Advantages and Limitations of BCG Matrix


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Advantages –

  • it is easy to use
  • it is quantifiable
  • it draws attention to the cash flows
  • it draws attention to the investment needs

 

Limitations –

  • it is too simplistic
  • link between market share and profitability is not strong
  • growth rate is only one aspect of industry attractiveness
  • it is not always clear how markets should be defined
  • market share is considered as the only aspect of overall competitive position
  • many products or business units fall right in the middle of the matrix, and cannot easily be classified.

BCG matrix is thus a snapshot of an organization at a given point of time and does not reflect businesses growing over time.

 


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