The BCG matrix is a tool for the management of organization business portfolio developed by Bruce Henderson of the Boston Consulting Group in 1970s. The BCG matrix position the business units into the matrix based on relative market share and growth rate of industry. The Organization can track the business unit performance based on cash inflows and outflows by using BCG matrix.
The BCG matrix is composed of four quadrants, first quadrant is the question mark second quadrant is star third is cash cow and fourth is dog. Each business unit position is based on relative market share and growth rate of the industry, relative market share can be calculated by dividing business unit market share with the leading competitors market share. The relative market share is positioned on X-Axis and industry growth rate on Y- Axis both are measured in percentage.
As discussed there are four quadrants in BCG matrix each one explain the business in terms of relative market share and growth rate.