What to remember
- Define the market and period before calculating.
- Name the reference competitor used in relative share.
- Report insufficient evidence instead of forcing a quadrant.
- Test the diagnosis against economics, synergies, risks and capacity.
Define comparable units and markets
Compare businesses, offers or product-market pairs at the same level. A global brand, a local product and an experiment are not comparable portfolio units without reframing.
Growth depends on market scope and period. Relative share depends on the chosen competitor. Retain these definitions, sources and dates so the chart can be reproduced.
- Stable unit of analysis
- Documented reference market
- Common period
- Source and date
- Reference competitor
Calculate both axes transparently
Relative market share is the unit’s share divided by the selected leading competitor’s share. A value above 1 means the unit has a larger share than that competitor. Growth describes the market over the chosen period, not the product alone.
Illustrative example: A has 30% against 20%, giving 1.50. B has 15% against 30%, giving 0.50. Their market growth rates are 8% and 12%. High and low thresholds belong to the decision file and are not universal constants.
| Unit | Unit share | Competitor share | Relative share | Growth |
|---|---|---|---|---|
| A | 30% | 20% | 1.50 | 8% |
| B | 15% | 30% | 0.50 | 12% |
| C | 35% | 25% | 1.40 | 2% |
Treat quadrants as hypotheses
Stars, cash cows, question marks and dogs compress two measures. They do not directly include profitability, investment need, synergies or reversibility.
A low-growth business may fund options only if cash generation is evidenced. A low-share niche may still be profitable. Test every quadrant-led direction against economic and strategic evidence.
Move from the chart to the trade-off
Retain calculations, data quality, thresholds and open questions. In the target workflow, Grid is the primary editorial link for portfolio structure and Plot for BCG analysis. These editorial links prove neither a public runtime nor automated module exchange.
Record whether to invest, maintain, test, divest or stop, together with amount, owner, review condition and portfolio consequences.
Frequently asked questions
Which market-growth threshold should be used?
There is no universal threshold. Choose a defensible reference for the market and horizon, then test sensitivity.
What if no reliable competitor is available?
Mark relative share as not computable and investigate. An arbitrary number would create a misleading quadrant.
Is the BCG matrix enough to allocate budget?
No. Add margins, cash needs, capacity, risk, synergies and constraints.
Full sources
- BCG growth-share matrixComplete source available online · Read the complete source
- The Growth Share Matrix revisitedComplete source available online · Read the complete source
- Persistence and limits of the BCG matrixComplete source available online · Read the complete source
- Growth-share matrix caveatsComplete source available online · Read the complete source