Editing Growth–share matrix (section)

==Critical evaluation==
While theoretically useful, and widely used, several academic studies have called into question whether using the growth–share matrix actually helps businesses succeed, and the model has since been removed from some major marketing textbooks.<ref>Competitor-oriented Objectives: The Myth of Market Share http://cogprints.org/5196/1/myth_of_market_share.pdf See discussion on page 14.</ref><ref>{{cite journal | url = http://marketing.wharton.upenn.edu/documents/research/Effects%20of%20portfolio%20planning%20methods-empirical%20results.pdf | title = Effects of portfolio planning methods on decision making: experimental results | author = J. Scott Armstrong and Roderick J. Brodie | journal = International Journal of Research in Marketing | volume = 11 | issue = 1 | pages = 73–84 | year = 1994 | doi = 10.1016/0167-8116(94)90035-3 | url-status = dead | archive-url = https://web.archive.org/web/20100620225128/http://marketing.wharton.upenn.edu/documents/research/Effects%20of%20portfolio%20planning%20methods-empirical%20results.pdf | archive-date = 2010-06-20 | citeseerx = 10.1.1.708.5557 | s2cid = 11220583 }}</ref> One study ([http://jom.sagepub.com/content/18/4/717.abstract Slater and  Zwirlein, 1992]), which looked at 129 firms, found that those who follow portfolio planning models like the BCG matrix had lower shareholder returns.

===Misuse===
As originally practiced by the [[Boston Consulting Group]],<ref name="fut">[http://futureobservatory.dyndns.org/9435.htm the Rule of 123] {{webarchive|url=https://web.archive.org/web/20061003100819/http://futureobservatory.dyndns.org/9435.htm |date=2006-10-03 }}</ref> the matrix was used in situations where it could be applied for graphically illustrating a portfolio composition as a function of the balance between cash flows.<ref name="Product Portfolio">{{cite web|last=Henderson|first=Bruce D.|title=The Product Portfolio|url=https://www.bcgperspectives.com/content/classics/strategy_the_product_portfolio/|access-date=16 May 2013}}</ref>  If used with this degree of sophistication its use would still be valid. However, later practitioners have tended to over-simplify its messages.{{citation needed|date=August 2013}} In particular, the later application of the names (problem children, stars, cash cows and dogs) has tended to overshadow all else—and is often what most students, and practitioners, remember.

Such simplistic use contains at least two major problems:

*'Minority applicability'. The cashflow techniques are only applicable to a very limited number of markets (where growth is relatively high, and a definite pattern of product life-cycles can be observed, such as that of ethical pharmaceuticals). In the majority of markets, use may give misleading results.
*'Milking cash cows'. Perhaps the worst implication of the later developments is that the (brand leader) cash cows should be milked to fund new brands. This is not what research into the [[fast-moving consumer goods]] markets has shown to be the case. The brand leader's position is the one, above all, to be defended, not least since brands in this position will probably outperform any number of newly launched brands. Such brand leaders will, of course, generate large cash flows; but they should not be 'milked' to such an extent that their position is jeopardized. In any case, the chance of the new brands achieving similar brand leadership may be slim—certainly far less than the popular perception of the Boston Matrix would imply.

Perhaps the most important danger,<ref name="fut"/> however, is that the apparent implication of its four-quadrant form is that there should be balance of products or services across all four quadrants; and that is, indeed, the main message that it is intended to convey. Thus, money must be diverted from 'cash cows' to fund the 'stars' of the future, since 'cash cows' will inevitably decline to become 'dogs'. There is an almost mesmeric inevitability about the whole process. It focuses attention, and funding, on to the 'stars'. It presumes, and almost demands, that 'cash cows' will turn into 'dogs'.
 
The reality is that it is only the 'cash cows' that are really important—all the other elements are supporting actors. It is a foolish vendor who diverts funds from a 'cash cow' when these are needed to extend the life of that 'product'. Although it is necessary to recognize a 'dog' when it appears (at least before it bites you) it would be foolish in the extreme to create one in order to balance up the picture. The vendor, who has most of their products in the 'cash cow' quadrant, should consider themselves fortunate indeed, and an excellent marketer, although they might also consider creating a few stars as an insurance policy against unexpected future developments and, perhaps, to add some extra growth.  There is also a common misconception that 'dogs' are a waste of resources.  In many markets 'dogs' can be considered loss-leaders that while not themselves profitable will lead to increased sales in other profitable areas.

===Alternatives===
As with most marketing techniques, there are a number of alternative offerings vying with the growth–share matrix although this appears to be the most widely used. The next most widely reported technique is that developed by McKinsey and General Electric, which is a three-cell by three-cell matrix—using the dimensions of 'industry attractiveness' and 'business strengths'. This approaches some of the same issues as the growth–share matrix but from a different direction and in a more complex way (which may be why it is used less, or is at least less widely taught). Both growth-share matrix and Industry Attractiveness-Business Strength matrix developed by McKinsey and General Electric, are criticized for being static as they portray businesses as they exist at one point in time. Business environment is subject to constant changes, hence, businesses evolve over time. The Life Cycle-Competitive Strength Matrix was introduced to overcome these deficiences and better identify "developing winners" or potential "losers".<ref name=":0" />  A more practical approach is that of the [[Boston Consulting Group's Advantage Matrix]], which the consultancy reportedly used itself though it is little known amongst the wider population.