Christine Divine M.

Baterna

Topics:
Boston Consulting Group Matrix
(BCG Matrix)
Internal and External Matrix (IE
Matrix)
Grand Strategy Matrix

The Boston Consulting Group Matrix

(BCG Matrix)
- Graphically portrays differences among
divisions in terms of relative market
share position and industry growth rate.
- Matrix is developed by Bruce Henderson
of the Boston Consulting group in early
1970s

Relative Market share

position
- is defined as the ratio of a divisions own
market share in a particular industry to
the market share held by the largest
rival firm in that industry.
Computed as follows:
Relative market share = Brands Market x
100
Largest competitor market

Industry Growth Rate in

sales
- Average annual increase in revenues
of the firm.
Computed as follows:
Current revenue- Prior Period revenue
Prior period revenue

BCG Matrix

Question Marks
- Absorb great amount of cash
- Investment requirement is high
Strategies:
Market Penetration
Market Development
Product Development
Divestiture

Stars
- Leader of the business
- Heavy investment to maintain its
share in the market
- Large amount of cash consumption
and cash generation

Stars
Strategies:
Forward, Backward and Horizontal
integration
Market Development
Product Development
Market Penetration

Cash cow
- Generate more cash than required
- extract profits by investing as little
cash as possible
- located in the industry that is
mature, not growing or declining.

Cash cow
Strategies:
Product Development
Retrenchment
Divestiture

Dogs
- Cash traps
- Situated in a declining stage
Strategies:
Retrenchment
Divestiture

BCG Matrix for Nestle

BCG Matrix for product

line of:

Question marks

Stars

Cash cows

Dogs

"To be successful, a company should have a

portfolio of products with different growth
rates and different market shares. The
portfolio composition is a function of the
balance between cash flows. High growth
products require cash inputs to grow. Low
growth products should generate excess
cash. Both kinds are needed
simultaneously.
Bruce Henderson

Internal-External Matrix
(IE matrix)
- is based on an analysis of internal and
external business factors which are
combined into one suggestive model
- Based on two key dimensions:
The IFE total weighted scores on x- axis
The EFE total weighted score on y-axis

IE Matrix

WalMart
Internal Factor Evaluation
Key Internal Factors

Internal Strengths

Weights

Rating

0.0 to 1.0

1 to 4

Storesinall50states

Weighted Score

0.09

0.36

NewConcepts-Hypermarkets,supermarkets

0.1

0.3

Widevarietyofmerchandise

0.1

0.3

Nationallyadvertisedmerchandise

0.08

0.24

Point-of-salebarcodescanning

0.13

0.52

GreatEmployeeBenefits

0.09

0.27

Internal Weaknesses

Noformalmissionstatement

0.1

0.3

Managementresistedputtingwomenonboardofdirectors

0.13

0.39

Hiringillegalminorities

0.08

0.16

0.1

0.3

Growthforemployeesonlyinitsdivision

Totals

0
3.14

WalMart
External Factor Evaluation
Key External Factors

Opportunities

Weights

Rating

0.0 to 1.0

1 to 4

AgreementwithBerkshireHathaway,Inc.
acquiredMcLaneCompany,Inc.

Weighted Score

0.1

0.3

FortunesnumberoneMostAdmiredCompany
andlargestcompanyinnation

0.14

0.56

Worldslargestprivatesatellitecommunicationsystems

0.16

0.64

RonBrownCorporateLeadershipAward

0.11

0.33

Threats

BuyAmericanpolicy

0.15

0.45

Target

0.14

0.42

0.2

0.8

AsolutiontobreakingthemonopolyWal-Marthascreated

Totals

3.5

WALMART IE MATRIX
Grow and Build
Intensive strategy:
Market penetration
Market development
Product Development
I

Integrative Strategy:
Backward integration
Forward Integration
Horizontal integration

Grand Strategy Matrix

- It is a popular tool for formulating
alternative strategies.
- Based on two major dimensions
Competitive position in the x-axis
Market Growth on the y- axis

Grand Strategy Matrix

WalMart
Grand strategy matrix