Premium Essay

Bcg Matrix Analysis

In:

Submitted By jaynegamgee
Words 2585
Pages 11
BCG Matrix Model
BCG Matrix Model

The BCG matrix or also called BCG model relates to marketing. The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.
The BCG matrix model is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's.
The BCG model is based on classification of products (and implicitly also company business units) into four categories based on combinations of market growth and market share relative to the largest competitor.
When should I use the BCG matrix model?
Each product has its product life cycle, and each stage in product's life-cycle represents a different profile of risk and return. In general, a company should maintain a balanced portfolio of products. Having a balanced product portfolio includes both high-growth products as well as low-growth products.
A high-growth product is for example a new one that we are trying to get to some market. It takes some effort and resources to market it, to build distribution channels, and to build sales infrastructure, but it is a product that is expected to bring the gold in the future. An example of this product would be an iPod.
A low-growth product is for example an established product known by the market. Characteristics of this product do not change much, customers know what they are getting, and the price does not change much either. This product has only limited budget for marketing. The is the milking cow that brings in the constant flow of cash. An example of this product would be a regular Colgate toothpaste.
But the question is, how do we exactly find out what phase our product is in, and how do we classify what we sell? Furthermore, we also ask, where does each of our products fit into

Similar Documents

Free Essay

Peste Analysis and Bcg-Matrix

...Нов Български университет Магистърска програма „Бизнес администрация“ Цветелина Иванова Гудева Фак.№ F66452 Самостоятелна работа по Мениджмънт МВАМ 022/037 PESTE анализ и BCG – матрица на фирма „Кенди“ ООД Съдържание: I. Кратка характеристика на фирмата II. Стратегически анализ на факторите на външната макросреда и влиянието, което те оказват върху отрасъла и бизнеса – PESTE 1. Политически и глобални фактори 2. Икономически фактори 3. Социални идемографски фактори 1. Качество на живот 4. Технологични фактори 5. Екология III. BCG – матрица 1. Анализ на BCG - матрица IV. Обобщение V. Литература I. Кратка характеристика на фирмата Фирма КЕНДИ ООД основана през 1992г. Правната ѝ форма е дружество с ограничена отговорност, с основен капитал 5000 лв. Тя се занимава с производството на безалкохолни напитки STEP, витамини SUPRAVIT, бульони CHEF'S BEST, подправки, фиксове и сухи супи PICANTINA и подсладители KENDY. В настоящия проект ще бъде разгледана дейността на фирмата от гледна точка на разтворимите безалкохолни напитки. II. Стратегически анализ на факторите на външната макросреда и влиянието, което те оказват върху отрасъла и бизнеса- PESTE PESTE анализът разглежда...

Words: 2667 - Pages: 11

Premium Essay

Bcg Matrix

...1 of 6 ANZMAC 2009 Adjusting the BCG Matrix for the Recession Avichai Shuv-Ami, The College of Management aviami@colman.ac.il Abstract The idea of the BCG matrix is that managers are able to evaluate their businesses using objective criteria and to develop strategies suitable to the business' particular situation. The BCG matrix can be used for portfolio analysis in times of economic crisis, but adjustments must be made. The first adjustment involves adding two more criteria – profit margins and cash flows. The second adjustment involves redefining the breaking points between the high and low of the relative market share and market growth rate averages of the industry and/or the company. The third adjustment is to add two more strategies – freeze and cut. Using all these adjustments provides better flexibility for BCG matrix analysis in a shrinking economy and recession. 1 ANZMAC 2009 Page 2 of 6 Adjusting the BCG Matrix for the Recession Introduction The BCG matrix has been used in the real world in a variety of ways for such business analysis tasks as analyzing value, business strategy toward customers, segmentation (Dibb 1995) and brand portfolio analysis. As a result of the current financial crisis, which has affected strategic market planning decisions, businesses and practitioners are using the BCG (Boston Consulting Group) matrix in a flexible manner. This paper provides several adjustments to the BCG matrix in order to adjust it to the current economic...

Words: 2059 - Pages: 9

Premium Essay

Comparing the Bcg Matrix with the Mckinsey 7s Model

...Comparing the BCG Matrix with the McKinsey 7S model 1 Structure STRUCTURE ........................................................................................................................................ 2 INTRODUCTION ................................................................................................................................. 3 BOSTON CONSULTING GROUP (BCG) GROWTH MATRIX ................................................... 3 COMPOSITION AND FRAMEWORK ....................................................................................................... 3 APPLICATION ....................................................................................................................................... 3 EXAMPLE APPLICATION: JUWI ............................................................................................................ 3 WEAKNESSES AND STRENGTHS OF THE BCG MATRIX ....................................................................... 4 THE MCKINSEY 7S MODEL ............................................................................................................ 5 COMPOSITION AND FRAMEWORK ....................................................................................................... 5 APPLICATION ....................................................................................................................................... 7 EXAMPLE APPLICATION: JUWI ..............................................................

Words: 4013 - Pages: 17

Premium Essay

Dabur

...The PEST or PESTLE Analysis PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors, which are used to assess the market for a business or organizational unit strategic plan Originally designed as a business environmental scan, the PEST or PESTLE analysis is an analysis of the external macro environment (big picture) in which a business operates. These are often factors which are beyond the control or influence of a business, however are important to be aware of when doing product development, business or strategy planning. A SWOT is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. It involves specifying the objective of the business or project and identifying the internal and external factors that are supportive or unfavourable to achieving that objective. Definition of SWOT A SWOT analysis generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates. Strengths * Positive tangible and intangible attributes, internal to an organization. * They are within the organization’s control. Weakness * Factors that are within an organization’s control that detract from its ability to attain the desired goal. * Which areas might the organization improve? Opportunities * External attractive factors that represent the reason for an organization...

Words: 1105 - Pages: 5

Premium Essay

Uuuu

...Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an organization to examine different businesses in it’s portfolio on the basis of their related market share and industry growth rates. It is a two dimensional analysis on management of SBU’s (Strategic Business Units). In other words, it is a comparative analysis of business potential and the evaluation of environment.According to this matrix, business could be classified as high or low according to their industry growth rate and relative market share.Relative Market Share = SBU Sales this year leading competitors sales this year. Market Growth Rate = Industry sales this year - Industry Sales last year. | The analysis requires that both measures be calculated for each SBU. The dimension of business strength, relative market share, will measure comparative advantage indicated by market dominance. The key theory underlying this is existence of an experience curve and that market share is achieved due to overall cost leadership. BCG matrix has four cells, with the horizontal axis representing relative market share and the vertical axis denoting market growth rate. The mid-point of relative market share is set at 1.0. if all the SBU’s are in same industry, the average growth rate of the industry is used. While, if all the SBU’s are located in different industries, then the mid-point...

Words: 880 - Pages: 4

Premium Essay

Boston Consulting Group Matrix

...together in a group, organising self and others to produce work to agreed deadlines, the group will aim to engage in debate about strategy from a theoretical and practical standpoint, while Undertaking analysis of a case and generate a critical evaluation. Each member of the group will produce a formal report critically analysing one chosen identified corporate strategy, the report will evaluate and summarise the chosen model reflecting their individual analysis to corporate strategy. The group will then put reports together to make a single portfolio of the different corporate portfolio framework analyses. Along side the written report the group will also work together to produce a presentation which will focus on one chosen corporate strategic model analysed in the report, in this case the group decided to focus on Porters five forces. The group will apply critically apply this framework and critically apply this to a business of the groups choice (in this case Samsung) during the presentation. Corporate strategy 1 Boston Consulting Group Matrix The Boston consulting group matrix (BCG Matrix) is a four cell matrix developed by the Boston Consulting Group in the early 1970’s to manage and asses a business portfolio of products and their potential, “The matrix helps in development of plans which reflects the need of each business unit as well as business as a whole” (Brahma and Chakraborty 2011 p23). It takes into consideration the amount of market share, market...

Words: 1134 - Pages: 5

Premium Essay

Boston Consulting Group Matrix

...together in a group, organising self and others to produce work to agreed deadlines, the group will aim to engage in debate about strategy from a theoretical and practical standpoint, while Undertaking analysis of a case and generate a critical evaluation. Each member of the group will produce a formal report critically analysing one chosen identified corporate strategy, the report will evaluate and summarise the chosen model reflecting their individual analysis to corporate strategy. The group will then put reports together to make a single portfolio of the different corporate portfolio framework analyses. Along side the written report the group will also work together to produce a presentation which will focus on one chosen corporate strategic model analysed in the report, in this case the group decided to focus on Porters five forces. The group will apply critically apply this framework and critically apply this to a business of the groups choice (in this case Samsung) during the presentation. Corporate strategy 1 Boston Consulting Group Matrix The Boston consulting group matrix (BCG Matrix) is a four cell matrix developed by the Boston Consulting Group in the early 1970’s to manage and asses a business portfolio of products and their potential, “The matrix helps in development of plans which reflects the need of each business unit as well as business as a whole” (Brahma and Chakraborty 2011 p23). It takes into consideration the amount of market share, market...

Words: 1132 - Pages: 5

Premium Essay

Strategic Management

...(30 marks) •This section consists of multiple choice questions & Short notes type questions. •Answer all the questions. •Part one questions carry 1 mark each & Part two questions carry 5 marks each. Part One: Multiple choices: 1. A plan of action designed to achieve a particular goal is: b. Strategy 2. It is important to develop mission statement for: a. Allocating organizational resources 3. The five forces model was developed by: c. Michael E. Porter 4. How many elements are involve in developing in an organizational strategy: a. Six 5. The three important steps in SWOT analysis are: b. Opportunities, Threats, Strengths 6. GE matrix consists of how many cells? a. Nine cells 7. Which of these is the type of Games: d. All of the above 8. SBU stands for c. Strategic Business Unit 9. The BCG matrix is known as: a. Growth share matrix 10. ______________ specifies sales revenues and selling distribution and marketing costs. b. Sales budget ________________________________________ Section A: Part Two: 1. What are the dimensions of Strategic management? Answer: Strategic management process involves the entire range of decisions. Typically, strategic issues have six identifiable dimensions: 1. Top management involvement: Strategic management relates to several areas of a firm’s operations. So, it requires top management’s involvement. Generally, only the top management has the perspective needed to understand...

Words: 5580 - Pages: 23

Premium Essay

Bcg Matrix

...International Marketing – 3rd Assignment Portfolio Analysis Region 4 (Italy) June 2011 1 Portfolio Analysis – The BCG Matrix The BCG Matrix is a market growth-market share matrix developed by the Boston Consulting Group, which is used to support strategic decisions in order to optimize a business portfolio with regard to new, old, innovative or established products and/or strategic business units (SBU). Its underlying theories are the experience curve as well as the product life cycle. Having classified its strategic business units, a company can develop its individual strategies for each of these SBUs. Future decisions include how to allocate investments on the SBUs, analysis about whether the respective products are still profitable or should be “killed” or given away and last but not least the need for developing new products or SBUs. The findings of the PIMS database (Profit Impact on Market[ing] Strategy) support the BCG matrix . Source: Kotler/Bliemel, Marketing Management, 12th Edition 2007, p. 96-103 Turnover / Profit Product Life Cycle Unit Cost Experience Curve Market Growth Rate Indroduction Growth Maturity Decline Withdrawel ? 2 1 Product Life Cycle of a Successful Product Product Life Cycle of an Unsuccessful Product Relative Market Share 1 Profit 2 Time Cumulative Output ? STAR: SBU with high market share in a growing market Costs of such business units are usually decreasing over time and at a faster rate...

Words: 935 - Pages: 4

Premium Essay

Cool

...How to perform BCG matrix analysis? Although BCG analysis has lost its importance due to many limitations, it can still be a useful tool if performed by following these steps: • Step 1. Choose the unit • Step 2. Define the market • Step 3. Calculate relative market share • Step 4. Find out market growth rate • Step 5. Draw the circles on a matrix Step 1. Choose the unit. BCG matrix can be used to analyze SBUs, separate brands, products or a firm as a unit itself. Which unit will be chosen will have an impact on the whole analysis. Therefore, it is essential to define the unit for which you’ll do the analysis. Step 2. Define the market. Defining the market is one of the most important things to do in this analysis. This is because incorrectly defined market may lead to poor classification. For example, if we would do the analysis for the Daimler’s Mercedes-Benz car brand in the passenger vehicle market it would end up as a dog (it holds less than 20% relative market share), but it would be a cash cow in the luxury car market. It is important to clearly define the market to better understand firm’s portfolio position. Step 3. Calculate relative market share. Relative market share can be calculated in terms of revenues or market share. It is calculated by dividing your own brand’s market share (revenues) by the market share (or revenues) of your largest competitor in that industry. For example, if your competitor’s market share in refrigerator’s industry was 25% and...

Words: 534 - Pages: 3

Premium Essay

Godrej

...prof. “ ”, who guided and helped us from time to time to successfully conduct this research. We think her directions were the best thing that could happen to us and our project. We would also like to thank our college for letting us use the library. We hope you enjoy reading the report as much as we enjoyed making it. INDEX SR.NO | Topics | Page No. | 1. | B.C.G Matrix | 5 | 2. | Diagram & its Explanation | 6 | 3. | Godrej | 8 | 4. | G.E Matrix | 11 | 5. | Diagram & its Explanation | 12 | 6. | Yamaha | 13 | 7. | Comparison between B.C.G & G.E Matrix | 16 | 8. | Conclusion | 17 | 9. | Bibliography | 18 | B.C.G MATRIXBoston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates. It is a two dimensional analysis on management of SBU’s (Strategic Business Units). In other words, it is a comparative analysis of...

Words: 2509 - Pages: 11

Premium Essay

Literature Review Business Ethics

...Literature Review of Strategic Business Analysis Tools: Research Ethics: PEST, BCG and Porter’s Five-Force Model Abstract This literature review takes the work of twelve different scholarly peered-reviewed resources and explains the outcome of their studies. All of the studies were conducted with different strategic analysis tools and how the use of ethics plays a role in each model. Although there are many strategic tools for managers to use, this literature review focuses in on only three tools. The three strategic analysis tools researched in this literature review are the PEST analysis, the BCG growth matrix, and Porter’s five-force model. This literature review compares the work of the different articles to show how each strategic tool was used in the different articles and where ethics play a role in each research method. The end of the literature review entails different recommendations on how to further the research for a better understanding of these strategic tools while continuing to do so in a manner that remains ethical. In conclusion, this literature review is design to give the reader a better understanding of three different strategic management tools and how they are being used professionally and scholarly with allowing for all research to be done in an manner that does not allow for outcomes that can be used in an unethical manner to pad results. Introduction The business environment is rapidly changing and the past has shown that companies who are...

Words: 1594 - Pages: 7

Premium Essay

Business Strategy

...to the chosen industry sector - an assessment and critical evaluation of the ways in which the organization uses the chosen models to make strategic choices. References and Appendices Number words: 2016 ID Number: B00653228 Date: 17/01/14 Contents 1 Introduction 3 2 Organisation Profile 3 3 Stategic Theory 3 4 model application 4 4.1 Question Mark 4 4.2 Risiing Star 5 4.3 Cash Cows 6 4.4 Dogs 7 5 Conclusion 8 6 Reference 9 Introduction In this paper I am going to describe and analysis the BCG matrix. The BCG Matrix may be a very helpful and widespread method of evaluating the portfolio of companies or product in a very business unit. The BCG matrix may be used to verify what priorities should provide to different products, and that method is also possible to use to given product or businesses. In this case I will apply the BCG matrix into the Apple Company in mobile industry in order to analysis the products which the Apple has already provided in the market. Organization Profile In 1976, Apple pc, Inc. was established and was incorporated in 1977 [Michael Dougherty, 2010]. Apple’s 1st product was the Apple I that began the non-public pc revolution. In 2007, Apple pc, Inc. modified...

Words: 2370 - Pages: 10

Premium Essay

Harley Davidson Case Study

...Chapter 6 Strategy Analysis & Choice Strategic Management: Concepts & Cases 13th Edition Global Edition Fred David Please note this is not a comprehensive source for studying Please note this is not a comprehensive source for studying Ch 6 -1 Ch 6 -2 Strategy Analysis & Choice “Whether it’s broke or not, fix it – make it better. Not just products, but the whole company if necessary.” – Bill Saporito “Life is full of lousy options.” – General P.X. Kelley Please note this is not a comprehensive source for studying Ch 6 -3 1 Strategy Analysis & Choice Subjective decisions based on objective information Generating alternative strategies Selecting strategies to pursue Best alternative course of action to achieve mission & objectives Derived from vision, mission, objectives, external audit, and internal audit Please note this is not a comprehensive source for studying Ch 6 -4 Strategy Analysis & Choice Generating Alternatives – Participation in generating alternative strategies should be as broad as possible Please note this is not a comprehensive source for studying Ch 6 -5 Comprehensive StrategyFormulation Framework Stage 1 - Input Stage EFE Matrix IFE matrix CPM Stage 2 - Matching Stage SWOT SPACE matrix BCG matrix IE Matrix Grand strategy matrix Stage 3 - Decision Stage QSPM Please note this is not a comprehensive source for studying Ch 6 -6 2 Strategy-Formulation Framework External...

Words: 2262 - Pages: 10

Premium Essay

Ffsdaf

...Accounting Education 11 (4), 365–375 (2002) Derrick’s Ice-Cream Company: applying the BCG matrix in customer pro tability analysis M A LC O LM SM I T H * Division of Business and Enterprise, University of South Australia and Leicester Business School, De Montfort University, UK Received: August 2001 Revised: October 2001; June 2002 Accepted: July 2002 Abstract This case highlights the differences in the pro tability possible when different customers are in receipt of substantially the same product. It provides the opportunity to develop a customer portfolio, along the lines of the Boston Consulting Group (BCG) portfolio matrix, as part of a customer pro tability analysis. Keywords: customer pro tability, BCG matrix, delivery policy, portfolio pro le, purchasing pattern, inventory holding The case Derrick’s Ice-Cream Company is located in modern premises and manufactures and distributes 30 different ice-cream product lines from its suburban base in the UK. The products are distributed by Derrick’s own eet of refrigerated trucks to six major wholesale distributors. Annual sales are currently around the £10m level, distributed among the wholesalers as indicated in Table 1. Derrick’s control about 35% of its metropolitan market, but this shrinks to less than 10% in outlying areas where there are many small competitors. Derrick’s will usually hold up to four weeks of stock in their central cold stores to meet the distribution requirements of their six major customers...

Words: 3928 - Pages: 16