What is the BCG Matrix? What are the recommended strategies for dealing with Stars, Question Marks, Dogs, and Cash Cows?

The BCG Matrix ties strategy formulation to an analysis of business opportunities based on market growth rate (low versus high-growth rate) and market share (low versus high share). The BCG Matrix has four combinations of business conditions, each of which has a particular strategic implication. These combinations are Stars, Question Marks, Cash Cows, and Dogs. Stars are high market share/high-growth businesses. They produce large profits through a dominant competitive position in a growing market. The preferred strategy is growth. Question Marks are low market share/high-growth businesses. They do not produce much profit but do compete in rapidly growing markets. The preferred strategies are growth for promising Question Marks and retrenchment for the other Question Marks. Cash Cows are high market share/low-growth businesses. They produce large profits and a strong cash flow but offer little growth opportunity. The preferred strategy is stability or modest growth, using the cash flow to fund investment in Stars or promising Question Marks. Dogs are low market share/low-growth businesses. They do not produce much profit and show little potential for future improvement. The preferred strategy is retrenchment by divestiture.