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BCG
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Limitations / problems of the BCG Matrix 1. The problems of getting data on the market share and market rate 2. There is no clear definition of what constitutes a ‘market’ 3. A high market share need not necessarily lead to profitability all the time. 4. The model employs only two dimensions – market share and growth rate. This may tempt management to emphasis a particular product or divest prematurely. 5. Low share businesses can be profitable too. 6. It considers the product or SBU only in relation to one competitor: the market leader. It misses small competitors with fast growing market shares. Critiques of BCG Matrix 1. In another word: by definition, only a single company can have a share greater than 1.0 in any given market. Thus, in the BCG matrix, there can be but one cash cow or one star per market. 2. The BCG model implies resource allocation rules regarding cash usage. Assumptions of BCG 1. This matrix assumes that a larger market share in a growth market leads to profitability. An effort to obtain a large market share in a slowly growing market requires too much cash.
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