how to calculate relative market share in bcg matrix

Cash Cow: Low Growth Rate and High Relative Market Share means the product is Cash Cow.Star : High Growth Rate and High Relative Market Share means the product is of Star Category.Business units operating in fast-growing markets are often cash consumers and are worth investing in only when they are projected to expand or retain market share in the future.

High market growth rates mean higher earnings and often income but they also absorb tons of cash, which is used as an investment to stimulate more growth. Thus we can say that “Company X” has a relatively high market share. The BCG Matrix is divided into four quadrants: Star, question marks, dogs and cash-cows.Īnother Scenario is if we are considering Company X which has a market share of 60% and the largest competitor “Company Y” is having a market share of 20% then the relative market share is 60%/20% = 3/1. The general aim of the review is to assist in understanding which products the business should invest in and which should be divested. These two dimensions show the company portfolio’s probable productivity in terms of the cash required to sustain the unit and the cash it produces.

It classifies the portfolio of companies into four categories based on industry attractiveness (that industry’s growth rate) and competitive position ( relative market share). Growth-share matrix or BCG Matrix is a business method that uses relative market share and industry growth rate indicators to determine the value of a portfolio of company brands and recommend additional investment strategies.īCG matrix is a tool developed by Boston Consulting Group to determine the competitive role and ability of the portfolio of company brands. Relative market share is represented on the horizontal axis and market growth speed is represented on the vertical axis.

BCG Matrix is a strategic method used to represent the company’s brand portfolio or SBUs on a quadrant.

How to calculate relative market share in bcg matrix