BCG Matrix is a four celled matrix ( 2*2 matrix) developed by Boston Consulting Group, USA. The BCG Matrix produces a framework for allocating resources among different business units and makes it possible to compare many business units at a glance. But BCG Matrix is not free from limitations, the major limitations of BCG Matrix are:

  1. BCG matrix classifies businesses as low and high, but generally businesses can be medium also. Thus, the true nature of business may not be reflected.
  2. Market is not clearly defined in this model.
  3. High market share does not always lead to high profits. There are high costs also involved with high market share.
  4. Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability.
  5. At times, dogs may help other businesses in gaining competitive advantage. They can earn even more than cash cows sometimes.
  6. This four-celled approach is considered to be too simplistic.

For more refer BCG

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