The larger the firm’s market share, relative to its largest competitor, the stronger the firm is in the marketplace. Relative market share is used as a surrogate of competitive strength. The growth rate of the market dimension is used as a proxy measure of the attractiveness of the market, with high-growth markets being seen as more attractive and offering more potential and opportunity. The BCG matrix considers two elements to form its four quadrants. The BCG matrix was a simple way of plotting the firm’s different business portfolios onto the same matrix and providing some guidance to how the company’s resources should be allocated across the different business units. Because it helps analyze and guide business portfolios, it is considered to be a portfolio model. These all represent different business portfolios – sometimes referred to as strategic business units – for the organization. In other words, it was a model designed for use in large conglomerate organizations that operated many different divisions.įor example, a large retailer may have chains of supermarkets, department stores, convenience stores, specialty stores and so on. The BCG matrix was originally developed to assist companies that have multiple product portfolios (or strategic business units) to help guide their decisions on reinvestment.