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The BCG model is criticised for having a number of limitations (Kotler 2003; McDonald 2003):
In modern economies, with relatively frictionless capital flows, this is not the appropriate metric to apply – rather, risk-adjusted discounted cash flows should be used (ManyWorlds 2005).
This may be incorrect due to various 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 positive cash flow and a growth at the same time; and industry overcapacity and price competition may depress prices in maturity.
A fast growing market is not necessarily an attractive one. Growth markets attract new 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 weaknesses, the BCG Growth-Share matrix must be used with care; nonetheless, it is a best-known business portfolio evaluation model (Kotler 2003).
Limitations of the BCG Model in Marketing. (2016, Mar 21). Retrieved from https://studymoose.com/limitations-of-the-bcg-model-in-marketing-essay
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