The simplest, quantitative method known about analysis of products or centers of strategy, is the developed one by the Boston Consulting Group, at the end of the 60s and it materializes in the growth - market share counterfoil. This method is known also by Analysis BCG or Analysis Portfolio.

This approach is considered by the cash flow (I benefit + amortizations) like the most important variable at the time of the decision making on the composition of the portfolio of products or centers of strategy of a company, and on how assigning the resources.

It is important that a balance is obtained inside the company, for it the products excedentarios, that they are giving liquidity to the company, they must finance the deficit ones.

The approach of the BCG departs from two premises:

• The liquidity obtained across the operations of the company is a function of the unitary cost, which in turn is a function of the volume of sales and of the experience, which finally depend on the market share (effect climbs, related to the fixed costs).
• The liquidity necessary for the investment in facilities, team and working capital is a function of the growth rate of the sector in which there is the company or the strategic segment of business.

And so, the strategy associated with every «center of strategy» will be determined by two factors on which the cash flow of the company depends, this is, to the being the cash flow a function of the relative market share and of the growth rate of the company or sector, the differences with regard to these two factors will indicate us the strategy to be continued.

At operative level and with a practical adaptability, it is possible to use the BCG to analyze the scale of products of the company, those of the competition and even the exemption networks. As soon as there were known the variables that the growth - market share counterfoil frames, the following step is the construction of the above mentioned counterfoil.

GRAPH 3. COUNTERFOIL OF GROWTH - PARTICIPATION (BCG)

These concepts of growth rate and quota of participation, properly combined, allowed to the Boston Consulting Group to carry a classification of the products out, according to the position of the same ones, in order to analyze the portfolio, attending on his capacity of generation or consumption of income, and as a result, to establish different strategies. The graphic representation of these variants is realized capturing in the abscissas axis the obtained market share, and in the axis of arranged the growth rate of the product with regard to his market. This way there is obtained a counterfoil or board split into four quadrants. Each of these represents the position of a product, attending on his capacity of generation of flows (cash flow) and on his monetary needs. This way there are established different categories of products or groups of products. In the graph of the counterfoil, the coordinates (X - X ') and (Y - Y') they indicate the average of the sector, so much of the quota of market share as of the growth rate.

Diverse authors support that the axis of coordinates (X - X ') is equivalent to the critical mass, that is to say, that his growth rate is superficially or below 10 for 100; in practice, this is neither possible nor useful since in stages of slowing down of a certain sector, to grow over 5 for 100 can place the company over the competition turning his products into star or children.

8.1. Products question - child

The questioning products or children are those placed on markets of big growth with limited relative market shares, what implies a few limited benefits, and the need for big investments to support his market shares and, of course, to increase them. The units placed in this area will be able to be products that interfere for the first time on an already existing market, products introduced in advance but that for any motive did not reach a high market share, or products that went so far as to have a high market share but they lost it.

Generally there are products with high growth on the market and small quotas of participation. They represent the future of the company, reason for which they need of a suitable management of prices, promotion, distribution... that is translated in a few needs for investment of resources. There are the named ones to be «products it covers with stars».

8.2. Products it covers with stars

The placed ones in markets of high growth and high market share receive the name of stars. These are characterized for having a balanced cash flow, since the big obtained benefits are compensated by the big needs for money to finance his growth and to support his market share. Placed in phase of growth, are those who present better possibilities, so much to invest as to obtain benefits.

In these products it is basic to support and to consolidate his market share, for which sometimes it will be necessary to sacrifice margins and this way to establish barriers of entry to the competition. The price policy can be an important strategy, so it allows to choose between obtaining a few minor cash flows in exchange for increasing the market share. Some companies leave the product in this phase to support an image leadership.

8.3. Products dairy cow

The products placed on markets of low growth and high market share receive the name of dairy cows. These are liquidity generators, since, on not having needed big investments, they are going to serve to finance the growth of other units, the research and development of new products, and to remunerate to the proper and foreign capital.

These products are located normally in the ripeness phase, with high market share and low or void growth rate. There are products with a big piled up experience, costs minor than the competition and, as a result, better income. They constitute the fundamental base we are allowed to finance the "questioning" products, his research and development, and compensate the sacrifices of income demanded from the products "covers with stars".

It is necessary to bear in mind that the expectations of growth of these «dairy cows» are void, that they do not need additional funds and that more soon or later they will come to his slope stage. Therefore, the investments must be faced exclusively to support the reached quota, while the replacement is obtained for «products it covers with stars».

8.4. Products dog

The products with limited market shares and under growth they receive the name of «dogs«. There are real liquidity pitfalls, since due to his low market share, his profitability is very small and is difficult that there become a big liquidity source, therefore they are immobilizing resources of the company that might be invested more appropriately in other centers. The units placed in this area will be able to be:

• Products that were not successful in reaching a leadership position during the growth stage.
• New marks recently got on the market to compete with the products «dairy cows».
• Products that have happened of being «dairy cows» to be «dogs«.

They have a growth rate and small market share. The Home characteristic of these products is that, in most cases, hardly they will be profitable. Competitors exist with better costs, major experience and quota, and better income.

There are products difficult to impel, reposicionar and that they absorb many unjustified hours of dedication, for which it is not logical to invest in them. The best strategy for these products is to use them as generators of box up to where «they go a long way» or to try to find a segment, a niche of market, suitable for them, in which, marking a differentiation, a high participation could be reached and defend it. Also, there are companies that support products in this category for image of company or of mark, since of another form they would not have a finished scale of products. Exception to here exposed sound all the realized products artesanalmente whose economic income is positive, but that the proper making philosophy does not allow them the mass production and, therefore, the growth.

8.5. Ideal products portfolio

Attending on the classification realized by the BCG, the companies have to keep his portfolio well balanced, that is to say, they must have interfering on the market products with future perspectives in categories of questioning products and products you cover with stars, in addition to the products dairy cows, which provide income across which there will be realized investments and actions of investigation and marketing in the previous ones. Also dogs can have products, whenever they are well differentiated and possess a concrete market cycle. The graphic representation of the portfolio is realized by means of a points cloud, being located these in the place that corresponds to them for his market share and growth rate.

8.6. Different types of generic strategies

The approach of the BCG proposes four types of strategies, all of them in market share terms. To determine which is the most appropriate depends, between other motives, of the current market of the product, of his life cycle, of the resources of the company, and of the possible reactions of the competition.

In this respect, I remember again that the term market share, even being important, has left part of his leading role to that of client's quota. These strategic performances, which transmit his targets expressed in market share, are four:

• To increase the market share. It can be an offensive or defensive action, if he looks for an increase of the profitability, in the first case; or, in the second one, if he looks for the securing of the critical market share that allows him to survive on the market.
• To preserve the market share. That is adapted for products that are in the ripeness stage and that have big relative market shares, because in the above mentioned stage the buy habits are usually stabler and difficult to change, and an attempt of increasing the quota would be at the expense of the rest of the consumers. It is the most adopted strategy, always appearing what is the most profitable way of supporting the market share.
• To harvest. It consists of maximizing the short-term benefits and the cash flow, leaving that the market share diminishes. To carry out this strategy it is necessary to reduce the costs to the maximum. It is the strategy most adapted for the scale of products that has a limited market share on markets of little growth.
• To move back. It consists of liquidating the product, since the resources will be able to be used better in another part. It will have to apply to those strategy products with a market share lower than the criticism.