, connections between businesses, and resource limits before choosing actions.
Keep its limits in mind
A quadrant is not an automatic investment or closure decision. Market growth is different from your own sales growth. The thresholds in this example are teaching assumptions, and no market measurements support its placements.
Reviewing a neighborhood retailer’s portfolio
Fictional example: Qinghe’s portfolio discussion covers everyday goods, household breakfast packs, and community classes. The worksheet also includes low-frequency custom gift boxes. All placements are teaching hypotheses, not measured market research.
On a small screen, scroll across the diagram to read it.
Classification limit: The inputs state thresholds but provide no actual market growth or share measurements. They support an illustrative placement, not an evidence-based classification.
Resource discussion: Maintaining everyday goods, exploring breakfast expansion, and limiting a class trial are directions to evaluate. The budget and approval status are not supplied.
Next step: Collect comparable market data and review the portfolio after one quarter before treating the placements as established.
Three reasons to leave a business unclassified
First, pause when the market is defined differently for your business and its competitor. A narrow neighborhood service and a national category are not interchangeable denominators. Define the customer need, product boundary, geography, period, and unit. A convenient market definition can make relative share appear strong without changing the business.
Second, do not replace market growth with your own revenue growth. Market demand can expand while your share falls; your sales can grow in a flat market by taking share. Use comparable whole-market observations for the growth axis and comparable shares for the other axis. Missing or zero denominators cannot be repaired by entering zero or picking a quadrant that feels plausible.
Third, stop treating a category name as a cash-flow measurement or an instruction to invest. A “cash cow” can still require maintenance and working capital. A low-share business can support another service or carry an obligation. Review actual cash, dependencies, strategic fit, and exit consequences before allocating resources. The matrix is one view, not an approval process.
Choose portfolio position, market direction, capability, or economics
The BCG view combines market growth and relative share. Its classic category labels do not guarantee sustained performance. Use other tools for questions the two axes cannot answer, and keep each decision’s evidence separate.
| Question and material | Method | Output and limit |
|---|---|---|
| Several businesses compete for resources; comparable market data exist | Growth-share matrix | Provisional positions and investment questions; not measured cash generation. |
| A business is considering products or markets to enter | Ansoff matrix | Growth directions and assumptions; no automatic resource allocation. |
| A capability may support other settings | Core competence analysis | Value, imitation, and transfer questions; no expansion mandate. |
| Customers, delivery, and economics are interconnected | Business Model Canvas | A map of operating assumptions; no validated profitability. |
Calculate a separate fictional portfolio from complete market cards
The Qinghe example above has four illustrative placements and no market measurements. Keep that limitation. The following is a separate, original fictional calculation exercise, not new research about Qinghe and not evidence that its illustrative placements are wrong. The four synthetic market cards use one fictional region and two consecutive, equal twelve-month periods A and B. Each market keeps its own product boundary. Market volume is in units; shares are period-B unit shares.
The raw cards are: everyday goods, volume 1,000 to 1,050, own share 30%, largest competitor 20%; breakfast packs, 1,000 to 1,200, own 12%, largest competitor 20%; community classes, 500 to 600, own 24%, largest competitor 20%; custom gifts, 1,000 to 1,000, own 5%, largest competitor 25%. The competitor means the largest other supplier within that card’s market. All numbers are invented teaching inputs; cash flows and budgets remain absent.
For this exercise only, define high growth as at least 10% and high relative share as at least 1. Growth equals (B − A) / A; relative share equals own share / largest competitor share. Everyday goods therefore has 50 / 1,000 = 5% growth and 30 / 20 = 1.5 relative share. Breakfast has 20% growth but 0.6 relative share, so its strong market growth does not establish leadership. Neither calculation uses the company’s own sales growth.
| Synthetic business | Market units A → B | Own / competitor share | Growth; relative share | Exercise category |
|---|---|---|---|---|
| Everyday goods | 1,000 → 1,050 | 30% / 20% | 5%; 1.5 | Cash cow |
| Breakfast packs | 1,000 → 1,200 | 12% / 20% | 20%; 0.6 | Question mark |
| Community classes | 500 → 600 | 24% / 20% | 20%; 1.2 | Star |
| Custom gifts | 1,000 → 1,000 | 5% / 25% | 0%; 0.2 | Dog / pet |
Test sensitivity before making a resource request
The exercise produces four reproducible classifications under stated rules. It does not produce an investment budget. Its breakfast and class positions differ from the original illustration because this separate exercise supplies different inputs; do not merge them into a before-and-after story. If the growth threshold changes to 25% while the share threshold stays at 1, both 20%-growth markets move to the low-growth half: classes become a cash cow and breakfast becomes a dog under that rule. Their underlying data have not changed.
Before using a real portfolio, verify source dates, market boundaries, missing suppliers, volume versus revenue shares, and estimation uncertainty. Do not mix value share with unit share or compare unequal periods without adjustment. A borderline or weakly measured position should carry its uncertainty rather than force a confident category. High share alone cannot tell you the cash available to support another business.
The proposed resource review asks for actual operating cash, maintenance commitments, shared people and channels, and costs or obligations of exit. Everyday goods may need service investment; classes may need delivery validation; gifts may have a strategic connection worth checking. These are questions, not conclusions supplied by the labels. An owner must approve any trial allowance or withdrawal plan; no budget or approval is given here.
At the planned quarterly review, update the market evidence and actual trial results separately, retaining prior definitions and any changes. A new category caused by a new threshold is a decision-rule change, not a business improvement. Record whether to investigate, maintain, test, or exit, with reasons and actual authorization. The original Qinghe placements remain illustrative, and the separate arithmetic remains a fictional exercise.
Check your work
- Market boundaries and time periods are consistent.
- Relative share and market growth have identifiable inputs.
- Thresholds and uncertainty are explicit.
- Resource choices require further judgment and are not implied approvals.
Framework references
References explain the framework and its scope; they do not validate the fictional example's results.
Put the framework to work
Copy the outline and add your question, evidence, and open questions.