The BCG Matrix is primarily a tool for what?

• A. Forecasting currency fluctuations.
• B. Evaluating a portfolio of businesses on growth and relative market share.
• C. Designing advertising campaigns.
• D. Auditing internal controls.

Answer: (B)

The BCG Matrix is a portfolio-management tool that evaluates a portfolio of businesses on two dimensions: market growth and relative market share. This two-dimensional view helps managers decide how to allocate resources across different business units. High-growth markets imply more opportunities but also more risk, so units with high relative market share in these markets—often called stars—are typically prioritized for investment to fuel expansion. Units with high relative market share in slower-growing markets tend to generate steady cash and can fund other ventures, known as cash cows. Low-share units in high-growth markets may require significant investment and become question marks, while low-share, low-growth units—dogs—often become candidates for divestment or harvest. The matrix thus focuses specifically on how to manage a set of businesses by growth potential and competitive strength, rather than activities like forecasting currencies, designing ads, or auditing internal controls.