Market share is defined in terms of the percentage of your company in the industry that is measured either in revenue terms or unit volume terms. Market share is generally expressed as a percentage and to have high market share, you generally have to be in market for a very long time, have been benefited from economies of scale and customers have purchased your products and have been somewhat satisfied if you’re going to generate high market share. One such assumption that we take in BCG matrix is that if a company has very good market share then it is successful from a financial standpoint. The 2nd variable on X- axis is the Relative Market share. Now every company is fighting to get some share in the fixed pie. Say for examples if your company’s sales is growing by 15%, but the industry is growing by 20%, you are lagging behind your competition by 5% or Industry is growing at 12%, then you are leading ahead of your competition by 3%.Ĭompetition is very severe in markets that has low growth. Market Growth Rat e = Total sales in current year / Total sales in previous year So the formulae to calculate Market growth rate is It is the rate at which a market’s size is growing. We can figure out the market growth rate from industry reports, which are usually available online.
The 1st variable on Y- axis is is the Market Growth Rate. Before we understand how to construct BCG Matrix lets understand these terms firstģ) SBU (Strategic Business Units).
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