How to build the Boston matrix in excel. Boston Consulting Group Matrix: An In-Depth Review

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Brief information about the tool

Method BCG Matrix (BCG Matrix)– one of the most famous business management tools. BCG was created by the founder of the Boston consulting group, Bruce D. Henderson, in the early 70s of the last century. The purpose of this matrix is ​​to analyze the relevance of the company’s products depending on the growth of the market for this product and the share it occupies. The BGK matrix has another name - "Growth - market share".

Corporate Portfolio Management

The BCG model is a fairly well-known business portfolio optimization tool that focuses on the following issues:
1) Portfolio balance.
2) Achieving a certain market position as a formulated goal for a specific business in a given strategic perspective.
3) The attractiveness of the products in the portfolio in terms of profitability or growth rate.
4) In what specific areas of activity should investments or income be directed in this strategic period?
5) Level of compliance with other types of business in terms of creating synergy.
Also known as the “market share - growth rate” matrix, as it represents the position of a particular business in the strategic space. This matrix shows the relative share of a company's specific product in a specific market for that product. And also measuring the growth rate of the market for the corresponding product, that is, the growth of consumer demand for a certain product.

Construction of the BCG matrix

It represents the intersection of axes, where the horizontal axis corresponds to relative market share. It is calculated as the ratio of your own sales to the sales of the strongest competitor or three strongest competitors, depending on the degree of concentration in a particular market.

The vertical axis corresponds to the market growth rate.

Thus, the BCG matrix results in four quadrants, each of which contains different companies.

The Boston Matrix is ​​based on the product life cycle model. It is based on two assumptions.

1. A business with a significant market share gains a competitive advantage in terms of production costs as a result of the experience effect. It follows that the largest competitor has the highest profitability when selling at market prices and for it the financial flows are maximum.
2. Presence in a growing market means an increased need for financial resources for its development, i.e. renovation and expansion of production, intensive advertising, etc. If the market growth rate is low, such as a mature market, then the product does not require significant financing.

Four stages of the BCG matrix

Access to the market

1. Access to the market (product - "problem"). This product is also called "Problem Children", "Question Marks", "Wildcats", "Dark Horses". A characteristic feature is a low share in a rapidly growing market. This is a weak position that requires large investments and does not provide tangible profits. In this situation, you either need to make a serious investment in the business, or sell it, or invest nothing and get a possible residual profit. But we must remember that under certain conditions and proper investments, products in this group can become "Stars".

Height

1. Height (product-"Star") These are leaders in a rapidly growing market. They provide high profits, but they need investment to maintain their leading position. When the market stabilizes, they may move into the category "Cash cows".

Maturity

1. Maturity (product - "Cash Cow"). This product is also called "Money Bags". As a rule, these are yesterday's "Stars" who constitute the company's main asset. Products have a high market share in markets and low rates of development. The profit from Cash Cows is greater than the investment. It is advisable to direct funds from the sales of “Cash Cows” to the development of “Difficult Children” and to support “Stars”.

Recession

1. Recession (product - "dog"). This product is also called "Lame Ducks", "Dead Weight". The product is characterized by a low growth rate and a small market share. Typically, products are unprofitable and require additional investment to maintain their positions. “Dogs” are supported by large companies if they are related to their direct activities. If there is no such need, then it is better to get rid of them or minimize their presence in the company’s assortment policy.

Quadrant of the BCG matrix

The BCG matrix quadrant represents a typical set of strategic decisions for specific business segments:
Stars are divisions that have a relatively high market share in high-growth industries. Therefore, they must be strengthened and protected. That is, maintain or increase the corresponding share of business in a given market.
“Cash cows” - since these business units generate more profit than they require investment, therefore, we must take advantage of these opportunities, but do not forget about control. You should also not forget about a certain share of investments and costs for this segment of the business, but the optimal amount of investment should be set.
The excess cash that “cows” provide should also not be spent thoughtlessly. This money should be used for a strategic perspective, that is, it should be used to develop other areas of the business.
“Difficult children” or “question marks” require a special approach. This business segment is worth studying, analyzing, and predicting its prospects. It is quite possible that with the help of targeted investments this business segment can be transformed into “stars”. In the most unoptimistic case, this market share can be reduced, but it must be preserved and in no case be liquidated.
“Dogs” represent weak growth prospects and a lagging position in the market compared to its leaders, which limits their profit margins. Therefore, they should be gotten rid of. In the strategic period, the corresponding lines of business are either liquidated or reduced.

Company portfolio taking into account the parameters of the BCG matrix

To ensure long-term value creation, a company must have a product mix—both high-growth potential products that require cash investment and low-growth potential products that supply cash.

Disadvantages and advantages of BCG

Like every business tool, the Boston Matrix has its own advantages and disadvantages that must be taken into account when planning a business.

So, its unconditional advantages we can consider the clarity and simplicity of construction, as well as the objectivity of the analyzed parameters (relative market share and market growth rate.

TO shortcomings It can be attributed to the fact that it simplifies the complex decision-making process. In practice, there are many situations when recommendations developed on its basis are unacceptable. For example, it is often important for consumers to see some “Dog” products in the assortment, and their removal may lead to an outflow of customers.

It is also unattractive to assume that market share corresponds to profit, because this rule may be violated when introducing a new product to the market with large investment costs. The assumption that a market decline is caused by the end of a product’s life cycle is not always correct.

Limitations of the Boston Consulting Group Matrix

The practice of using the BCG model has its pros and cons, as well as clear boundaries of its application.
Significant limitations of the BCG model include the following:
1) The strategic prospects of all portfolios of the organization must be commensurate with growth rates. This requires that the relevant products, in the strategic perspective under consideration, remain in stable phases of their life cycle.
2) The high market share that has been achieved is not the only factor of success, and not necessarily a high level of profitability.
3) To develop competition and determine the organization’s future market position, it is enough to know the value of the relative market share using the BCG model methodology.
4) Sometimes “Dogs” can bring even more profit than “Cash Cows”. This means that the quadrant of the matrix is ​​information with relative truthfulness.
5) In difficult competitive conditions, other tools of strategic analysis are needed, i.e. another model for building an organization's strategy.

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This is a preliminary encyclopedic article on this topic. You can contribute to the development of the project by improving and expanding the text of the publication in accordance with the rules of the project. You can find the user manual

In the May issue of the magazine we will talk about the BCG matrix - a marketing tool used when introducing products and services to the market. We will consider the algorithm for constructing this matrix, draw conclusions from the results of the analysis, and use a practical example to form an optimal portfolio of additional services provided by an autonomous institution.

The BCG Matrix is ​​a tool for strategic analysis and planning in marketing. It was created by the founder of the Boston consulting group, Bruce D. Henderson (the abbreviation comes from the name of the group) and is used to analyze the relevance of a product or service or the stage of the life cycle at which the organization itself is located, based on the dynamics of the development of a particular market and the share occupied by the organization in it .

For an autonomous institution, the BCG matrix will help determine which additional paid services need to be developed and supported, and which services should be abandoned because they do not bring the desired income.

The matrix displays the axes of the market growth rate (vertical axis) and relative market share (horizontal axis). Scores on these indicators allow you to classify a product or service, highlighting its possible roles for the organization.

Basics of matrix construction and interpretation

The BCG matrix (shown below) is divided into four quadrants, each of which contains the products and services of the institutions being studied (or the institutions themselves).

The Cash Cows quadrant includes organizations that have a high share of a slow-growing market, as well as those products and services that have a large market share but a low sales growth rate. Such organizations are highly profitable, do not require investments, and such services generate good income, which can be used to develop other quadrants.

"Stars" are leaders in a rapidly growing market. Their profitability is high, but they need investment to maintain their leading position. As the market stabilizes, the “stars” will turn into “cash cows.”

“Question Marks” (otherwise known as “problem children” or “wild cats”) include organizations and services that occupy a small share of a rapidly growing market. They have a weak position, so they have a high need for financing.

The Dogs quadrant contains organizations and services that have a small share of a slow-growing market. They are usually unprofitable and require additional financing to maintain their positions. Thus, “dogs” can be supported by large organizations if the former are connected with the activities of the latter (for example, they carry out warranty repairs of their products).

The BCG matrix implies that organizations and services typically go through a full life cycle. They start out as “question marks”, then if successful they become “stars”, when the market stabilizes they turn into “cash cows”, and end their cycle as “dogs”.

However, an organization's path may change depending on the actions of management and the influence of the competitive environment. In particular, "question marks" may not become "stars", but fail and turn into "dogs". In turn, the “stars”, as a result of certain changes, may return to the position of “question marks”, and not move into the category of “cash cows”. Similar metamorphoses can occur with the “cash cow”, which will become a “star” after modernization. “Dogs” are the least amenable to change - if successful, they can only move into the category of “question marks”.

Thus, based on the analysis using the BCG matrix, the organization can change its strategy. Depending on which quadrant a particular institution falls into, its strategic behavior can be predicted.

The BCG matrix allows you to choose from four strategies:

1. “Stars” are busy searching for additional financing necessary to expand their presence in a particular market (increase in production scale, volume of services provided). That is, the task here is to maintain and increase market share.

2. “Cash cows” are striving with all their might to maintain their market share and are ready to direct excess finance to the development of other areas and conducting scientific research and development.

3. “Question marks” need targeted financial investments to become “stars” or maintain their existing market share. Otherwise, the institution will have to reduce this direction.

4. “Dogs” are forced to be liquidated unless there are some special reasons for their preservation.

Construction of the BCG matrix using the example of a medical institution

Currently, most medical institutions have the ability to introduce and provide paid services, and the range of these services often differs. Using the example of a municipal hospital, we will consider the following paid services:

1) dental;

2) paid preventive examinations;

3) X-ray room services;

4) ultrasound examinations;

5) laboratory services (general blood and urine tests, blood sampling from a vein, biochemical blood test);

6) endoscopy (gastroscopy, colonoscopy);

7) physiotherapy (massages);

8) Academy of Nutrition.

Analysis stages

The construction of the BCG matrix takes place in six stages. First - collecting the necessary information(data on sales volumes).

At the second stage it is made calculation of sales growth rate.

Further market share is calculated occupied by one or another service (third stage). To do this, you need to know the sales volumes of the main competitors of the municipal hospital for each specific service. Suppose, after analyzing the collected data, the institution determined that its services occupy the following market shares:

Fourth stage - construction of the BCG matrix by sales volume. Knowing the relative market share of the service provided and the rate of market growth (sales volumes), an institution can determine the place of each service in the BCG matrix and, accordingly, in its portfolio of offerings. The corresponding quadrant should reflect the name of the service, sales volume and total sales volume per group. By analyzing the data obtained, you can determine how balanced the organization’s portfolio is, correctly prioritize the development of services and highlight key areas for the institution.

Fifth stage - construction of the BCG matrix by profit volume. Analysis based on this indicator makes it possible to judge the possibility of initial financing and further financial support for new services of the institution, and also helps to set priorities in supporting certain types of services.

Finally, in the sixth stage, a final analysis is carried out, conclusions are formulated and the institution’s strategy is developed (adjusted).

Analysis results

Based on the data obtained when constructing the BCG matrix, the following can be revealed:

1. The “Star” position includes endoscopy and nutrition academy services. This means that they occupy a relatively large share of the supply among paid medical services provided by the hospital, with a fairly high rate of development. The institution must support and strengthen this area, not reduce, but perhaps increase investment in it.

The best resources of the organization (personnel, scientific developments, funds) should be allocated to these areas. Star services are future stable source of funds for the institution.

2. Ultrasound, laboratory tests and physiotherapeutic procedures occupy the position of “cash cows”. That is, these services have a stable position among all the institution’s offerings and are the main profit generators. These areas are represented by a fairly large assortment, but are characterized by a negative growth rate.

There is no need for large investments - just to maintain the current level of sales. The institution may use income from the sale of such services to develop their promising areas- “stars” or “question marks”.

3. The presence of x-ray diagnostics in the “question mark” quadrant indicates that this service is at a transitional stage - it is beginning to lose its relative share among hospital services. Activities falling in this quadrant require large investments in order to grow in line with the market and strengthen their position in it.

When any referral falls into this quadrant, the institution must decide whether Are there currently sufficient resources to develop the service?. If funds are available, they are used to strengthen the key advantages of the service and intensively increase its market share. If the organization does not have sufficient resources, the service does not develop.

4. Services included in the "dog" position include preventive examinations and dentistry. This quadrant concentrates services with low market share in slow-growing or stagnant markets. These areas usually bring little profit and are unpromising for the organization. However, in our case this is not the case. These services are core business activities and should not be withdrawn from the market. They bring significant income, but their demand is low(at least on a paid basis). Therefore, the management of the institution should think about the current situation and take the necessary measures (for example, reduce the cost of the service).

Thus, an organization’s ideal portfolio of proposals should consist of two groups:

1) services that can provide the institution with free monetary resources for investment in development (“stars” and “cash cows”);

2) services that are at the stage of implementation or growth, require financing and can create the basis for the future stability and sustainability of the organization ("question marks").

In other words, the services of the first group ensure the current functioning of the organization, and the services of the second group ensure its future income.

Main conclusions for medical institutions

The construction of the BCG matrix allows us to draw the following conclusion: in the example under consideration, the portfolio of services is completely balanced. But the institution needs to develop new directions and strengthen the position of new products - “question marks”.

More detailed conclusions are formulated in the table.

The BCG Matrix suggests next set of next steps institutions on the market:

1. Services located in the “Stars” quadrant should be preserved and their positions strengthened.

2. If possible, expand the range of paid medical services from the “Dogs” quadrant. This will move them into the "Question Marks" or "Cash Cows" categories.

3. Services located in the “Cash Cows” zone must be strictly controlled - monitor changes in their market share and sales growth rates.

The change in the portfolio of services in the example under consideration is mainly associated with the displacement of previous methods of diagnosis and treatment by modern methods used using high-tech equipment purchased by the institution. Most likely, this policy was formed under the influence of competition, since the list of services for which the municipal hospital has a low growth rate in sales volumes is offered by almost all medical institutions. Therefore, a more thorough study of the needs of hospital clients (through surveys, questionnaires and other methods) is necessary. And the old tactics, when a developed set of services are offered, no longer justifies itself.

The considered portfolio of proposals allows us to conclude that at this time the institution is using a mass undifferentiated marketing strategy. That is, the hospital, ignoring differences in target audience segments, appeals to the entire market with the same services. At the same time, the emphasis is not on how the needs of individual consumer groups differ, but on what these needs have in common. As a result, the hospital provides services that are perceived positively by the widest possible range of consumers. But if other medical institutions choose a similar strategy, this leads to tougher competition and a decrease in income. Small segments are also lost.

Thus, in order to stably maintain market share and develop paid medical services, an institution needs to adhere to a more thoughtful marketing policy.

To analyze the relevance of the company’s products, based on their position in the market relative to the growth of the market for these products and the market share occupied by the company selected for analysis.

This tool is theoretically justified. It is based on two concepts: the product life cycle and economies of scale or learning curve.

The matrix displays the axes of market growth (vertical axis) and market share (horizontal axis). The combination of assessments of these two indicators makes it possible to classify a product, highlighting four possible roles of the product for the company producing or selling it.

Classifications of types of strategic business units

"Stars"

High sales growth and high market share. Market share needs to be maintained and increased. "Stars" bring in a lot of income. But, despite the attractiveness of this product, its net cash flow is quite low, as it requires significant investment to ensure a high growth rate.

"Cash Cows" ("Money Bags")

High market share, but low sales growth rate. “Cash cows” must be protected and controlled as much as possible. Their attractiveness is explained by the fact that they do not require additional investments and at the same time provide a good cash income. Funds from sales can be used to develop “Difficult Children” and support “Stars”.

"Dogs" ("Lame Ducks", "Dead Weight")

The growth rate is low, the market share is low, the product is generally low in profitability and requires a lot of management attention. We need to get rid of the “Dogs”.

"Problem Children" ("Wild Cats", "Dark Horses", "Question Marks")

Low market share, but high growth rates. “Difficult children” need to be studied. In the future, they can become both stars and dogs. If there is a possibility of transferring to the stars, then you need to invest, otherwise, get rid of it.

Flaws

• Great simplification of the situation;
• The model takes into account only two factors, but high relative market share is not the only factor of success, and high growth rates are not the only indicator of market attractiveness;
• Failure to take into account the financial aspect, the removal of dogs can lead to an increase in the cost of cows and stars, as well as a negative impact on the loyalty of customers using this product;
• The assumption that market share corresponds to profit, this rule may be violated when introducing a new product to the market with large investment costs;
• The assumption is that the market decline is caused by the end of the product's life cycle. There are other situations in the market, for example, the end of rush demand or an economic crisis.

Advantages

• theoretical study of the relationship between financial receipts and analyzed parameters;
• objectivity of the analyzed parameters (relative market share and market growth rate);
• clarity of the results obtained and ease of construction;
• it allows you to combine portfolio analysis with a product life cycle model;
• simple and easy to understand;
• It is easy to develop a strategy for business units and investment policies.

Construction rules

The horizontal axis corresponds to the relative market share, the coordinate space from 0 to 1 in the middle in increments of 0.1 and then from 1 to 10 in increments of 1. The assessment of market share is the result of an analysis of the sales of all industry participants. Relative market share is calculated as the ratio of one's own sales to the sales of the strongest competitor or three strongest competitors, depending on the degree of concentration in a particular market. 1 means that your own sales are equal to those of your strongest competitor.

The vertical axis corresponds to the market growth rate. The coordinate space is determined by the growth rates of all company products from maximum to minimum; the minimum value can be negative if the growth rate is negative.

For each product, the intersection of the vertical and horizontal axis is established and a circle is drawn, the area of ​​which corresponds to the product’s share in the company’s sales volumes.

Links

• Practical methods for developing and analyzing an enterprise’s product strategy based on internal secondary information

Notes

Wikimedia Foundation. 2010.

See what the “BCG Matrix” is in other dictionaries:

MATRIX “GROWTH-MARKET SHARE”, or BCG matrix- one of the most common, classic tools of marketing analysis, and in particular portfolio analysis of company strategies. The matrix gained fame and name thanks to the work of the Boston Consulting Group (BCG, or, in Russian, Boston... ...

BCG (BOSTON ADVISORY GROUP) MATRIX- a two-dimensional matrix with which you can identify winners (market leaders) and establish the degree of balance between enterprises in the context of the four quadrants of the matrix: enterprises that have won large market shares in growing sectors... ... Large economic dictionary

The BCG Matrix (Boston Consult Group, BCG) is a tool for strategic analysis and planning in marketing. Created by the founder of the Boston consulting group, Bruce D. Henderson, to analyze the position of the company’s products in the market... ... Wikipedia

- (product market matrix) an analytical tool for strategic management, developed by the founder of this science, an American of Russian origin Igor Ansoff, and intended to determine a product positioning strategy... ... Wikipedia

PORTFOLIO ANALYSIS- [English] portfolio analysis portfolio analysis] in marketing, analysis of types of products (types of activities or types of projects) using the classification of all product markets of the company according to two independent measurement criteria: market attractiveness and ... ... Marketing. Large explanatory dictionary

Bruce D. Henderson Bruce D. Henderson Occupation: Entrepreneur, author of the BCG Matrix, creator of the Boston Consulting Group Date of birth: 1915 (1915) ... Wikipedia

Henderson, Bruce D Bruce D. Henderson Bruce D. Henderson Occupation: Entrepreneur, author of the BCG Matrix, creator of the Boston Consulting Group Date of Birth: 1915 ... Wikipedia

The BCG matrix is ​​a unique matrix that helps, based on initial data, to construct a diagram and analyze all market segments. The matrix was created by the Boston Consulting Group, which is where it got its name.

It makes it possible to mathematically correctly analyze the market and select the necessary measures for the further development of various products in the future.

It sounds a little confusing, but in fact everything is a little simpler than it seems at first glance. The matrix strategy assumes that all products belong to only four groups:

· "dogs"- products that represent a small market share in their low growth segment; these products are less promising, so the production of this segment will not be successful;

"difficult children"- products that can quickly break into a promising segment, but still occupy a small part of the entire market; products with good development rates, but requiring financial and investment;

"cash cows"- a market segment with a constant but insignificant income, which does not require any investment; their share is significant, but in a weakly growing market segment;

· "stars"- products with a significant share of a fast-growing market that have the greatest success; from the first days they bring good income, and future investments in this segment can only increase profits.

The growth rate ratio relative to market segments can be displayed:

The essence of the BCG array is to find a specific market segment to which the original group or single product can be attributed.

Let's try to implement this procedure in practice using Excel functionality:

1. Let's create a table in which we display the original products with information about the number of sales of the current month and the previous one, as well as the lowest price of these goods from a competitor.

2. We calculate the growth rate of these goods on the market and their relative share. Let's divide the number of sales for the current period by the number for the previous period, and, accordingly, the amount of sales of the current period by sales from competitors.

3. The next step is to construct a diagram based on the information received. We use a bubble type chart – “Insert” - “Diagram” - “Other” - “Bubble”.

4. Select the necessary inputs. Open the functions and point to the “Select data” item.

5. In the data selection window, click on “Change” and begin to fill in the changes to the bubble chart series.

6. In the “Name of the series” set the cell “Name”. “X values” will be pulled up from the “Relative market share” column, to “Y values” - “Market growth rate”. “Bubble sizes” will be taken from the “Current period” range. This completes entering the values ​​and creates a diagram.

7. Let's carry out similar actions for all groups and get the final bubble chart. All that remains is to configure the axes correctly.

8. The axes need to be slightly adjusted. To begin with, in the horizontal axes we change the “Minimum value” to “0”, “Maximum” to “2”, and “Divisions” to “1”.

9. In the settings of the vertical axes, set “Minimum” to 0, “Maximum” to “2.18”, and divisions to “1.09”. These indicators are calculated from the average relative market share, which must be multiplied by 2. “Divisions” are also set to “1.09”. The last thing we will indicate is “Axis value” - “1.09”, respectively.

10. It remains to sign our axes and we can begin the direct analysis of the BCG matrix.

The BCG matrix makes it possible to conduct a quick and correct analysis of market segments.

In our case we see that:

“Product 2” and “Product 5” belong to the “Dogs” product group - they do not generate profit. They are not popular in the market, so we are no longer interested in them as future sales strategies.

“Product 1” is a representative of the “Difficult Children” group, which means that the product, with proper development and financing, can make a profit, but this will not happen in the near future.

“Product 3” and “Product 4” - “Cash cows” - excellent revenue makes it possible to develop other categories without investing in this segment.

“Product 6” is the only one that fully belongs to the “Star” category - its excellent ability to generate profit supports the entire business, and additional investments in this segment will only help improve the financial position.

Thus, it is possible to conduct a significant analysis of market segments and obtain the necessary conclusions for each group of products using the BCG matrix. Building a matrix should not cause any particular difficulties, but it is worth considering that verified initial data and indicators are needed, because they are the basis of the matrix.

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