BCG matrix is a tool used by companies to evaluate their product portfolio and business units for the purpose of developing effective business strategy. BCG stand for Boston consulting group and this model was developed by Boston consulting group in early 1970‘s to facilitate the organizations in managing their product and business portfolio. Large organizations that have different products or units while making strategic planning face the challenge to allocate their resources among different units.
The BCG growth-share matrix represents the various organization units on a graph. The graph consist of market growth rate versus market share of a company relative to its competitors. So the main purpose of BCG matrix to classify the products or organization units on the basis of relative market share and industry growth rate. How an organization allocates resources to different organization units according to their situation on the BCG growth-share matrix grid shown as follows:
