Question

Compare and contrast the advantages and disadvantages of the BCG and McKinsey matrices. Are there industries for which one matrix is a better tool of analysis than the other? Why?

Answer 1

Comparison of BCG and McKinsey matrices:

	BCG Matrix	McKinsey Matrix
Objective	To assist firms in identifying best way of organizing resources in different units.	To assist in prioritizing investment decision.
Cells	Four	Nine
Aspects	Market growth and share	Strengths of business as well as industry attractiveness
Measures	It uses single measure	It uses multiple measures

Advantages of BCG Matrix:

• It is easy to understand and prepare it,
• It clearly helps in determining opportunities,
• It helps in determining weakness of business and remove those units,

Disadvantages of BCG Matrix:

• It ignores other important aspects of business other than market growth and share.
• It only determines either high or low growth; there is no option for mediocre business unit.

Advantages of McKinsey Matrix:

• Several factors that are ignored in BCG matrix are considered in GE-McKinsey matrix.
• Provides more options than BCG matrix that too in easily understandable manner.
• It is simple to use it.

Disadvantages of McKinsey Matrix:

• Collaboration between different products is ignored in this matrix.
• Scoring system in GE-McKinsey matrix can lead to bias decision.
• Does not allocate investment in each product.

Yes in my opinion in a particular industry one matrix will serve as a better tool of analysis than the other. The reason I believe so is both matrix has their advantages and disadvantages, depending on the nature of industry one can identify that which matrix will serve the purpose better than the other.