BCG MATRIX

Presented by:1.Satish Kumar 2.Vinod Kulhari 3.Aarti Verma

INTRODUCTION
BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.

MARKET SHARE
Market share is the percentage of the total market that is being serviced by the company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARE

RMS = Business unit sales this year Leading rival sales this year The higher the market share, the higher proportion of the market is under control.

MARKET GROWTH RATE

Market growth is used as a measure of a markets attractiveness. MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.

Market Position:
SBU Sales (mn)No. of competito rs 0.3 2 2.4 3.2 0.5 10 15 10 3 10 1 2 2.4 3.2 2.5 Sales of top 3 players Annual growth rate 1 2 3 1 2 1.2 0.8 1.8 0.3 1 1 0.7 1.7 20% 15% 5% 2% 4%

A B C D E

Relative Market share of A

If Leader = (Your Sales)/(Size of Next Largest Competitor) If Not Leader = (Your Sales)/(Leader Sales) = 0.3 = 0.3 1.0 Market Growth Rate = 20% Hence, it is a for the company Recommendations: INVEST in A as it is Question Marks and has 8 competitors Can become STARS and eventually CASH COWS in the near future

Relative Market share of B

RMS = Business unit sales this year Leading rival sales this year = 2.0 = 1.0 2.0 Market Growth Rate = 15% Hence, it is a Transforming from Question Marks to Stars for the company Recommendations: INVEST in B as it is becoming STARS and has 22 competitors Can become CASH COWS in the long run

Relative Market share of C

RMS = Business unit sales this year Leading rival sales this year = 2.4 = 2.0 1.2 Market Growth Rate = 5% Hence, it is a Stars for the company Recommendations: INVEST in C as it is STARS and has 14 competitors Can become CASH COWS in the near future

Relative Market share of D

RMS = Business unit sales this year Leading rival sales this year = 3.2 =4.0 0.8 Market Growth Rate = 2% Hence, it is a Cash Cows for the company Recommendations: Dont Invest too much as the industry is either saturated or declining and has 5 competitors Already a leader in sales

Relative Market share of E

RMS = Business unit sales this year Leading rival sales this year = 0.5 = 0.2 2.5 Market Growth Rate = 4% Hence, it is a DOGS for the company Recommendations: The company should DIVEST as there is no scope in this business Search for other products or horizons

STARS

QUESTION MARKS

18% 16%

B A

14% 12% 10% 8% 6%

CASH COWS

C
DOGS

o Gt ekr a M r

4% 2%
10x 0.2x

5x 0.1x

2x

1x

0.5x

Relative Market Share

Limitations
1. Market growth rate is only factor in industry attractiveness, and relative market share is only one factor in competitive advantage. 2. The framework assumes that each business unit is independent of the others. 3. The matrix depends heavily upon the breadth of the definition of the market. A business unit may dominate its small niche, but have a very low market share in the overall industry. In such a case, the definition of the market can make the difference between a dog and a cash cow.

Limitations
4. Valuation of the realization of the various factors. 5. Aggregation of the indicators is difficult. 6. Core competencies are not represented. 7. Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities.

Thank You