bcg-matrix

BCG Matrix: The Growth-Share Matrix In A Nutshell

In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

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The Product Portfolio origin story

It all started back in the 1970s, when Bruce D. Henderson, the American businessman, founded the Boston Consulting Group (BCG) in 1963 as part of a bank, The Boston Safe Deposit and Trust Company.

The BCG became independent by the end of the 1970s, and by then, Bruce Henderson had come up with The Product Portfolio (aka BCG Matrix or growth-share matrix).

The idea was that determine the share of cash to allocate for each product, also based on how much future cash potential each product had.

Assumptions underlying the Product Portfolio theory

According to The Product Portfolio theory, it’s fundamental to look at cash flows to build up a successful portfolio, and this is based on four primary rules:

  • Rule 1: High market shares bring high margins and cash flows.
  • Rule 2: Growth requires cash to be maintained.
  • Rule 3: High market share will be either earned or bought.
  • Rule 4: No product market can grow forever.

Cash cows

Cash cows are products with high market share and slow growth. They generate cash in excess of what it takes to maintain the market share.

According to The Product Portfolio theory, cash should be invested back in cash cows only to maintain them, but most of the excess cash produced by cash cows should be invested in new products (question marks, see below), which have the potential to become cash cows in the future.

Pets (dogs)

Dogs are products with low market share and slow growth

Pets are those products that don’t have growth potential, and they don’t generate enough cash to be sustained.

As Bruce Henderson explained in his piece, all products either become cash cows or pets.

Question marks

Question marks are low market share and high growth products.

They require far more cash than they can generate.

Otherwise, they will die. The only way out is if they become stars. Otherwise, they will decay into dogs.

Star

Stars are high-share, high-growth products.

While they are leaders, they generate substantial cash. Yet, they will become large cash generators only when they will turn into cash cows, as their growth rate will slow down.

However, they will have high market shares, thus becoming more stable products, requiring diminishing investments and high cash generation.

The Success Sequence

Bruce Henderson, founder of BCG, in his Product Portfolio, explained how in a successful sequence of cash allocation, stars over time become cash cows.

And the abundant cash generated by cash cows will be invested back in question marks, which will need, over time, to become stars, to trigger a positive loop.

bcg-matrix-success-sequence

In short, stars become cash cows due to market dominance and saturation, thus creating a condition of a product with a slower growth rate and yet high margins and cash flows.

The cash flows generated by cows will need to get invested back to question marks, that for the time being, will make substantial cash.

To trigger a positive loop, those question marks will need to be turned into cash cows, or else they will decay and turn into dogs.

The Disaster Sequence

Bruce Henderson, founder of BCG, in his Product Portfolio, explained how in a disaster sequence of cash allocation, excess cash from stars is invested in question marks that turn into dogs.

And how excess cash from cash cows invested in dogs turns a negative loop.

bcg-matrix-disaster-sequence

In a disaster sequence, the cash generated gets invested inefficiently, thus either using the excess cash from cash cows into products that will turn into dogs.

Or the excess cash from stars into question marks that will decay into dogs.

BCG Business Model

bcg-business-model
It all started back in 1963 when Bruce D. Henderson founded the Boston Consulting Group (BCG) as part of The Boston Safe Deposit and Trust Company. The BCG became independent by the end of the 1970s, and it started an expansion process. In 2019, BCG made over $8.5 billion in revenues.

BCG Matrix Examples

As we saw, the Boston Consulting Group (BCG) matrix, also known as the product portfolio matrix, is a tool used to assess the strategic position of a company’s brand portfolio.

The BCG matrix was developed in 1968 by Boston Consulting Group founder Bruce Henderson in a short essay titled Perspectives. At its peak, Henderson’s model was used by approximately 50% of all Fortune 500 companies. Today, it is still one of the most popular product portfolio analysis methods and is a central component of many business school curriculums. 

The approach places a firm’s products and/or services into a 2×2 matrix with four quadrants that measure market share and growth rate. Each quadrant is described as follows:

  1. Question marks – high market growth/low market share products.
  2. Stars – high market growth/high market share products.
  3. Dogs – low market growth/low market share products, and
  4. Cash cows – low market growth/high market share products.

In this article, we’ll explain some BCG’s matrix examples.

Unilever BCG Matrix Example

Unilever is a multinational consumer goods company with hundreds of brands across categories such as ice cream, condiments, beauty products, personal care, and cleaning agents.

Founded in 1929, Unilever is the largest soap producer in the world and among the top 10 consumer packaged goods companies by market capitalization.

Question marks

Some of Unilever’s food and drink-based brands occupy the question mark quadrant of the BCG matrix.

The company has acquired a few of these brands to better position itself in markets where health-conscious consumers are driving growth.

Examples include:

  • Horlicks – a malted milk drink purchased from GlaxoSmithKline Consumer Healthcare Limited (GSKCH) in 2020.
  • Olly Nutrition – a vitamin and supplement brand acquired in late 2019.
  • Liquid I.V. – an electrolyte drink mix enabling consumers to hydrate faster, and
  • SmartyPants Vitamins – another vitamin supplement brand for adults, children, and pets. Unilever acquired SmartyPants in November 2020.

Stars

With over 400 brands in its portfolio, Unilever has a number that could be considered stars.

In its Q3 2022 report, the company identified five billion-dollar brands that contributed to 14% growth and accounted for 50% of turnover:

  • OMO – the company’s largest laundry soap and detergent brand.
  • Rexona – a predominantly Australian deodorant and antiperspirant brand that is also sold in Africa, Europe, and North America under different names.
  • Hellmann’s – an American line of mustards, sauces, ketchup, condiments, and salad dressings owned by Unilever since 2000.
  • Magnum – an ice cream brand also sold as Magic in Greece.
  • Lux – a global soap and feminine products brand

Dogs

Unilever sold its Slim-Fast diet shake brand in 2014 as part of a wider strategy to dispose of its non-core assets.

Over the nine years that the company owned Slim-Fast, consumer weight loss trends shifted away from drink-based shakes toward other techniques such as the 5:2 program.

To focus in areas where it can develop sustainable and competitive businesses, Unilever also sold Spanish personal care brands Royale Ambrée, S3, and Petit Cheri in 2022.

Cash cows

While their respective industries may be relatively slow-growing, Lipton and Dove are two major sources of cash flow for Unilever.

Dove is a personal care brand sold in over 150 countries with revenue of around $5.1 billion across 2021 and 2022.

The brand is also in the top three health and beauty brands worldwide with over 2 billion consumer reach points.

Lipton, on the other hand, is one of 30 tea brands in Unilever’s portfolio that enables it to sell around 143 billion servings of tea each year.

Despite the evergreen popularity of tea as a beverage and $2.26 billion in annual revenue, Unilever announced it would be divesting some of its Lipton tea assets in 2021.

Unilever CEO Alan Jope noted that the sale was part of the “evolution of our portfolio into higher growth spaces.

To that end, the company has retained its tea businesses in India, Nepal, and Indonesia. It also retained 100% of its ready-to-drink tea products released under a joint venture with Pepsi.

PepsiCo BCG Matrix Example

In the second example, let’s discuss PepsiCo. The company is best known for its soft drink brands, but it also has diversified interests in breakfast foods, snacks, sports drinks, water, iced tea, and various coffee-based beverages. 

Let’s take a look at some of these under the BCG matrix.

Question marks

When Diet Pepsi was launched in 1964, it became the first diet cola to be distributed around the United States.

Initially devised to cater to the dietary preferences of Baby Boomers, the brand enjoyed first mover advantage until Diet Coke was released in 1982.

Despite renewed interest in healthier, low-calorie drinks today, Diet Pepsi’s share of the core U.S. soft drink market has declined from 6.1% in 2004 to 3.8% in 2021. 

7-Up Nimbooz is another PepsiCo brand that falls in this quadrant of the matrix.

Launched in 2013 to take advantage of growth in the Indian market, the brand has failed to take market share from the likes of Thums Up, Sprite, and Kool-Aid. 

Stars

In North America, Gatorade holds an impressive 67.7% of the sports drinks market where it has been a mainstay for around half a century.

Globally, there may be additional opportunities for the brand to cement itself as the market leader. 

Mordor Intelligence predicts the global sports drink market to grow at a CAGR of 4.5% between 2022 and 2027.

The research firm believes this increase will be driven by more awareness of the benefits of sports drinks and their ability to act as a convenient food or nutrient supplement.

Dogs

Consumer health trends suggest that all sweetened cola beverages (including Pepsi) will move to the dog quadrant at some point in the near future. However, this cannot be predicted with absolute certainty.

Pepsi’s failed attempts to move with the times have led to some of its most notable failed brands.

One of these was Crystal Pepsi, a colorless, caffeine-free alternative to Pepsi which was removed from shelves after just twelve months in 1993. 

Other failures include spice-flavored soda 7UP Gold and Frito-Lay lemonade, an uninspiring combination of the company’s snack and beverage lines.

Cash cows

One cash cow for PepsiCo is snack brand Frito-Lay with nearly 60% market share in the United States and, in 2020, $4.8 billion in sales.

The brand’s range of convenient and savory snacks is a staple of American pantries and is thus unlikely to decline in popularity any time soon.

Tropicana was also a cash cow with around 44% of the $2.63 billion chilled juice sector in the United States.

The brand’s core product is Tropicana Pure Premium, a pulp-free orange juice that is itself the third most popular food brand in the country. 

Despite a high market share and around $3 billion in revenue, PepsiCo sold Tropicana and some other juice brands to focus on more profitable aspects of its business in 2021.

As part of the deal, the company retained a 39% non-controlling interest.

Coca-Cola BCG Matrix Example

Coca-Cola is one of the most recognizable brands in the world, but its true global presence combined with shifting consumer preferences means it does not necessarily dominate every market it enters. 

Question marks 

As the soft drink industry undergoes rapid transformation toward healthier alternatives, the question mark quadrant is perhaps the most important to Coca-Cola.

To that end, the company has invested a lot of money in low or no-calorie drinks such as tea and fruit juice.

Diet-Coke is another product that falls within this quadrant.

Despite attempts by Coca-Cola to market it as a healthier alternative, the product has not been able to gain significant traction.

Stars 

Bottled water is one product that Coca-Cola has been able to move from the question mark quadrant to the stars quadrant.

Brands such as Kinley, Dasani, and Glaceau Smartwater are significant players in the rapidly growing bottled water market.

In the United States alone, sales of the latter two brands accounted for $1.911 billion in sales during 2021.

Dogs 

Coca-Cola Life is an example of one product that falls in the dogs quadrant.

The product, which was a lower-calorie version of Coca-Cola, was made with the natural sweetener stevia.

Critics derided the company for greenwashing, but, in any case, consumers showed little interest in the natural alternative.

Cash cows 

The Coca-Cola company has quite a few cash cow products, none more significant than Coca-Cola itself.

Growth is limited since the product is sold in more than 200 countries and territories around the world.

However, the drink remains immensely popular and a market leader despite a decline in global soft drink sales.

Apple BCG Matrix Example

Apple can boast a diverse product line that caters to a wide audience base. Let’s take a look at various Apple products in terms of the BCG matrix.

Question marks 

While Apple has a dominant market share in many contexts, Apple TV and Apple AirPods face strong competition from both established brands and smaller companies.

Apple TV in particular is a reasonable quality product that was simply ahead of its time.

It may become more popular when consumers can appreciate the importance of the fact that it is part of the Apple ecosystem.

Stars 

The Apple iPhone is a star product that continues to deliver.

With each update, the iPhone seems to set new innovative standards and smash previous sales records. The iPad and Smartwatch are not far behind.

Dogs 

The iPod could be considered an example of a dog product.

While it only took the company five years to sell 100 million iPods, the longevity of the portable music player market was cut short by smartphone innovations and the rise of music streaming services.

Cash cows 

In terms of cash cows, the MacBook, iMac, and iPad enjoy relative dominance in their respective markets.

These three products enjoy high brand equity, with devoted consumers more likely to purchase Apple products over comparable (and sometimes cheaper) alternatives.

Nestlé BCG Matrix Example

Stars

According to the Nestlé website, the company’s biggest brands are Nescafe, KitKat, Nespresso, Maggi, Toll House, and Milo.

In terms of revenue, the powdered and liquid beverage product category contains the most star brands with $23.976 billion in sales in 2021 alone.

Of the brands we mentioned above, Nescafe, Milo, and Nespresso are included in this category.

But it is Nespresso that warrants a closer look.

The brand can trace its origins back to 1975 when engineer Eric Favre was tasked with finding a way to allow consumers to enjoy quality espresso at home with the speed and convenience of instant coffee.

Nestlé’s eventual pod-based, single-serve coffee system was patented in 1976 with specialized coffee machines developed to match.

Today, around 14 billion Nespresso capsules are sold annually in around 84 countries. Impressively, around 400 Nespresso drinks are consumed every second with 1H 2022 sales of around $3.15 billion.

Cash cows

The company’s line of Maggi soups, noodles, recipe bases, bouillons, and recipe bases is a cash cow.

The brand was developed in Switzerland in 1886 by Julius Maggi who wanted his product to become as ubiquitous as salt and pepper at the dinner table. 

Maggi products are available all over the world today, but the brand enjoys particular dominance in the Indian market.

In 2019, the company sold around 264,000 metric tonnes of Maggi products which have been a staple item for Indian consumers since they were first introduced in 1983.

Despite strong competition, Maggi’s range of instant noodles commands 60% of the market in India which is touted as the fourth-largest consumer of such products in the world.

Question marks

Nestlé EveryDay is a brand of powdered milk or tea whitener that occupies the low market share, high market growth quadrant of the BCG matrix.

This market was valued at $5.35 billion in 2018 with an predicted CAGR of 3.2% to be worth $6.87 billion by 2025.

EveryDay and similar brands EveryDay Lite and Nestlé a+ SLIM are popular in the sub-continent where tea is popular and consumers desire a product that has a longer shelf-life than fresh milk.

However, the market for powdered milk and related products is extremely competitive with companies such as DFA, Fonterra, Danone, and Arla all major players.

While Nestlé has around 41% market share in Pakistan and has also found success in India, the company may find it difficult to increase its presence in the hyper-competitive powdered milk segment.

Dogs

In 2013, the company undertook a strategic review of around 1,800 businesses to identify poor performers.

One of these was the weight loss brand Jenny Craig which was acquired by Nestlé in 2006 but struggled outside of the United States. The brand exited the European market in 2010 and was sold off completely in 2019.

The company’s ice cream brands have been in a similar predicament.

The size of the market has stagnated somewhat as consumers seek healthier food choices, and in the lucrative Chinese market, Nestlé was also forced to close its Shanghai factory in 2012 after failing to compete with the economies of scale enjoyed by local producers.

In more recent years, Nestlé has struggled to compete with main rival Unilever and its investment in powerhouse ice cream brands such as Magnum and Ben & Jerry’s. 

Nike BCG matrix example

Stars

Nike is the most popular brand of sports and sports-inspired footwear in the world with a market share of around 27.4%.

Footwear sales comprised around 66% of total company revenue for the fiscal year 2022, equivalent to $29 billion.

The global footwear market is extremely lucrative and one where Nike invests much of its resources into product development.

Some predictions project Nike’s market to grow by 3.8% to be worth $508 billion by 2027.

Some of the best-selling brands in this market include the Nike Air Max, Nike Air Force, Nike Revolution, Nike Air Vapormax, and Nike Air Jordan lines.

Cash cows

Nike sells numerous types of footwear, but the one that earns the company the most revenue is that which is affiliated with NBA superstar Michael Jordan.

The Jordan Brand alone surpassed $5 billion in revenue in 2022 or around 17% of total footwear revenue.

While growth in this market is limited, Jordan’s mystique and the power he lends to the brand have not diminished in the three decades since the first pair of shoes was developed.

The company maintains an interest in the Jordan Brand with frequent releases of new sneakers and, at times, re-releases models that have long been out of production.

Question marks

Nike’s sports equipment brands could be considered question marks in the BCG matrix.

Despite the global sports equipment market predicted to experience a CAGR of 6.8% between 2023 and 2027, the company’s market growth has been negligible. 

Over the past five years, Nike has reported revenue growth of 5.9% in Europe, the Middle East, and Africa and 8.9% growth in the critical Chinese market.

However, this increase has been tempered by a 6.6% and 6.7% decline in the North America and Asia Pacific & Latin America regions respectively.

Moving forward, it will be interesting to see how Nike addresses the decline in the United States amidst increased competition from domestic competitors and perhaps an overreliance on growth in the Chinese market.

Dogs

Nike acquired the Hurley brand in 2002 for an undisclosed amount at a time when the surf, skate, and snowboard culture was at its peak.

However, as interest in this culture started to wane toward the end of the decade, so too did the brand’s profit margins and viability.

When Nike decided not to disclose Hurley’s revenue from 2012 onward, many saw the writing on the wall.

In December 2019, Nike sold Hurley to Bluestar Alliance LLC as part of a broader trend of divestments and acquisitions in the industry. 

Similarly, the company’s skateboard division – dubbed Nike SB – and its range of apparel, accessories, and shoes could also occupy this quadrant of the matrix.

Whilst Nike owns the popular Converse brand that is somewhat associated skate culture, Nike the company does not have a strong skateboard heritage when compared to others.

BCG Matrix and Ansoff matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

Similar to the BCG matrix, the Ansoff matrix is a prioritization tool that serves to understand whether to leverage existing products and markets or build new products and develop new markets as a business strategy.

Whereas the BCG matrix tries to look at the current company’s portfolio to understand what product might turn into a star, thus, kicking off a success sequence.

The Ansoff matrix helps inform the organization’s business strategy; for instance, by making the company prioritize a market penetration strategy or a market development strategy.

You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

Both tools are used in conjunction and can help prioritize a product’s portfolio and inform a company’s business strategy.

These tools can help a company to assess its position in the current market landscape to understand the level of competitiveness and the competitive moats.

BCG Matrix vs GE Matrix

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

GE Matrix is a multifactor portfolio matrix that tells a firm which strategy to follow based on the position a product occupies in the grid, which can be broken down into three main strategies:

These strategies are based on strong, average, and weak competitive advantage and high, medium, and low industry attractiveness.

Thus, the GE Matrix gives a much more comprehensive understanding of a business landscape compared to the BCG Matrix, which is primarily a prioritization tool for products.

Thus, the BCG matrix is more primitive.

In addition, the GE McKinsey matrix provides concrete instruction on how a business can calculate industry attractiveness and competitive advantage or business unit strength.

Where the BCG matrix does not clarify how market share and market strength should be calculated.

There is one advantage in favor of the BCG Matrix. Its simplicity is also its strength.

The BCG Matrix is a way to develop a mental model around how a business can prioritize product units, thus moving fast from there based on this understanding.

The GE Matrix, on the other hand, with its weights, gives the impression of being more accurate than the BCG Matrix, yet it loses in flexibility.

Key takeaways

  • The Boston Consulting Group (BCG) matrix, also known as the product portfolio matrix, is a tool used to assess the strategic position of a company’s brand portfolio. The matrix was developed in 1968 by Boston Consulting Group founder Bruce Henderson.
  • Back in the 1970s, Bruce Henderson, founder of the BCG consulting produced a cornerstone piece called The Product Portfolio, which would become the foundation of what is also known as the BCG Matrix or Growth-Share matrix.
  • The BCG Matrix assumes that the success of a portfolio of business products will highly depend on how the cash will be allocated over those same products. More precisely high market shares products will also bring high margins and cash and vice versa.
  • The matrix divides the products into four main categories: cash cows, dogs, question marks, and stars.
  • In a success sequence, stars generate cash and over time they will turn into cash cows. Cash cows have low growth but high market share and as such generate large cash flows to be invested in question marks, to turn them in stars, that over time will become cash cows, and trigger again this positive loop.
  • In a disaster sequence, the excess cash from stars is invested in question marks that decay into dogs. And the excessive cash from cash cows is invested back into cash cows that over time decay into dogs.
  • Coca-Cola is one of the most recognizable brands in the world but is not immune from failed product launches or intense competition. As the soft drink industry wanes and consumers choose healthier alternatives, the question mark quadrant is perhaps the most relevant to the company’s long-term success.
  • For Apple, products in the question mark quadrant may become more successful over time since they are integrated with other, more popular products. The iPhone, iPad, and Smartwatch are all products that enjoy tremendous market share, while the company’s laptop and desktop products are considered cash cows.
  • Read next: SWOT Analysis.

What is BCG matrix with example?

The Product Portfolio (aka BCG Matrix or Growth-share Matrix) would look at a successful business product portfolio based on potential growth and market shares. As an example, Unilever is a multinational consumer goods company. Some of Unilever’s food and drink-based brands occupy the question mark quadrant of the BCG matrix (Horlicks, Olly Nutrition, SmartyPants Vitamins). Unilever has a number that could be considered stars (OMO, Rexona, Hellmann’s). Slim-Fast diet shakes brand in 2014 as part of a broader strategy to dispose of its non-core assets as a dog into the BCG matrix. Lipton and Dove are two significant cash flow sources for Unilever, thus being the cash cows.

What are the 4 elements of a BCG Matrix?

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The four critical elements of the BCG Matrix comprise:

What is the effectiveness of BCG model?

The BCG Matrix is a prioritization tool to understand how to manage, maintain and grow a portfolio of products to grow a business in the long term and build competitive moats by looking into four key quadrants: question marks, starts, dogs, and cash cows.

Connected Strategy Frameworks

ADKAR Model

adkar-model
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived from whether the market is new or existing, and whether the product is new or existing.

Business Model Canvas

business-model-canvas
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

lean-startup-canvas
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Balanced Scorecard

balanced-scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

GAP Analysis

gap-analysis
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

GE McKinsey Model

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

McKinsey’s Seven Degrees

mckinseys-seven-degrees
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

McKinsey Horizon Model

mckinsey-horizon-model
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis

Scenario Planning

scenario-planning
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

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