Key Idea: HL Topic 6.4 extends BCG matrix analysis with detailed portfolio evaluation, strategic resource allocation recommendations, and critical assessment of the model's assumptions and limitations in dynamic market conditions.
[Diagram: bcg-matrix]
📊 The four quadrants: **Stars —** high share, high growth, need investment. **Cash cows —** high share, low growth, generate cash. **Question marks —** low share, high growth, uncertain but promising. **Dogs —** low share, low growth, often weak strategic value.
🧠 HL portfolio logic: **Cash cows often fund stars and question marks**. **Too many dogs may suggest weak portfolio renewal**. **No stars may suggest poor future growth**. **Question marks require careful judgement, not automatic investment**.
✅ Why BCG is useful: Useful for comparing products quickly. Helps prioritise investment. Shows balance across a portfolio. Supports strategic allocation decisions.
⚠️ Limits of BCG: Only uses two measures. Static snapshot — products move over time. Ignores profitability, brand strength and synergy. A dog may still matter strategically in a niche or for brand completeness.
Strong HL answers do not just label a product as a star or dog. They explain what that classification means for investment, cash flow and future strategic value.
Evaluation tip: a product may sit in an unattractive BCG position but still be kept for strategic reasons such as protecting a brand range, supporting another product, or serving a profitable niche.
Important: Common trap: reversing the axes. Market share is horizontal, market growth is vertical, and high market share is on the LEFT.
- Draw and label the matrix correctly
- Use the case data to classify each product
- Explain what the position means strategically
- Compare products across the portfolio
- Recommend where to invest, maintain or divest
- Add one limitation or qualification for HL evaluation