The BCG BOX

In the 1970s Boston Consulting Group developed The BCG Box as a method for assessing the value of investments in a company’s portfolio.

Cash Cows

High market share but low growth rate. They don’t cost much but yield high returns. Companies should milk them for all they are worth!

Stars

High market share and high growth rate but devour money. The aim is to convert stars into cash cows. Invest wisely!

Question Marks

High growth potential but a low share of the market. In the right circumstances, they can be turned into stars. It’s a tough decision on growing this quadrant!

Dogs

Business units with a low share in a saturated market. Dogs should be held onto only if they have a value other than a financial one. e.g. vanity project!

Consider supplier perception and where you sit on the BCG box. Useful questions to ask, are you part of their top 10 suppliers or are you viewed as a low-income client but strategically important to be linked with?

BCG reckons one of the biggest challenges in procurement is working with a supplier that has no competitors. How can you beat an unbeatable supplier to remain competitive and reduce your procurement costs?

Use contract management to improve the supplier relationship. How can you get a win-win situation, no one stays on top forever, there may be no competition now but that doesn't mean it will always remain that way.  Reason with the supplier to level the playing field. Try decoupling or seeking new arrangements. If the supplier feels like they have a monopoly and treat you unfairly, try altering the demand by reducing volume, going elsewhere where you can or become a bigger customer by joining a consortium or buying group to become their No.1 customer. (or as close as possible) Give smaller players a chance and develop the market to increase competition