Bcg matrix of pran
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The BCG matrix is a tool used to evaluate a company's portfolio of business units based on their relative market share and market growth rate. It categorizes units as stars, cash cows, question marks, or dogs. For Pran, ketchup is classified as a star due to its market share of 7.6% in a high growth market. Spice powder is a question mark with low market share but a growth rate of 11%. Frooto is a cash cow with steady growth and a 5.8% market share. Power drink is labeled a dog with only 1% market share and slow growth.
Bcg matrix of pran
- 1. BCG Matrix of Pran BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis. Growth-share matrix is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies. Understanding the tool BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and it’s potential. The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested. Relative market share: Higher corporate’s market share results in higher cash returns. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits. RMS: Business unit sale in this year/ Leading rival’s sale of this year Market growth rate: High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. There are four quadrants into which firms brands are classified. MGR: (Individual sales of this year – individual sales of last year)/ individual sales of last year. Dogs: Dogs hold low market share compared to competitors and operate in a slowly growing market. In general, they are not worth investing in because they generate low or negative cash returns. Strategic choices: Retrenchment, divestiture, liquidation Cash cows: Cash cows are the most profitable brands and should be “milked” to provide as much cash as possible. The cash gained from “cows” should be invested into stars to support their further growth. According to growth-share matrix, corporates should not invest into cash cows to induce growth but only to support them so they can maintain their current market share. Strategic choices: Product development, diversification, divestiture, retrenchment
- 2. Stars: Stars operate in high growth industries and maintain high market share. Stars are both cash generators and cash users. They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows. Strategic choices: Vertical integration, horizontal integration, market penetration, market development, product development Question marks: Question marks are the brands that require much closer consideration. They hold low market share in fast growing markets consuming large amount of cash and incurring losses. It has potential to gain market share and become a star, which would later become cash cow. Strategic choices: Market penetration, market development, product development, divestiture Using the tool 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. Choosing the unit Step 2. Defining the market Step 3. Calculating relative market share Step 4. Finding out market growth rate Step 5. Drawing the circles on a matrix
- 3. Stars (Ketchup) Market growth rate is 15% 2. Market share is 7.6% 3. Highest export Question Marks (Spice powder) Market growth rate is 11% 2. Market share is 0.6% Cash Cows (Frooto) ± 2.26 % is growth rate per year. 2. 5.8% market share growth per year. Dogs (Power drink) Market share is approximately 1% 3. Growth rate is 2tk/ bottle Market Analysis