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What are some advantages and disadvantages of the BCG matrix?

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The BCG (or growth-share) matrix for corporate planning helps businesses to easily map their own market share against the rate of market growth; however, one of its key shortcomings lies in its limited scope, which does not cover extraneous variables that may impact markets. The BCG (Boston Consulting Group) matrix has also been criticized for being reductionist, seeking to place all strategic business units (SBUs) or brands into one of four graph quadrants. The matrix is therefore not equipped to usefully analyze those SBUs that sit at the intersection of the graph's vertical (market growth) and horizontal (market share) axes.

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Full Answer

Some have criticized its reliance on market share and market growth to evaluate profitability in the first place. While the matrix is easy to use, this simplicity may be misleading, since a high share of a market that is not particularly profitable will not equate to high profits.

The BCG matrix also ignores the possibility that individual SBUs might not be independent of the others. If one SBU holds a low market share in a market with a low rate of development, for example, it will be plotted somewhere within the "dog" quadrant, the contents of which are not recommended for investment. However, some "dog" SBUs might be integral to a company's overall strategy toward gaining or maintaining a competitive edge.

In any case, the BCG matrix is praised as a good foundation for further analysis.

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