mingyao743/make-rational-decision/bcg-matrix

BCG Matrix Analysis (Boston Consulting Group Matrix)

A portfolio analysis tool that classifies products, projects, or business units by market growth rate and relative market share to guide resource allocation.

When to Use

• Product portfolio review and investment decisions
• Resource allocation across multiple projects or initiatives
• Identifying which products to invest in, harvest, or divest
• Strategic portfolio balancing

The Four Quadrants

       High  ┌──────────────────┬──────────────────┐
             │                  │                  │
   Market    │    ★ STARS       │   ? QUESTION     │
   Growth    │                  │     MARKS        │
             │  Invest heavily  │  Selective       │
             │  to sustain      │  investment      │
             │  growth          │                  │
             ├──────────────────┼──────────────────┤
             │                  │                  │
             │   $ CASH COWS    │   🐶 DOGS        │
   Low       │                  │                  │
             │  Harvest profits  │  Consider       │
             │  Minimize        │  divesting       │
             │  investment      │                  │
             └──────────────────┴──────────────────┘
              High               Low
              
              Relative Market Share (vs. competitor)

The Four Categories

Process

1. Define the scope

• What portfolio are you analyzing? (products, projects, business units, features)
• What market/competitive context applies?

1. Gather data for each item

• Market growth rate: industry CAGR, segment growth, or demand trend
• Relative market share: your share vs. largest competitor's share
• Revenue and profit contribution
• Investment requirements

1. Plot each item on the matrix

• X-axis: relative market share (high = dominant, low = minor player)
• Y-axis: market growth rate (high = expanding, low = mature/declining)
• Size of bubble = revenue or investment (optional but informative)

1. Classify each item

• Assign each item to one of the four quadrants
• Document the rationale for classification

1. Develop portfolio strategy

• Stars: Continue investment, protect market position
• Cash Cows: Optimize profitability, redirect excess cash to Stars/Question Marks
• Question Marks: Evaluate each individually — invest in promising ones, divest unpromising ones
• Dogs: Divest, restructure, or retain only if strategic value exists

1. Balance the portfolio

• Ensure sufficient Cash Cows to fund Stars and Question Marks
• Avoid over-investment in Dogs
• Maintain a pipeline of Question Marks to feed future Stars

Output Format

## BCG Matrix: [Portfolio Name]
 
### Portfolio Overview
 
| Item | Category | Market Growth | Rel. Share | Revenue | Recommendation |
|------|----------|---------------|------------|---------|----------------|
| [Item A] | ⭐ Star | 25% | 1.5x | $5M | Continue investment |
| [Item B] | 💰 Cash Cow | 3% | 2.0x | $10M | Harvest, fund Item A |
| [Item C] | ❓ Question Mark | 20% | 0.3x | $1M | Invest or divest? |
| [Item D] | 🐶 Dog | -2% | 0.1x | $0.5M | Divest |
 
### Strategic Resource Allocation
- **From Cash Cows**: $[amount] redirected to Stars and Question Marks
- **To Stars**: $[amount] for growth investment
- **To Question Marks**: $[amount] for selective bets
- **From Dogs**: Divest [items], reallocate $[amount]
 
### Portfolio Balance Assessment
- Cash generation: [Sufficient/Insufficient]
- Growth pipeline: [Healthy/Weak]
- Risk concentration: [Diversified/Concentrated]

Extensions

This skill is enhanced by the following shared extensions:

• `_shared/diagram-renderer.md` — Mermaid quadrantChart template for rendering the BCG matrix
• `_shared/research-protocol.md` — Data collection methodology for market growth rates and market share figures
• `_shared/skill-workflows.md` — Workflow 2 (Strategy Chain) uses BCG Matrix for resource allocation
• `_shared/examples-library.md` — Example 7 shows a complete BCG matrix for a SaaS product portfolio

Rules

• Market share is relative — it's your share divided by the leading competitor's share, not absolute percentage
• Growth rate threshold for "high" vs "low" should be defined explicitly (commonly 10% for the dividing line)
• Classification is a snapshot — positions shift over time as markets evolve
• The matrix informs but does not dictate strategy — consider qualitative factors alongside the quantitative classification
• A balanced portfolio needs items in all four quadrants, not just Stars and Cash Cows