Understanding: The Growth-Share Matrix (by Adam Boari)

A framework first introduced by the Boston Group Company in the 1960’s, the Growth-Share Matrix is a useful framework to help companies decide how they want to think about allocating certain resources to certain businesses.

The matrix consists of two axis: relative market share and growth. These also are commonly referred to as the ability to obtain cash and the need for cash, respectively. The axis work together to create four separate, recognizable names: Cash Cow, Star, Question Mark, and Dog. The four categories each have certain aspects of the axis which distinguish one another by their characteristics of share of the market and overall growth.

Cash Cow: These are often companies that have been around a long time but are close to falling into a decrease of profits. A cash cow has a high market share (making plenty of cash) but a low rate of growth (small need for cash.)

Star: These are companies who prosper in both categories. They have a high market share and a high rate of growth.

Question Mark: These companies enjoy a high rate of growth but are accompanied by a low market share. Thus, these companies may or may not prosper depending on if there small amount of market share can account for need for cash.

Dog: These companies, by name, share both a low market share and a low rate of growth.

The overall purpose of this matrix is to show companies the direction in which they are proceeding, and how a change in their marketing startegy may increase/decrease either of the axis to get them from say a question mark or a dog to a STAR!!