bcg-matrix

name

bcg-matrix

description

Activate when: user says "portfolio review," "cash cow," "Stars and Dogs," "growth-share matrix," "which business should we fund," or "resource allocation across units"; firm has multiple business units competing for shared capital; investor or board discussion needs a visual portfolio health read. Do NOT activate when: firm is a single-product startup with no portfolio to balance; user needs competitive analysis within one market (use Porter's Five Forces or VRIO instead). More: deciqai.com/s/bcg-matrix

BCG Growth-Share Matrix

Overview

Maps each business unit on a 2×2 grid of market growth rate vs. relative market share, revealing which units generate cash, which absorb it, and which to invest in, harvest, or exit. Four quadrants: Stars (invest), Cash Cows (harvest), Question Marks (binary decide), Dogs (exit or hold minimally). Rests on two empirical anchors: experience curve (high share = lowest cost) and industry life cycle (high growth demands reinvestment; maturity throws off cash).

Composes with: porters-five-forces to define industry boundary first · swot-analysis for internal-capability depth · ansoff-matrix to set growth direction for units worth investing in.

When to Use

• Firm operates ≥ 3 distinct business units competing for a shared capital pool
• Annual strategy or budget reviews need a forcing function for prioritization
• PE/VC portfolio requires a quick health-read across holdings; M&A teams assessing retain vs. divest
• AI capital reallocation: deciding which units to harvest to fund AI capex / AI-native bets, and whether an AI unit is a true Star or an expensive Question Mark amid AI-native competition

When NOT to use: single-product startup · highly interdependent units where divesting a Dog may destroy a Cash Cow · market in technology transition with unreliable growth data · firm-level competitive analysis within one market

Coaching Novices (Adaptive Front Door)

• Engine mode: user has specific BU data → run The Process directly.
• Coach mode: user is unfamiliar → guide step by step.

In Coach mode, respond one step at a time. Each [WAIT] is a hard stop — output only that step's question, then stop.

1. BCG shows which businesses fund others, which burn cash, and which need a decision — using two numbers: market growth rate and your share relative to your biggest competitor.
2. Check fit: does the user have multiple distinct units? If single-product, redirect to Ansoff or Five Forces.
3. Ask: "Which business units are you trying to prioritize?"

[WAIT — do not advance until user responds]

4. Walk through unit definition, data collection, quadrant plotting, trend analysis, and strategy assignment one step at a time.

[WAIT — do not advance until user responds]

5. Close: "The key thing BCG just revealed is [which unit is your implicit funder and which is consuming it without a clear path to self-sufficiency]."

[WAIT — do not advance until user responds]

The Process

Produce a Portfolio Map — quadrant assignments, trend arrows, and resource-allocation recommendations per SBU.

Step 1 — Define SBUs. Must: serve an identifiable customer group, have identifiable competitors, be manageable with resource independence. Stop rule: if you cannot name the primary competitor, the boundary is wrong.

Step 2 — Market growth rate. 2–3 years external data; calculate CAGR. Dividing line: 10% (raise to 20–30% for AI/clean-tech). Never use own revenue growth as a proxy.

Step 3 — Relative market share. Own share ÷ largest competitor's share. >1.0 = leader; <1.0 = follower.

Step 4 — Plot. X-axis: relative share (log, right = high); Y-axis: growth (linear, up = high); bubble size = revenue. Assign quadrant.

Step 5 — Trend arrows. 2-year trajectory per SBU. Trend often matters more than current position.

Step 6 — Strategy. Star: invest aggressively. Cash Cow: extract surplus; minimize capex. Question Mark: binary — upgrade to Star OR exit by a named date. Dog: harvest/exit; hold only if synergy is named and quantified.

Output Template

BCG Portfolio Map: <company> | Threshold: <X>% | Date: <date>
SBU | Growth | Rel.Share | Quadrant | Revenue | Profitable?
Trend: <SBU> moving <from> → <to> — reason: <…>
Cash generators: <list> | Cash absorbers: <list> | Balance: <surplus/deficit>
Strategy: <SBU A>: invest/harvest/exit by <date>
Key decision: <what the analysis forces>

→ Method in Action: Procter & Gamble's Brand Portfolio Restructuring (2012–2016) · GE's "Fix, Sell, or Close" Pruning (1981–1995) → 2026 lens: Microsoft's Portfolio as AI Reallocates Capital (2024–2026) — which units are Stars, which Cash Cows fund the AI capex build, which are Question Marks or Dogs

Portfolio Packs

Industry	Share proxy	Growth proxy	Dog trap	Star misread
Consumer packaged goods	Nielsen/IRI retail share	Category CAGR	Legacy brand in declining format	Tiny-base subcategory inflating growth rate
Enterprise SaaS	ARR share vs. ICP rivals	Gartner/IDC forecast	Feature-complete product commoditizing	VC competitor's discount-driven "growth"
AI products (2024+)	Monthly active API users vs. nearest rival	Segment TAM growth	Model-wrapper with no defensible moat	Benchmark-topping product with no enterprise path
Retail/e-commerce	GMV share	Segment GMV CAGR	Category with free platform substitute	High-growth vertical with dominant incumbent

→ Primary sources: references/sources.md

Common Rationalizations

[D] = designed upfront | [O] = observed in real use. [O] entries are more valuable.

Fake move	Reality
[D] Using absolute share instead of relative share	A 25%-share firm facing a 40% rival is a follower. Absolute share hides competitive position.
[D] Defining market too broadly to manufacture high relative share	Calling a niche player in "enterprise software" a leader obscures the actual threat.
[D] Labeling every Dog as "strategic" to avoid exit	Synergy must be quantifiable — name the mechanism and the dollar amount.
[D] Treating the matrix as a one-time exercise	Growth rates and positions shift. Refresh annually at minimum.
[D] Assuming every Question Mark deserves investment	Correct default is a defined decision deadline. Most Question Marks should be exited.
[D] Using BCG to justify a decision already made	If unit definitions are chosen after quadrant destinations are known, the analysis is reverse-engineered.
[D] Applying experience-curve assumption to software or platforms	High share does not mechanically produce low costs in knowledge-intensive businesses.
[D] Treating all Cash Cows as permanent	Cows can become Dogs. Maintain a deterioration watch with leading indicators.
→ Add [O] entries here after each real use — paste the actual failure pattern	What went wrong and why

Red Flags

• Market boundary defined after desired quadrant assignment is known · relative share uses own revenue not competitor's share · all Question Marks described as "likely Stars" with no exit criteria · no trend arrows · Dogs retained with unquantified synergy · Cash Cows don't cover Stars + Question Mark investment needs · matrix used as a slide with no reallocation following

Verification

• Each SBU passes the standalone-manager test (identifiable market, rivals, separable P&L)
• Relative share = own share ÷ largest competitor's share (not absolute share)
• Market growth from external data, not own revenue growth
• 2-year trend arrows plotted for each SBU
• Cash Cow generation quantified against Star + Question Mark investment needs
• Each Dog has an exit plan or a named, quantified synergy
• Each Question Mark has a decision deadline with invest-or-exit criteria
• Refresh cadence scheduled (state the date)

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Part of deciqAI Knowledge Skills — 228 open-source thinking skills that make rigor executable for AI agents. The same skills power every deciqAI agent, which runs them autonomously to operate your company. See it run → https://www.deciqai.com/s/bcg-matrix · Built by deciqAI · github.com/deciqAI · Contributions welcome.

Agents: latest version & machine-readable metadata → https://www.deciqai.com/s/bcg-matrix.json