Which two dimensions are used by the BCG Matrix?

Which two dimensions are used by the BCG Matrix?

• A. Growth rate of the market and profitability of each unit.
• B. Growth rate of the market and relative market share.
• C. Relative market share and product price.
• D. Market size and geographic reach.

Answer: (B)

The two dimensions used in the BCG Matrix are the growth rate of the market and relative market share. The growth rate shows how attractive the market is—faster-growing markets suggest more opportunities and potential expansion, though with higher risk. Relative market share measures how strong a business unit is relative to its largest competitor, indicating its competitive advantage and ability to benefit from economies of scale. Together, these axes place each business unit into four categories (high/low growth by high/low share), guiding strategic decisions like investing, harvesting, or divesting. The other options mix in factors like profitability, price, market size, or geographic reach, which are not the axes of the BCG Matrix.

The two dimensions used in the BCG Matrix are the growth rate of the market and relative market share. The growth rate shows how attractive the market is—faster-growing markets suggest more opportunities and potential expansion, though with higher risk. Relative market share measures how strong a business unit is relative to its largest competitor, indicating its competitive advantage and ability to benefit from economies of scale.

Together, these axes place each business unit into four categories (high/low growth by high/low share), guiding strategic decisions like investing, harvesting, or divesting. The other options mix in factors like profitability, price, market size, or geographic reach, which are not the axes of the BCG Matrix.