BCG Matrix: Optimizing Product Portfolio Strategy
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Understanding the BCG Matrix: Product Portfolio Strategy
The Boston Consulting Group (BCG) Matrix is a strategic tool used to analyze a company's product portfolio based on market share and market growth. It categorizes products into four quadrants, each with distinct characteristics and strategic implications.
Stars: High Growth, High Share
Characteristics of Stars
- Stars are products with high market share in high-growth markets.
- They are highly profitable and generate significant cash.
- Their high growth also means they require substantial cash to finance working capital and build capacity.
- Therefore, although profitable, Stars can have positive or negative net cash flow.
- Over time, as market growth slows, Stars often evolve into Cash Cows.