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    BCG Matrix

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    mridul
    The document discusses the BCG matrix, which was developed by Boston Consulting Group in the 1970s. The BCG matrix classifies business units into four categories based on their market growth rate and relative market share: question marks, stars, cash cows, and dogs. Question marks have high growth but low market share, stars have high growth and high market share. Cash cows have low growth but high market share, while dogs have low growth and low market share. The BCG matrix is used to assess the cash demands and investment needs of different business units and help with resource allocation decisions.

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    BCG Matrix

    Uploaded by

    mridul
    60 views30 pages
    The document discusses the BCG matrix, which was developed by Boston Consulting Group in the 1970s. The BCG matrix classifies business units into four categories based on their market growth rate and relative market share: question marks, stars, cash cows, and dogs. Question marks have high growth but low market share, stars have high growth and high market share. Cash cows have low growth but high market share, while dogs have low growth and low market share. The BCG matrix is used to assess the cash demands and investment needs of different business units and help with resource allocation decisions.

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    The document discusses the BCG matrix, which was developed by Boston Consulting Group in the 1970s. The BCG matrix classifies business units into four categories based on their market growth rate and relative market share: question marks, stars, cash cows, and dogs. Question marks have high growth but low market share, stars have high growth and high market share. Cash cows have low growth but high market share, while dogs have low growth and low market share. The BCG matrix is used to assess the cash demands and investment needs of different business units and help with resource allocation decisions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    60 views30 pages

    BCG Matrix

    Uploaded by

    mridul
    The document discusses the BCG matrix, which was developed by Boston Consulting Group in the 1970s. The BCG matrix classifies business units into four categories based on their market growth rate and relative market share: question marks, stars, cash cows, and dogs. Question marks have high growth but low market share, stars have high growth and high market share. Cash cows have low growth but high market share, while dogs have low growth and low market share. The BCG matrix is used to assess the cash demands and investment needs of different business units and help with resource allocation decisions.

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    You are on page 1of 30

    BUSINESS

    POLICY AND
    STRATEGIC
    MANAGEMENT
    BCG Matrix

    BOSTON CONSULTING GROUP (BCG)

    Matrix is developed by Bruce Henderson of the


    Boston Consulting Group in the early 1970s
    According to this technique, business or products
    are classified as low or high performance
    depending upon their market growth rate &
    relative market share.

    RELATIVE MARKET SHARE &


    MARKET GROWTH

    To understand the Boston Matrix you need to


    understand how market share & market growth
    interrelated.

    Market

    Share

    Market share is the percentage of the total


    market that is being serviced by your
    company measured either in the revenue
    terms or unit volume terms.

    RELATIVE MARKET SHARE


    Business Unit Sales this year
    RMS :Leading rival sales this year
    The higher your market share, the higher
    proportion of the market you control.

    MARKET GROWTH RATE

    Market Growth is used as a measure of a


    markets attractiveness.

    Individual Sales this year Individual sales last year


    MGR =
    Individual Sales last year

    Markets experiencing high growth are ones


    where the total market share available is
    expanding & there is plenty of opportunity for
    everyone to make money

    THE BCG GROWTH-SHARE MATRIX

    It is portfolio planning model which is based on the


    observation that companys business unit can be
    classified in to four categories .
    Question Marks
    Stars
    Cash cows
    Dogs

    It is based on the combination of market growth &


    market share relative to the next based competitor.

    QUESTION MARKS/PROBLEM CHILDREN


    ( HIGH GROWTH, LOW MARKET SHARE)
    Most business start of as question marks
    They will absorb great amount of cash if the
    market share remains unchanged (low)
    Question marks have potential to become star &
    evenly cash cow but can also become dog.
    Investment should be high for question marks.

    STARS
    (HIGH GROWTH, HIGH MARKET
    SHARE)
    Stars are leader in business
    They also require heavy investment to maintain
    its large market share.
    It leads to large amount of cash consumption &
    cash generation.
    Attempts should be made to hold the market
    share otherwise the star will became a cash cow.

    CASH COWS
    ( LOW GROWTH, HIGH MARKET
    SHARE)
    They are foundation of the company & often the
    stars of yesterday.
    They generate more cash than required
    They generate more cash than required.
    They extract the profits by investing as little cash
    as possible
    They are located in an industry that is mature
    not growing or declining

    DOGS
    (LOW GROWTH, LOW MARKET
    SHARE)
    Dogs are the cash traps
    Dogs do not have potential to bring
    High cost Low quality
    Business is situated at a declining stage

    WHY BCG MATRIX


    To asses
    Profile of product /business
    Cash demands of products
    The development cycle of product

    Resource allocation & investment decisions

    MAIN STEPS OF BCG MATRIX

    Identifying & dividing a company into SBU

    Assessing & comparing the prospects of each SBU


    according to two criteria
    1) SBUs relative market share
    2) Growth rate of SBUs industry
    Classifying the SBUs on the basis of BCG matrix
    Developing strategic objective for each SBU

    BENEFITS
    BCG matrix is simple & easy to understand
    It helps to quickly & simply screen the
    opportunity open to you, & help you think about
    how you can make the most of them.
    It is used to identify how corporate cash
    resources can best be used to maximize
    companys future growth & profitability.

    LIMITATION
    BCG matrix uses only two dimensions relative
    market share & market growth rate.
    Problem of getting data on market share &
    market growth
    High market share does not mean profits all
    time.
    Business with market share can be profitable too.

    BCG-MATRIX FOR THE PRODUCT


    LINE OF

    Coca-Cola

    QUESTION MARKS
    (HIGH GROWTH, LOW MARKET
    SHARE

    STARS
    (HIGH GROWTH, HIGH MARKET
    SHARE)

    CASH COWS
    (LOW GROWTH, HIGH MARKET
    SHARE

    DOGS
    (LOW GROWTH, LOW MARKET
    SHARE)

    QUESTION MARKS

    STARS

    Invest for growth

    CASH COWS
    ( MILK TO FUND OTHER BUSINESS)

    DOGS

    CONCLUSION

    Though BCG matrix has its limitation it is one of


    the most famous & simple portfolio planning
    matrix, used by large companies having multiproducts.

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