Use two explicit portfolio measures to start a resource-allocation conversation—then test the assumptions the matrix leaves out.
In one minute
The BCG growth–share matrix plots comparable business units or products on:
- market growth rate, a proxy for investment demand and opportunity;
- relative market share, originally linked to scale and experience advantages.
The familiar quadrants are:
- Stars: high growth, high relative share;
- Question Marks: high growth, low relative share;
- Cash Cows: low growth, high relative share;
- Dogs/Pets: low growth, low relative share.
The matrix is a portfolio lens, not an automatic instruction to invest, harvest or divest.
Best for: a company with several comparable businesses and credible market data.
Avoid when: market boundaries, growth or relative share cannot be measured consistently.
The problem it addresses
Leaders can evaluate each product in isolation and miss the way businesses compete for capital and management attention. The matrix makes portfolio differences visible and prompts discussion about funding, cash generation and strategic experiments.
The intended outcome is a resource-allocation hypothesis supported by unit economics, strategic fit and additional evidence.
When to use it
- when managing several products or strategic business units;
- when market growth and competitor share are measurable;
- during portfolio and capital-allocation reviews;
- when a fast-growing unit consumes significant cash;
- when deciding which “question marks” deserve experiments;
- as one input to a broader portfolio process.
When not to use it
Do not use the matrix:
- for a single product;
- when units serve fundamentally different economic systems without careful normalisation;
- when “market” has been chosen to force a preferred answer;
- when relative share is a poor proxy for cost or advantage;
- as a rule to divest every low-growth, low-share offer;
- without profitability, cash-flow, synergy and option-value analysis.
Independent recent reviews reinforce the central caution: the two axes simplify a portfolio but omit supply-side productivity, interdependence and much of the economics needed for allocation. Use the quadrant to open a resource discussion, never to close it.
Inputs required
- clearly defined portfolio units;
- a consistent market boundary for each unit;
- current market size and defensible growth estimates;
- the organisation’s share and the largest competitor’s share;
- revenue or asset size for bubble weighting;
- unit economics, cash flow, strategic dependencies and evidence confidence.
Step-by-step process
1. Define the unit of analysis
Use strategic business units or products with distinct markets and accountable economics. Do not mix a feature, a country and an entire division on one chart.
2. Define each market
Document customer need, geography, category and time period. Market definitions should be externally defensible, not chosen after seeing the desired quadrant.
3. Calculate relative market share
A common form is:
relative market share =
our market share / largest competitor's market share
A value above 1 means the unit is larger than the leading competitor used in the denominator.
4. Estimate market growth
Use a consistent period and source. Separate observed historical growth from forecast growth and record confidence.
5. Plot the portfolio
Place units on a logarithmic share axis where appropriate. Use bubble size for a relevant scale measure, but label it clearly.
6. Add the economics the matrix omits
For each unit, review profitability, cash consumption, customer retention, synergies, switching costs and future option value.
7. Form allocation hypotheses
Decide which units to:
- fund for leadership;
- test before scaling;
- operate for efficient cash generation;
- reposition, partner, maintain or exit.
8. Set gates
Define evidence, milestones and review dates. A quadrant is not a permanent identity.
Visual model
Text alternative: high-growth/high-share units are Stars; high-growth/low-share units are Question Marks; low-growth/high-share units are Cash Cows; low-growth/low-share units are Dogs or Pets.
Interactive example
Northstar has three products:
| Product | Market growth | Northstar share | Largest competitor share | Annual revenue |
|---|---|---|---|---|
| Salon Scheduler | 4% | 30% | 20% | €4.0m |
| Clinic Scheduler | 18% | 8% | 32% | €0.8m |
| SMS Reminder Add-on | 3% | 12% | 40% | €0.5m |
Your move
Calculate relative share and propose the next question for each product.
Worked answer
| Product | Relative share | Provisional quadrant | Decision question |
|---|---|---|---|
| Salon Scheduler | 1.50 | Cash Cow | Can it fund growth without damaging retention? |
| Clinic Scheduler | 0.25 | Question Mark | Is there evidence and capability to win meaningful share? |
| SMS Add-on | 0.30 | Dog/Pet | Does it create retention or cross-sell value not visible in standalone share? |
The labels do not provide the answers. The add-on might be strategically valuable if it protects the core product; the clinic product may destroy value if entry economics are poor.
Facilitation notes
- Ask a finance or market-intelligence owner to validate inputs.
- Show confidence ranges when market data are uncertain.
- Challenge market definitions before debating quadrants.
- Keep quadrant names secondary to the underlying numbers.
- Record portfolio interactions that the chart cannot show.
Expected output
- a plotted, dated portfolio;
- formulas and source notes;
- confidence levels for growth and share;
- unit economics and strategic dependencies;
- resource-allocation hypotheses;
- evidence gates and review dates.
Common mistakes
- Using absolute share instead of relative share.
- Mixing inconsistent market definitions.
- Assuming high share always creates superior economics.
- Treating growth as guaranteed.
- Equating quadrant names with mandatory actions.
- Ignoring synergies and option value.
- Using the matrix when reliable data do not exist.
Quality checklist
- Units are comparable and strategically meaningful.
- Market definitions and periods are documented.
- Relative share uses a clear denominator.
- Growth data distinguish history from forecast.
- Confidence is visible.
- Cash flow, profit and strategic dependencies supplement the chart.
- Allocation decisions have evidence gates.
Template
| Unit | Market definition | Growth rate | Our share | Largest competitor share | Relative share | Revenue/asset size | Economics | Strategic role | Proposed action | Review gate |
|---|---|---|---|---|---|---|---|---|---|---|
Knowledge check
Your unit has 18% market share and the largest competitor has 30%. What is relative market share?
A. 0.60
B. 1.67
C. 12 percentage points
D. 48%
Answer: A. Relative share is 18 ÷ 30 = 0.60.
Related tools
- Follows: strategy and market analysis
- Alternative to: other portfolio frameworks when their assumptions fit better
- Often combined with: Decision Matrix, Scenario Planning
- Not to be confused with: Ansoff Matrix, which frames growth directions rather than portfolio position
How to calculate a BCG matrix: one product, two calculations
The following numbers are an illustrative extension of the Northstar example, not a reported company result. Suppose the clinic-scheduling market grew from €10 million to €11.8 million in one year. Northstar holds 8% and its largest rival holds 32% of the same market.
| Calculation | Working | Result |
|---|---|---|
| Market growth | (€11.8m − €10m) ÷ €10m × 100 | 18% |
| Relative market share | 8% ÷ 32% | 0.25 |
This is high growth and low relative share if the team has explicitly chosen a 10% growth boundary for this exercise. The provisional label is Question Mark. The 10% boundary is an example assumption, not a universal threshold. State the period, growth boundary and market definition beside the chart.
Northstar's own revenue growth is not market growth. A ratio of 0.25 is not a 25% absolute market share: Northstar's share is one quarter of the rival's share. If the competitor denominator changes, explain why before comparing charts across periods.
Turn the quadrant into an investment gate
In this fictional decision, the team could authorise a limited clinic pilot, conditional on measured onboarding cost, retention and support capacity. It should name the evidence that would stop the pilot, including demand that requires an unaffordable product redesign. The matrix does not establish whether those conditions are met.
BCG matrix or Ansoff matrix?
Use the Ansoff Matrix to compare growth directions; use BCG to discuss positions and funding within a defined portfolio. Use SWOT to challenge capabilities and external assumptions, then compare alternatives with a Decision Matrix. Continue with the BCG lesson to test why a quadrant is not an investment instruction.
Quick answers
How do you calculate relative market share in BCG?
Divide the business unit’s market share by the largest competitor’s share in the same defined market and period. In the teaching example, 8% divided by 32% equals 0.25. This is low relative share even though the unit’s own sales may be growing. Market growth is a separate axis, calculated for the whole market.
Does a “dog” classification mean that a product should be closed?
No. Low relative share in a low-growth market is a prompt for investigation, not an automatic closure rule. Check cash generation, margins, strategic dependencies, customer obligations and the cost of exit before deciding. The matrix alone cannot establish the best investment decision.
Can BCG be used without market-share data?
Not reliably in its standard form. If comparable market boundaries, shares or growth estimates are unavailable, record the uncertainty rather than substitute internal sales growth for market growth. Use the Ansoff matrix to explore growth directions, while collecting evidence for portfolio decisions.
References
- Henderson, B. “The Product Portfolio.” Boston Consulting Group, 1970. BCG original article (opens in a new tab). Primary source.
- Boston Consulting Group. “What Is the Growth Share Matrix?” BCG history and overview (opens in a new tab). Authoritative organisational history; notes the collaborative development and Henderson’s role in popularisation.
- Reeves, M., Moose, S., & Venema, T. “BCG Classics Revisited: The Growth Share Matrix.” BCG, 2014. BCG paper (opens in a new tab). Authoritative retrospective on context and continued use.
- Chaberka, K. “SWOT analysis as a tool for assessing the BCG matrix.” Zeszyty Naukowe Polskiego Towarzystwa Ekonomicznego w Zielonej Górze, 20, 2024, pp. 64–81. doi:10.26366/PTE.ZG.2024.254 (opens in a new tab). Independent peer-reviewed systematic review of strengths, weaknesses, opportunities and threats associated with use of the matrix.
Sources reviewed 27 July 2026.