Nowadays, in a stronger context of globalisation, companies have to face more and more complex challenges such as a higher international competition, emerging markets, many economic changes or new technological progresses etc. Strategic management decisions have to be completely successful in this context, otherwise the consequences of any failure or mistake can be dramatic for companies in terms of profits or reputation. Senior executives actually have to use several conceptual models to be efficient particularly in their decision making. First of all, we will determine why conceptual models are so commonly used in strategic management. Then, we will describe and explain the BCG Growth / Share Matrix and finally, we will evaluate the different strengths and weaknesses of this conceptual model by analyzing and synthesizing the views of several authors.
[...] Tim Hannagan (2005) Management Concepts & Practices. 4th ed. U.K.: Prentice Hall. Arthur A. Thompson, Jr., A. J. Strickland III (2001) Strategic Management, Concepts and Cases. 12th ed. U.S.A.: McGraw-Hill International. Ralph D. Stacey (2003) Strategic Management and Organisational Dynamics, The Challenge of Complexity. 4th ed. U.K.: Prentice Hall. Mind Tools, The Boston Matrix [online]. Available at:
[...] To make their strategic choices or to take up their challenges, managers often use conceptual models such as the BCG Growth / Share Matrix, the SWOT Analysis, the PEST model or the Porter's five forces Analysis for example. I.B. Why conceptual models are so commonly used in strategic management? Managers have different analytical tools at their disposition to make efficient strategic decisions. Many concepts have been created to help them in their decision making process. Let's now see what can be the models used by managers and how they can contribute to strategic business thinking The first example is about the famous PEST Analysis (Political, Economic, Social, Technological and sometimes Environmental and Legal), which provides an analysis of the macro-environmental influences acting on a company. [...]
[...] As the Boston Consulting Group mentioned in 1970, “Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. The balanced portfolio has: - STARS whose high share and high growth assure the future; - CASH COWS that supply funds for that future growth; and - QUESTION MARKS to be converted into STARS with the added funds”. III. Reflection and evaluation of the strengths and weaknesses of the BCG Growth / Share Matrix III.A. [...]
[...] According to the website of the management & competitive intelligence consulting firm several others limitations and criticisms can be made about the BCG concept. First, a high growing market is not always attractive. A growing market considerably attracts news entrants and capacity exceeds demand then the market may become a low margin one and therefore unattractive” (problems of stability and size actually). In addition, the matrix only has four categories, which is not “complex” enough to make efficient and adapted strategic decisions. [...]
[...] Sometimes, the use of the BCG Growth / Share Matrix can represent a risk for a business (Thorogood website). The first example is about a foodstuffs group, managed by James Ferguson. Indeed, that company used the BCG Matrix to analyse its famous brand “Maxwell House”, the company's coffee business. According to the portfolio model, this business unit was classified in the CASH COWS category; so it was supposed to generate large positive cash flows. It was also not supposed to grow. [...]
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