Abhishek Kumar Jaiswal Ankush Jain Surabhi Farkya Aditi Dikshit Mridula Kotwani

Dogs:- Dogs have low market share and a low growth rate & thus neither generate nor consume a large amount of cash. Problem Children:- Problem children are growing rapidly & thus consume large amounts of cash but because they have low market shares they do not generate much cash. They have high market growth & low market share.

Stars:- Stars generate large amounts of cash because of their strong relative market share but also consume large amounts of cash because of their high growth rate. Cash Cows: They have high market share & low growth rate. Cash Cows exhibit a return on assets that is greater than the market growth rate & thus generate more cash than they consume.

SBU

SALES No. of (Million Competitor Rs.)

Sales of Top 3 Player

Market Growth Rate

A A B B 0.5 1.6 1.8 8 22 14 0.7 1.6 1.8

B 0.7 1.6 1.2

C 0.5 1 1 15% 18% 7%

D
E

3.2
0.5

5
10

3.2
2.5

0.8
1.8

0.7
1.7

4%
4%

RMS=

Business Unit Sales This Year

Leading Rival Unit Sales This Year RMS for Each SBU A = 0.5/0.7 = 0.714 B = 1.6/1.6 = 1 C = 1.8/1.2 = 1.5 D = 3.2/0.8 = 4.75 E = 0.5/2.5 = 0.2

Market Growth Rate & Relating market share are the two factor used in BCG Matrix for positioning of each SBU.

SBU A B C

RMS 0.714 1 1.5

Growth Rate 15% 18% 7%

D
E

4.75
0.2

4%
4%

M A R K E T G R O W T H R A T E

BCG MATRIX
% 20 18 16 14 12

II
STARS
B A

I
Question Marks/ Problem child

10
8 6 4 2 0
D C E

Cash Cow

Dogs

III
10x 4x 2x 1.5x RELATIVE 1x 0.5x 0.4x 0.3x MARKET SHARE

IV
0.2x 0.1x

Strategy Recommended Divest Invest Hold Harvest

Category
Dog Problem Child Star Cow

SBU
E A, B B D, C

Only two dimensions market share and product or services growth rate are employed. 2. How to define market and how to get data about market share are also problems. 3. High market share dont always necessarily lead to profit at all times. It is not the only success factor. 4. Low share can be profitable too, which means in the real world some dogs can be more profitable than cash cows.
1.

5. The model can be more reflect the growth rate of the general market and market growth is not the only indicator for market attractiveness. 6. The model also neglects the effects of synergy between Business units.

Cooperation level between among all SBUs must be specified. Nature of product and market should be specified as each SBU has different potential and requires its own objective.