Practical Use of The BCG Matrix
For each product or service, the 'area' of the circle represents the value of its sales. The BCG Matrix thus offers a 'map' of the organization's product (or service) strengths and weaknesses, at least in terms of current profitability, as well as the likely cashflows.
The need which prompted this idea was, indeed, that of managing cash-flow. It was reasoned that one of the main indicators of cash generation was relative market share, and one which pointed to cash usage was that of market growth rate.
Derivatives can also be used to create a 'product portfolio' analysis of services. So Information System services can be treated accordingly.
Read more about this topic: Growth-share Matrix
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