The Boston Consulting Group was started up in 1963 by Bruce Henderson and from its inception sought to establish itself in the planning and was considered the pioneer of Business Strategy analysis. In the late 1960’s a consultant for the Boston Consulting Group presented his ideas about ‘cash deficient’ and ‘growth deficient’ businesses and the need for a balance between cash generators and cash users.
In the late 1960’s the Boston Consulting Group developed a portfolio business model based on this thinking. The model, the BCG matrix or growth/share matrix, was based on the Boston Consulting Group’s knowledge and work in the area of the experience curve and of the product life cycle and how they relate to cash generation and cash requirements.
The growth-share matrix was intended to analyse a portfolio from a corporate perspective because it is only at that level that cash balance is meaningful. A business may, however, be segmented further using this diagnostic tool to understand the positions of its various product lines or market segments. This portfolio can therefore be made up of products in a multiproduct company, divisions in a multidivisional company and companies in a conglomerate.