In analyzing the Cabot Corporation portfolio using the BDG matrix, the company decided to shift away from its core competence to unrelated areas of its business. The ensuing decline in assets indicated that it needed to return to its core competence in order to grow.

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Cabot Corporation supplies carbon black for the rubber, electronics, and plastics industries. Following the BCG matrix, Cabot moved away from its cash cow, carbon black, and diversified into stars such as ceramics and semiconductors in a seemingly overaggressive effort to create more revenue growth for the corporation. The company return on assets declined as the firm shifted away from its core competence to unrelated areas. The portfolio model failed because it pointed the company in the wrong direction (away from its core business) in an effort to spur growth. Recognizing its mistake, Cabot Corporation returned to its mainstay carbon black manufacturing and divested unrelated businesses. Today the company is a leader in its field with 3.6 billion USD in revenues in 2014.

In Analyzing the Cabot Corporation Portfolio Using the BDG Matrix