BCG Matrix’s Problems and Its Reconstruction（BCG矩阵的问题及其重建）.pdf

BCG Matrix’s Problems and Its Reconstruction ZHOU Zhenping, ZUO Zhanping Hebei University of Economics and Business, Shijiazhuang, China, 050061 zzhenp_511@126.com Abstract: Boston Consulting Group (BCG) Matrix is a common approach to managing a portfolio of different strategic business units (SBUs) or major product lines. Since the early 1970’s the BCG developed this matrix, over 30 years has been passed. And due to the rapid nature of change and increasing complexity of today’s competitive environment, the matrix needs improving in many aspects, like the incompleteness of vertical axis and something wrong with the formula and calculation of horizontal axis , which is often ignored and misleads the decision-making. Therefore several concrete improvements have been discussed here. Keywords: sales growth rate, relative market share rate, scale economy, product life cycle 1. Introduction Boston Consulting Group (BCG) Matrix is a common approach to managing a portfolio of different strategic business units (SBUs) or major product lines. The BCG Growth-Share Matrix positions the various SBUs/product lines on the basis of Market Growth Rate and Market Share relative to the most important competitor. It provides a framework to compare many SBUs/product lines and for allocating resources between the different SBUs or product lines, which is divided into four categories (As shown in diagram 1). SBUs/product lines with a relative high market share in a high growth market share are designated as Stars. SBUs/Product lines with a relative high market share in a low growth market are designated as Cash Cows. SBUs/Product lines with a relative low market share in a high growth market share are des