asgard-ai-platform BCG Growth-Share Matrix
Overview
The BCG Matrix classifies products or business units into four quadrants based on market growth rate (Y-axis) and relative market share (X-axis). It guides resource allocation: where to invest, where to harvest cash, and what to divest.
When to Use
Trigger conditions:
- User managing multiple products or business units and needs to prioritize
- User asks "which products should we invest in vs cut?"
- User needs a portfolio-level view of their business
- User mentions "cash cow", "star product", or "portfolio strategy"
When NOT to use:
- For single-product strategy → use SWOT or Blue Ocean
- For industry-level analysis → use Porter's Five Forces
- When detailed financial modeling is needed → use DCF or financial ratios
Framework
IRON LAW: Relative Market Share, Not Absolute
The X-axis is RELATIVE market share = your share / largest competitor's share.
A company with 20% share in a market where the leader has 40% = 0.5x (Low).
A company with 20% share where the next largest has 10% = 2.0x (High).
NEVER use absolute market share. A 30% share means nothing without knowing
the leader's share.
IRON LAW: Plot THEN Strategize
Place ALL products/units on the matrix BEFORE deciding strategy.
Portfolio balance matters — a company with only Stars has a cash crisis
(Stars consume cash). A company with only Cash Cows has no growth pipeline.
Step 1: Define the Portfolio Units
List all products, product lines, or business units to analyze. Each must be:
- A distinct unit with its own market and competitors
- Measurable in terms of revenue, market share, and market growth
Step 2: Gather Data for Each Unit
For each unit, determine:
- Market growth rate: Annual growth rate of the total market (not your revenue growth). Typically, >10% = High growth.
- Relative market share: Your market share ÷ largest competitor's market share. >1.0x = High.
Step 3: Plot on the Matrix
| High Relative Market Share | Low Relative Market Share | |
|---|---|---|
| High Market Growth | ⭐ Stars — High share in growing market. Generate revenue but consume cash to maintain position. | ❓ Question Marks — Low share in growing market. Need heavy investment to gain share, or divest. |
| Low Market Growth | 🐄 Cash Cows — High share in mature market. Generate surplus cash with low investment needed. | 🐕 Dogs — Low share in slow market. Minimal cash generation, limited potential. |
Step 4: Determine Strategy per Quadrant
| Quadrant | Default Strategy | Nuance |
|---|---|---|
| Stars | Invest to maintain/grow share | Will become Cash Cows as market matures |
| Cash Cows | Harvest — maximize cash extraction with minimal investment | Fund Stars and selected Question Marks |
| Question Marks | Selective invest OR divest — pick winners, cut losers | Most critical decision — not all can become Stars |
| Dogs | Divest or reposition | May keep if synergies with other units exist |
Step 5: Assess Portfolio Balance
Check the overall portfolio health:
- Healthy: Mix of Cash Cows (funding) + Stars (growth) + 1-2 Question Marks (pipeline)
- Unhealthy: All Cash Cows (no growth), all Stars (cash drain), all Dogs (declining)
Output Format
# BCG Matrix Analysis: {Company/Portfolio}
## Portfolio Units
| Unit | Revenue | Market Growth | Rel. Market Share | Quadrant |
|------|---------|--------------|-------------------|----------|
| {Product A} | {$X} | {X%} | {X.Xx} | Star/Cash Cow/QM/Dog |
## BCG Matrix Placement
| | High Share (>1.0x) | Low Share (<1.0x) |
|---|---|---|
| **High Growth (>10%)** | ⭐ {list Stars} | ❓ {list Question Marks} |
| **Low Growth (<10%)** | 🐄 {list Cash Cows} | 🐕 {list Dogs} |
## Strategic Recommendations
### Stars — Invest
- {Product}: {specific investment recommendation}
### Cash Cows — Harvest
- {Product}: {how to maximize cash extraction}
### Question Marks — Decide
- {Product}: Invest / Divest — {rationale}
### Dogs — Divest/Reposition
- {Product}: {recommendation}
## Portfolio Health Assessment
{Overall balance evaluation and rebalancing recommendations}
Examples
Correct Application
Scenario: BCG for a Taiwanese electronics company with 4 product lines
| Unit | Market Growth | Rel. Share | Quadrant | Reasoning |
|---|---|---|---|---|
| Laptop line | 3% | 1.8x (leader) | Cash Cow ✓ | Mature market, dominant position |
| Gaming peripherals | 18% | 0.4x | Question Mark ✓ | Fast-growing but small player |
| Server components | 12% | 1.2x | Star ✓ | Growing market, leading position |
| Feature phones | -2% | 0.3x | Dog ✓ | Declining market, minimal share |
Strategy: Harvest Laptop cash → fund Server (maintain Star) + selective invest in Gaming (Question Mark with potential). Divest Feature phones.
Incorrect Application
Scenario: Same company
What went wrong:
- Used absolute market share (25%) instead of relative (25% / leader's 30% = 0.83x) → Would misclassify as High Share when it's actually Low. Violates Iron Law.
- Decided "invest in everything" without plotting first → No portfolio trade-off analysis. Violates Iron Law: plot then strategize.
Gotchas
- Market growth ≠ your revenue growth: A product growing 20% in a market growing 25% is losing share. Use market growth rate, not company revenue growth.
- Relative share threshold: The 1.0x cutoff is a guideline. In fragmented markets with no clear leader, adjust the threshold. Document your reasoning.
- BCG is a snapshot: Markets evolve. Stars become Cash Cows, Question Marks become Dogs. Reassess annually.
- BCG ignores synergies: A "Dog" that provides key components to a "Star" may be worth keeping. Factor in cross-unit dependencies.
- Not all Question Marks can be funded: The hardest decision. Use additional criteria (market fit, team capability, strategic importance) to choose which to invest in.
References
- For GE-McKinsey Matrix as an alternative (multi-factor version), see
references/ge-mckinsey.md - For comparison with other strategy frameworks, see
references/framework-comparison.md