BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...
Transcript of BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...
![Page 1: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/1.jpg)
BOSTON CONSULTING GROUP (BCG)
Matrix is developed by Bruce Henderson of the
Boston Consulting Group in the early 1970’s
According to this technique, business or products
are classified as low or high performance
depending upon their market growth rate & relative
market share.
![Page 2: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/2.jpg)
RELATIVE MARKET SHARE & MARKET GROWTH
To understand the Boston Matrix you need to
understand how market share & market growth
interrelated.
Market Share
![Page 3: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/3.jpg)
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.
![Page 4: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/4.jpg)
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.
![Page 5: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/5.jpg)
MARKET GROWTH RATE
Market Growth is used as a measure of a market’s
attractiveness.
Individual Sales this year – Individual sales last year
MGR =
Individual Sales last year
![Page 6: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/6.jpg)
Markets experiencing high growth are ones where
the total market share available is expanding &
there is plenty of opportunity for everyone to make
money
![Page 7: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/7.jpg)
THE BCG GROWTH-SHARE MATRIX
![Page 8: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/8.jpg)
![Page 9: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/9.jpg)
It is portfolio planning model which is based on the
observation that company’s 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.
![Page 10: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/10.jpg)
![Page 11: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/11.jpg)
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.
![Page 12: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/12.jpg)
STARS
(HIGH GROWTH, HIGH MARKET SHARE)
Stars are leader in business
They also require heavy investment to maintain it’s
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.
![Page 13: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/13.jpg)
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
![Page 14: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/14.jpg)
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
![Page 15: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/15.jpg)
WHY BCG MATRIX
To asses
Profile of product /business
Cash demands of products
The development cycle of product
Resource allocation & divestment decisions
![Page 16: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/16.jpg)
MAIN STEPS OF BCG MATRIX
Identifying & dividing a company into SBU
Assessing & comparing the prospects of each SBU
according to two criteria
1) SBU’s relative market share
2) Growth rate of SBU’s industry
Classifying the SBU’s on the basis of BCG matrix
Developing strategic objective for each SBU
![Page 17: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/17.jpg)
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 company’s future
growth & profitability.
![Page 18: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/18.jpg)
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.
![Page 19: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/19.jpg)
BCG-MATRIX FOR THE PRODUCT LINE OF
Coca-Cola
![Page 20: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/20.jpg)
QUESTION MARKS
(HIGH GROWTH, LOW MARKET SHARE
![Page 21: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/21.jpg)
STARS
(HIGH GROWTH, HIGH MARKET SHARE)
![Page 22: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/22.jpg)
CASH COWS
(LOW GROWTH, HIGH MARKET SHARE
![Page 23: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/23.jpg)
DOGS
(LOW GROWTH, LOW MARKET SHARE)
![Page 24: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/24.jpg)
![Page 25: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/25.jpg)
QUESTION MARKS
![Page 26: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/26.jpg)
STARS
Invest for growth
![Page 27: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/27.jpg)
CASH COWS
( MILK TO FUND OTHER BUSINESS)
![Page 28: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/28.jpg)
DOGS
![Page 29: BOSTON CONSULTING GROUP BCG Matrix is developed by Bruce ...](https://reader034.fdocuments.net/reader034/viewer/2022042617/626424efad327f6adf2b85f6/html5/thumbnails/29.jpg)
CONCLUSION
Though BCG matrix has its limitation it is one of the
most famous & simple portfolio planning matrix,
used by large companies having multi-products.