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As Steve Jobs, CEO of Apple, famously put forward, "Innovation distinguishes between a leader and a follower." The Growth-Share Matrix is a pathway to such transformative leadership. It denotes an innovative model that aids Strategic Planning, guiding C-level executives like yourself in better portfolio management.




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Flevy Management Insights: Growth-Share Matrix


As Steve Jobs, CEO of Apple, famously put forward, "Innovation distinguishes between a leader and a follower." The Growth-Share Matrix is a pathway to such transformative leadership. It denotes an innovative model that aids Strategic Planning, guiding C-level executives like yourself in better portfolio management.

Understanding the Growth-Share Matrix

The Growth-Share Matrix harbors two dimensions: Market Growth Rate, which assesses the attractiveness of the business environment, and Relative Market Share, a measure of your advantage/superiority to competitors. It classifies businesses or products into four distinct categories or quadrants: Stars, Cash Cows, Question Marks, and Dogs. In Reality, each category represents a specific strategic objective that you need to consider as you work towards maximizing your company's overall value.

Application of the Growth-Share Matrix

The power behind the Growth-Share Matrix lies in its versatility. To apply the methodology, you segment your company's Strategic Business Units into the four quadrants:

Unleashing the Power of the Growth-Share Matrix

Used correctly, the Growth-Share Matrix offers valuable insight into your current product portfolio and crucial context for making strategic decisions. Here are some key principles for optimizing your use of the tool:

  1. Resource reallocation: The Growth-Share Matrix offers a crystal clear view of where each Strategic Business Unit stands, thereby enabling informed decision-making in resource allocation.
  2. Unbiased assessment: The matrix offers a non-biased viewpoint on the performance of each unit/product. This allows objective decision-making, mitigating “pet project” bias.
  3. Relevance to market conditions: Market conditions change rapidly, especially in the current era of Digital Transformation. Regular analysis using the Growth-Share Matrix ensures your strategy aligns with changing market dynamics.

Challenges and Adaptation of the Growth-Share Matrix

No strategy tool comes without limitations. In the case of the Growth-Share Matrix, your company needs to be careful when interpreting the market leadership data relating to Relative Market Share. Overemphasis on market-share leadership can lead to an unbalanced portfolio, while ignoring the importance of cash-flow generation and profit margins.

Additionally, low market share does not necessarily signify a lack of profitability. Thus, the interpretation of 'Dogs' should tread on careful lines.

Revolutionizing Management Decisions via the Growth-Share Matrix

The Growth-Share Matrix, with its business portfolio analysis capabilities, can function as a catalyst in Driving Organizational Change. Its real value surfaces when you use it to reconfigure your company's Strategy Execution process, leading to a more robust Operational Excellence Culture.

Moreover, the Growth-Share Matrix serves as a vital tool in today's data-driven world—enabling comprehensive Performance Management and Risk Management. It is a powerful strategic tool to manage the multitude of dilemmas you encounter in the complex dynamic business environment.

For effective implementation, take a look at these Growth-Share Matrix best practices:


Explore related management topics: Digital Transformation Operational Excellence Organizational Change Strategic Planning Performance Management Risk Management Strategy Execution Portfolio Management BCG Growth-Share Matrix Portfolio Strategy Consulting Frameworks SWOT Change Management




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