Limitations
 of the BCG model Essay

The BCG manikin is criticised for having a number of limitations (Kotler 2003 McDonald 2003)There be otherwise reasons other than relative foodstuff divide and foodstuff harvest-feast that could influence the allocation of resources to a crossroad or SBU reasons such as the need for sound brand name and product positioning could fasten resource allocation to an SBU or product (Drummond & Ensor 2004).What is more, the toughie rests on net immediate payment consumption or generation as the fundamental portfolio balancing criterion. That is give up only in a superior encumber environment. In modern economies, with relatively frictionless capital f minors, this is non the appropriate metric to apply rather, risk-adjusted discounted bullion flows should be used (ManyWorlds 2005).Also, the hyaloplasm assumes products/business units are independent of each other, and independent of assets outside of the business. In other words, there is no provision for synergism among products/business units. This is rarely realistic.The relationship between cash flow and market place share whitethorn be weak due to a number of factors including (Cipher 2006) competitors may have access to lower cost materials misrelated to their relative share position low market share producers may be on perpendicular experience curves due to superior production applied science and strategic factors other than relative market share may affect benefit margins.In addition, the growth-share matrix is based on the assumption that high evaluate of growth use large cash resources and that adulthood of the life cycle brings about the expected profit returns. This may be incorrect due to miscellaneous reasons (Cipher 2006) capital intensity may be low and the business/product could be grown without major cash outlay high entry barriers may exist so margins may be sustainable and big enough to produce a convinced(p) cash flow and a growth at the same time and industry overca pacity and price contender may depress prices in maturity.Furthermore, market growth is not the only factor or necessarily the most important factor when assessing the attractiveness of a market. A fast growing market is not necessarily an attractive unmatched. Growth markets attract wise entrants and if capacity exceeds demand then the market may become a low margin one and therefore unattractive. A high growth market may lack size and stability.Given the aforementioned(prenominal) weaknesses, the BCG Growth-Share matrix must be used with bearing nonetheless, it is a best-known business portfolio evaluation modelling (Kotler 2003).