The Boston Consulting Group
was started in 1963 by
Bruce Henderson and from its
inception 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. The Boston Consulting
Group then 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 analyze 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.
