Inflation Clouds the Picture
Market growth rate should be stated in terms of units to avoid the influence of inflation. The original BCG matrix advocated the use of volume for growth rates but many companies use value growth instead. This must be used with caution.
Motivational Problems May Occur after a BCG analysis.
Strategic labels can cause misconceptions. When a business/product is seen to be run down and in a ‘dog position’ and the recommendations are to eliminate it from the portfolio it is often difficult to get acceptance from the managers concerned. A ‘dog’ to one may not be a dog to another.
Cash Flow Reallocation
In many companies where one business unit/product has brought in most of the profit, management resents being asked to pass on this cash to new businesses for which they do not see the logic.