Advantages and Limitations of BCG Matrix

Advantages –

• it is easy to use
• it is quantifiable
• it draws attention to the cash flows
• it draws attention to the investment needs

Limitations –

• it is too simplistic
• link between market share and profitability is not strong
• growth rate is only one aspect of industry attractiveness
• it is not always clear how markets should be defined
• market share is considered as the only aspect of overall competitive position
• many products or business units fall right in the middle of the matrix, and cannot easily be classified.

BCG matrix is thus a snapshot of an organization at a given point of time and does not reflect businesses growing over time.