Adjusting the BCG Matrix for the Recession

The idea of the BCG matrix is that managers are able to evaluate their businesses using objective criteria and to develop strategies suitable to the business' particular situation. The BCG matrix can be used for portfolio analysis in times of economic crisis, but adjustments must be made. The first adjustment involves adding two more criteria – profit margins and cash flows. The second adjustment involves redefining the breaking points between the high and low of the relative market share and market growth rate averages of the industry and/or the company. The third adjustment is to add two more strategies – freeze and cut. Using all these adjustments provides better flexibility for BCG matrix analysis in a shrinking economy and recession.