The four stages of the BCG matrix while performing the analysis help the managers and the leaders of the organization to formulate various strategies to align the existing resources and the courses of actions with the overall set goals of the firm.
Start and Invest strategy:
The placement of a product, portfolio or the brand at the question mark level high business growth rate and the relative market position (market share) shall be invested at a higher rate. The reason why the higher rate of investment is required as the analysis reveals that the product has the higher business growth rate wider acceptability of the product and at the same time, the product has the potential to gain more market share. The argument has been supported by the academicians that question mark supported with higher growth and market share shall use the strategy of investment (Megargel, Shankararaman, and Reddy, 2018; Yi, 2018a). It is further established in the empirical studies that during the stage of investments the profit margins are low at present but in future will continue to increase since the product require higher investments (Canavari, 2018). The analysis of the literature and evaluation of the BCG matrix, it is important to go for the investment strategy when both the market share and the business growth is high for a single product or product portfolio.
Question mark, select a few and remainder diversified:
In this stage of a question mark on the BCG matrix, the business growth rate of the product or its portfolio is high; however, the market share is low. If we coordinate the concept and the performance of the product, it reveals that the firm shall adopt to select a few products to be further continued in the market as the chances of acceptance in terms of market share are low which may not be able product higher profits. Moreover, it also indicates that the firm is not making positive profits rather the negative profits are being earned due to larger investment and lesser market share (Gursoy, 2018; Adams, Bodas Freitas, and Fontana, 2019). In this stage of a question mark, the two strategies are composed off in the one, the 1st component is to a very few products shall be selected since the market share is quite low, therefore, the higher production may not be possible for the firm. The 2nd section of the strategy states that the diversification of the products may be used to deal with the potential and existing loss since major problem at this stage is lower market share.
Cash cow and production:
The 3rd box of analysis in the BCG analysis is the cash cow; at this stage, the business growth rate of the product is low, whereas, the market share is high. The research studies recommend that the demand for the product is quite high and thus the firms shall focus on the production to meet the existing demand (Johnsen, 2018; Ellram and Ueltschy Murfield, 2019). The profitability at this stage is very high and the investment does not need to be extended since no further features or characteristics can change the product demand. Hence, the practitioners suggested that the firm should focus more on production and make maximum profit out of this product.
Dog and liquidation:
The dog stage of the BCG analysis is again an analysis of the product of the firm or its portfolio to decide which strategy is to be implemented. At this stage, the market share and the growth rate of the business both are very low. It is often suggested that the firms shall liquidate this type of product or portfolio. The profits are negative, the least chances of market acceptability related to this product prevails. Hence, this stage of the BCG matrix suggests the strategy of liquidation should be adopted by the firm.
If we look at the strategic analysis of the BCG matrix and the related strategies it completely reflects that each stage is measured with business growth and market share, the strategy to invest is applicable when both are rated high, the strategy of diversification and investing in few is applicable with lower market share and the high business growth, the strategy to liquidate is applicable when the growth and market share both are at lowest ebb and with higher market share but low business growth the company should try to get as maximum profit by increasing the production supply since no further change in product will change demand.
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