It can also help them reduce costs, improve productivity, and increase value creation in the long run. The BCG growth-share matrix can be used to identify and prioritize projects and evaluate the profitability of each product portfolio. It allows companies to understand how their strategic business units’ competitive advantage will impact future profit performance. This means that it can be used by companies with different cash flows and profit margins. It does not require a company’s cash flow or profit as inputs. The BCG growth-share matrix is one of the few analytical tools that has been shown to be predictive and useful for investors to do portfolio analysis. It allows companies to see how market share can be expanded in certain markets, while others are reduced. It is a portfolio planning method, first developed by the Boston consulting group (founded by Bruce Henderson), that evaluates a company’s strategic business units in terms of market growth and relative market share.
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