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.
The BCG matrix classifies products by relative market share and market growth.
🔒 Interactive diagram
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Core structure (memorise)
- BCG matrix classifies products by market share (high/low) and market growth (high/low)
- Stars = invest. Cash cows = milk. Question marks = decide. Dogs = divest
- A healthy portfolio needs a mix — cash cows funding stars
- Use BCG to judge where resources should go, not just to label products
- High share LEFT, high growth TOP — don’t get the axes wrong!
📊 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**.
What HL examiners want
- Draw a 2×2 grid with market share on the x-axis and market growth on the y-axis
- Label all four quadrants clearly
- Place products using case study data and justify classification
- Use BCG to support strategic recommendations
- Always apply the model to the whole portfolio where possible
✅ 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