Why the Quadrants of BCG Matrix are Named as Star, Dog, Cow, Problem Child




Strategic Portfolio Management
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R.C. Natarajan
Professor of Marketing, India

Why the Quadrants of BCG Matrix are Named as Star, Dog, Cow, Problem Child

The BCG matrix's underlying assumptions are these:
(i) High market growth rate, by virtue of attracting competition, entails high resource usage for the firm;
(ii) High relative market share, by virtue of economies of scale, experience curve and power vis-a-vis channels and supplier of raw materials enables the firm to generate more resources.
Hence, the two axes can be better understood as "resource use" and "resource generation".
This makes it easy to understand that:
- A high-use low-generation is a problem child (or question mark, as called in many textbooks) that requires hand-holding and nurturing;
- A high use high-generation is a star that warrants continued support;
- A low use low-generation is a dog that can either be left alone or be divested; and
- A low-use high-generation is a cash cow that can be harvested.
Unfortunately, not many textbooks explain why the four quadrants are named so.
 

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