Beyond the Basics: Evaluating the BCG Matrix and Applying It to Singaporean Companies

Understanding business strategy requires more than just memorising models—it involves applying them critically and adapting them to real-world scenarios. The BCG Matrix is a well-known tool used to assess a company’s portfolio of products or business units, classifying them into Stars, Cash Cows, Question Marks, and Dogs based on market growth and market share.

While widely used, the model has limitations that students often overlook. Many industries do not fit neatly into its four categories, and modern businesses operate in environments far more complex than when the BCG Matrix was first introduced.

Limitations of the BCG Matrix

The BCG Matrix is often one of the first models students learn in business strategy, but it is important to recognise its shortcomings. Many companies use modified versions of the model or supplement it with other frameworks to gain a more accurate picture of their competitive position.

Oversimplification of Market Share and Growth

• The BCG Matrix assumes that market share and growth rate are the key indicators of a business unit’s success.
• Why this is a problem: Some businesses operate in niche markets where market share does not necessarily reflect profitability or long-term viability.
• Example: A luxury watchmaker may have a small market share but high profit margins, making it an essential part of a company’s portfolio even if it is classified as a “Dog.”

Market Definition Challenges

• The model relies on clearly defined markets, but industries today overlap and evolve rapidly.
• Why this is a problem: It can be difficult to determine which market a product belongs to and what counts as “high growth.”
• Example: A food delivery app competes in both the restaurant industry and the technology sector, making classification difficult.

Neglect of External Factors

• The BCG Matrix does not consider external influences like economic conditions, government policies, or technological changes.
• Why this is a problem: A business unit classified as a Cash Cow today may become obsolete in a few years due to technological disruption.
• Example: Traditional taxi services were once Cash Cows but faced declining market share with the rise of ride-hailing apps.

Alternative Models to Consider

Many businesses supplement the BCG Matrix with alternative models to gain a more well-rounded analysis.

• GE Multifactor Matrix – Uses industry attractiveness and competitive strength instead of just market share and growth rate.
• McKinsey’s Nine-Box Matrix – Provides a more nuanced evaluation of a company’s portfolio by incorporating multiple factors like brand value, operational efficiency, and competitive landscape.

Applying the BCG Matrix to Singaporean Companies

Despite its limitations, the BCG Matrix remains useful for categorising business units and identifying strategic priorities. Let’s examine how it applies to some of Singapore’s leading companies.

Singapore Airlines

Singapore Airlines has a diverse range of services, including premium flights, budget carriers, and cargo operations. Applying the BCG Matrix to its business units provides insight into how the company manages its portfolio.

• Stars: Premium airline services, particularly routes in high-growth markets like Asia-Pacific, where demand for luxury travel is increasing.
• Cash Cows: Well-established international routes with consistent passenger demand and profitability.
• Question Marks: Budget airline subsidiary Scoot, which has growth potential but faces intense competition from regional low-cost carriers.
• Dogs: Underperforming routes or older aircraft models that may be phased out in the coming years.

Singapore Airlines continuously invests in its Star segments while maintaining the profitability of its Cash Cows. It also assesses whether to continue expanding its budget airline operations or reallocate resources to higher-value segments.

Singtel

As Singapore’s largest telecommunications provider, Singtel operates across mobile, broadband, enterprise solutions, and regional expansion projects.

• Stars: 5G network infrastructure and digital services, which are high-growth areas that require substantial investment.
• Cash Cows: Mobile services in Singapore, where Singtel holds a dominant market share and generates steady revenue.
• Question Marks: Expansion into emerging markets like Indonesia and India, which have potential but also regulatory and competitive risks.
• Dogs: Fixed-line telephone services, which are declining as consumers shift to mobile and digital communication.

Singtel’s strategy involves aggressively expanding its digital services while ensuring that its core telecommunications business remains profitable.

Key Takeaways for Students

Understand the limitations of the BCG Matrix

• The model is a starting point, not a definitive guide. Many companies modify or supplement it with other frameworks.
• Businesses do not fit neatly into categories—market conditions and industry trends constantly shift.

Adapt the model for modern business environments

• Digital transformation, sustainability concerns, and regulatory changes must be considered when using strategic models.
• Companies today look beyond market share and growth rate and factor in elements such as brand value, innovation, and competitive positioning.

Use real-world examples to strengthen your analysis

• Applying the BCG Matrix to Singaporean companies makes the model more relevant and practical.
• When using strategic frameworks in assignments, provide local and industry-specific examples to demonstrate a deeper understanding.

Final Thoughts

The BCG Matrix remains a useful tool, but it must be applied with a critical mindset. Businesses today face more complex challenges than when the model was first introduced, and many adapt it to fit their specific needs.

By understanding both the strengths and limitations of this framework, you will develop stronger, more insightful business analyses in your coursework and future career.