BCG Growth-Share Matrix

What this tool does

CM8-253 builds a growth-share matrix from your own figures. Each row is one product line or business unit: what it earns for you, what the largest competitor earns in the same segment, how fast that segment is growing, and what it returns. The tool works out relative market share, places every line in one of the four quadrants — star, cash cow, question mark, dog — and prints a portfolio review with a strategy, an owner and a review date per line.

It answers one question: where should the next unit of cash and attention go? Not which product you like most. Portfolios drift because the loudest or best-loved line quietly absorbs the investment; the two axes make that visible. Everything runs inside this file — no upload, no network request.

The two axes, precisely

Both axes are routinely got wrong, and each mistake moves lines into the wrong quadrant. The horizontal axis is relative market share — your revenue in a segment divided by the revenue of the largest competitor in that segment. It is not your percentage share.

If you are already the leader, enter the second-placed competitor instead. That convention keeps the top of the scale meaningful: a leader on 1.05 is in a knife fight, a leader on 3.00 is unassailable.

The vertical axis is market growth — the segment's growth, not yours. This is the commonest error in a hand-drawn matrix. Your growth is a result; the market's is the condition you operate in. A line growing 30% a year in a market growing 2% is a share gain, not a growth market, and it will hit a ceiling. Your prior-period revenue has a separate field so it cannot contaminate the axis.

Both thresholds are yours: the classic cut is 10% growth and a relative share of 1.0, and the growth line belongs a little above the industry you compete in. A line that flips quadrant on a small change of threshold is one the matrix cannot really place — say so rather than accept the label.

Why relative share, not your percentage share

Relative share is a proxy for scale advantage, and therefore for cost position: volume and accumulated experience drive unit cost down, because the larger producer buys better, runs longer, spreads tooling over more units and learns faster.

So the axis compares you to the leader, not to the whole market. Holding 8% where nobody exceeds 9% is strong; holding 8% where one firm holds 60% is weak. The percentage is identical, the strategic reality is not — which is why a 5% line can sit in the cash cows while a 20% line sits in the question marks.

Estimating the market honestly

Your own revenue is measured. Market size and the leader's revenue almost never are, and with no research budget you will be estimating them. That is acceptable. Pretending otherwise is not.

• Trade bodies publish segment sizes, often free to members — the best single source, and usually a year out of date.
• Customer intelligence. Buyers know what they spend and who else supplies them. Ask during an ordinary review meeting; ten customers give a defensible sample.
• Competitor capacity. Headcount from public listings, machine counts from open days and equipment auctions, floor area, vehicle fleets. Revenue per employee in your own business is a rough but serviceable multiplier for a similar competitor.
• Filed accounts where they exist — a competitor's total may span several segments, and you need only the part competing with this line.

Then apply the discipline that matters more than the sources: write down that it is an estimate, and where it came from. A quadrant derived from a figure nobody can trace becomes fact within two meetings.

The four quadrants and the playbook

Star — high growth, strong relative share. Stars are cash-neutral at best: they earn well but consume it in capacity, working capital and the effort of holding share against everyone chasing the same growth. Invest to hold share while the growth lasts. Share lost in a growth market is rarely recovered, and a star that keeps its share becomes tomorrow's cash cow when the market matures.

Cash cow — low growth, strong relative share. Defend cheaply, and fund the rest. Hold the position with maintenance-level investment, resist pouring money into a market that cannot grow, and route the surplus to stars and to the question marks you back. The danger is complacency: a cow starved of reinvestment, or outflanked on cost, stops being a cow while the report still says it is one. Check the margin, not just the share.

Question mark — high growth, weak relative share. Decide — back it properly or exit. The failure mode is not deciding: funding it enough to keep it alive but never enough to make it competitive burns cash for years and buys nothing. Backing it properly means investment sufficient to plausibly reach leadership before the market matures, at a stated cost. Otherwise sell it, licence it or stop quoting.

Dog — low growth, weak relative share. Exit unless it serves a strategic purpose: a weak position in a flat market rarely improves on its own, and the capital, floor space and attention are worth more elsewhere.

The cash-flow logic

The quadrants are half the model; the flow of cash between them is the half that makes it a planning tool. Cows generate more than they can sensibly reinvest in their own market. Stars need cash to hold share and give it back when their market matures. Backed question marks need cash now, with no guarantee. Dogs should be releasing cash and capacity, not absorbing them.

So cows fund stars and one or two selected question marks. Two shapes should worry you: all cows and dogs — profitable today with nothing coming — and all stars and question marks, the state in which growing businesses run out of money.

What the model cannot see

Say this plainly in the meeting. The matrix reduces "is this market attractive?" to a single axis — growth — when attractiveness also turns on margin structure, competitive intensity and barriers to entry. It reduces "are we strong here?" to relative share, when strength can also come from a patent, a certification or a relationship no share figure captures.

It is blind to synergies: a line sharing a machine, a sales visit or a component with three others is worth more than its own row suggests, and killing it raises the cost of everything it carried. It is blind to niches, where a small firm serving a defensible corner earns more than the leader of a market it never wanted. And it says nothing about where growth would come from — pair it with an Ansoff view of existing and new products against existing and new markets.

How often to redo it

Annually for most businesses, as part of the planning cycle, with a light quarterly check for a line that has moved. Market growth and competitor scale do not change monthly, and rebuilding more often than the estimates can be refreshed only adds false precision. Rebuild out of cycle when something structural happens: a competitor acquired or failed, a large customer moved, a segment breaking its growth trend.

Keep the old reviews — after two or three cycles the most useful output is the movement. A question mark that has stayed one for three years was never backed and should have been exited.

Saving and printing

Lines and settings are saved to this browser's local storage as you type, and that storage belongs to one browser on one computer. Treat Export .json as the real save — one file holding everything, which Import .json restores anywhere. Reset asks twice, then erases everything.

Print Report produces the pack from whatever the current filter shows. Clear the filters before issuing anything described as the whole portfolio: a filtered matrix reports shares of a subset.

FAQ

What if I cannot find the leader's revenue? Bound it rather than invent it: take a range you would defend, use the midpoint, record the range in the note. If the quadrant holds at both ends, act on it; if it flips, the honest output is "we do not know".

Revenue or units? Revenue usually, because it is what you can produce for yourself and estimate for a competitor. Units are better where prices differ sharply — a volume leader selling cheaply may hold the cost advantage the axis is trying to detect. Use one basis throughout.

How narrowly should I define a segment? Narrowly enough that the competitors are the ones you meet in bids, broadly enough that it is not a market of one. If your definition makes you the leader by excluding everyone who beats you, it is too narrow.

A line landed in a quadrant I disagree with. Find out which number caused it. Either an input is wrong, or your judgement carries something the axes cannot see — write that into the note. Do not override the placement silently and leave the numbers unchanged.

Accuracy & disclaimer

This tool arranges figures you supply. It cannot check a market size, verify a competitor's revenue, audit a growth rate or know whether your segment definition is honest — and every quadrant depends on all four. A matrix built on weak estimates looks exactly as tidy as one built on sound research, which is the main practical danger in using it.

The quadrants structure a decision about where cash goes; they are not the decision, and they are not advice. Use the output alongside the numbers the matrix leaves out — margins, cash conversion, customer concentration, capacity, the order book — and people who know the markets involved.