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Rob, Netherlands
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10% Limit in Market Growth in BCG Matrix
Generally in the BCG Matrix, when the market growth is more than 10%, it is considered a star. Can anyone explain why they have chosen the (fairly high) limit of 10%?
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S. Adnan, Pakistan
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No Standard 10% threshold in BCG Matrix No this is wrong, there is no 10% limit / dividing line / threshold in the BCG matrix. This horizontal line in the diagram is drawn based on the average market growth. So if the brand is growing faster than the market, then it will be in star or question mark category, otherwise it will be under the line in the cash cow or dog section.
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shikha trivedi, India
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Product Life Cycle and BCG A really very good summary but plz explain the scaling of BCG and who can tell something more about the relationship of the Product Life Cycle and the BCG Matrix?
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Sanjay T Rane, India
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Average Growth rate of the Industry Low and high are divided on the basis of the average growth rate of the industry.
Let's say the growth rate of a certain industry is 40%. Then the separator line will come near 20%. Exactly you will have to calculate on the basis of weighted average or return from a product portfolio.
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Melvin van der Veen, the Netherlands
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Average growth rate As you say, Sanjay, the line in the middle should be 40%, yet this 40% is the average growth rate of the industry, right? Because why would 20% be an average? To me 20% over a market growth rate of 40% sounds like a very low percentage... So my question is: what do you base this 20% on?
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marjan
Student (MBA), Iran
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BCG Matrix Scales I want to know why the market share in BCG graph in different books is not same? For example I have read in Kotler's book 10% but in Changler's book it is 5%?
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Hamid Rezaei
Student (MBA), Iran
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Scales in BCG Matrix are Relative Agree with Melvin. It's the average growth rate. Therefore in the aforementioned example the horizontal line must be drawn on 40% scale.
But going back to Marjan's question, in the BCG Matrix we use a relative scale. You may scale it from 0% to 100% (although this is not often necessary and also is not very pragmatic).
The BCG Matrix is a concept rather than a calculation tool. You are free to use it based on your managerial judgment. We are not going to extract our perfect strategy out from BCG matrix.
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Jaap de Jonge
Editor, Netherlands
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Horizontal Line Dividing Sections in BCG Diagram @S. Adnan: This is correct. The horizontal line in the middle of the BCG Diagram has no fixed %, but depends on and reflects the average market growth % of the market in which the firm is active.
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