Editing Growth–share matrix (section)

== Overview ==
To use the matrix, analysts plot a [[scatter graph]] to rank the business units (or products) on the basis of their relative [[market share]]s and growth rates. This results is a chart showing:  
*'''''[[Cash cow]]s''''', where a company has high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, yet corporations value owning them due to their cash-generating qualities. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Cash "milked" is used to fund stars and question marks, that are expected to become cash cows some time in the future.<ref name=":0">{{Cite book|title=Strategic management : formulation, implementation, and control|last=Pearce, John A.|date=2000|publisher=Irwin/McGraw-Hill|others=Robinson, Richard B. (Richard Braden), 1947-|isbn=0-07-229075-7|edition=7th|location=Boston|oclc=41488602}}</ref>
*'''''Dogs''''', also called ''pets'':<ref>Hayes, A., [https://www.investopedia.com/terms/d/dog.asp What Is a Dog in Business? Definition, Meaning, and Example], ''Investopaedia'', updated on 19 December 2022, accessed on 11 September 2024</ref> units with low market share in a mature, slow-growing industry: the BCG matrix defines dogs as having low market share and relatively low market growth rate.<ref>{{Cite book|last=Duica|first=Andrea|date=November 2014|chapter=The rise and fall of B.C.G. Matrix|chapter-url=http://conferinta.management.ase.ro/archives/2014/pdf/13.pdf|title=Proceedings of the 8th International Management Conference|volume=1|pages=3}}</ref> These units typically "break even", generating barely enough cash to maintain the business's market share. Although owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. Dogs depress a profitable company's [[return on assets]] ratio, a measure used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off once short-time harvesting has been maximized.<ref name=":0" />
*'''''Question marks''''' (also known as '''a problem child''' or '''Wild dogs'''), which are business units operating with a low market share in a high-growth market. They are a starting point for most businesses. Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows. If question marks do not succeed in becoming a market leader, then after perhaps years of cash consumption, they will degenerate into dogs when market growth declines. When shift from question mark to star is unlikely, the BCG matrix suggests divesting the question mark and repositioning its resources more effectively in the remainder of the corporate portfolio.<ref name=":0" />  Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
*'''''Stars''''': units with a high market share in a fast-growing industry. They are graduated ''question marks'' with a market- or niche-leading trajectory, for example:  amongst market share front-runners in a high-growth sector, and/or having a [[monopolistic]] or increasingly dominant [[USP (marketing)|unique selling proposition]] with burgeoning/fortuitous [[proposition (value)|proposition]] drive(s) from: novelty, fashion/promotion (e.g. newly prestigious [[List of celebrity-branded fragrances|celebrity-branded fragrance]]s), [[customer loyalty]] (e.g. [[greenfield (investment)|greenfield]] or [[military]]/[[gang enforcement]] backed, and/or innovative, [[grey-market]]/[[illicit retail of addictive drugs]], for instance the British East India Company's, late-1700s opium-based Qianlong Emperor embargo-busting, [[Canton System]]), [[goodwill (accounting)|goodwill]] (e.g. [[Monopsony|monopsonies]]) and/or [[leverage (finance)|gearing]] (e.g. [[Oligopoly|oligopolies]], for instance [[Portland cement producer]]s near [[boomtown]]s), etc.{{citation needed| date= December 2013| reason=I have an authoritative cutting filed/to-bring, from FT or Economist as I recall.}}
The hope is that stars become next cash cows. Stars require high funding to fight competitors and maintain their growth rate. When industry growth slows, if they remain a niche leader or are amongst the market leaders, stars become cash cows; otherwise, they become dogs due to low relative market share. As a particular industry matures and its growth slows, all business units become either ''cash cows'' or ''dogs''. The natural cycle for most business units is that they start as ''question marks'', then turn into ''stars''. Eventually, the market stops growing; thus, the business unit becomes a ''cash cow''. At the end of the cycle, the cash cow turns into a ''dog''.

As BCG stated in 1970:
<blockquote>Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. The balanced portfolio has:
*stars whose high share and high growth assure the future;
*cash cows that supply funds for that future growth; and
*question marks to be converted into stars with the added funds.{{cn|date=October 2024|reason=Is this passage taken from "Perspectives" (1970)?}}
</blockquote>