Portfolio Analysis-BCG Matrix
Download as PPT, PDF5 likes1,958 views
The document presents the Boston Consulting Group (BCG) Growth-Share Matrix, categorizing business units/products into four categories: Stars, Question Marks, Cash Cows, and Dogs, based on market attractiveness and business strength. Strategies for managing each category are outlined, emphasizing investment for Stars, cautious approaches for Question Marks, maximizing cash flow for Cash Cows, and divesting Dogs. It also highlights limitations of the growth/share matrix regarding market growth, cash usage, and other profitability factors.
Portfolio Analysis-BCG Matrix
- 1. TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75 Affiliated Institution of G.G.S.IP.U, Delhi Portfolio Analysis-BCG Matrix Dr. Jaspreet Kaur Associate Professor
- 2. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75 Boston Consulting Group(Growth share matrix) • The SBUs/products are categorized into four cell matrix on the basis of – Market Attractiveness which shows Industry’s annual growth rate – Business Strength which shows the Company’s Market Share Relative to Largest Competitor
- 3. The Boston Consulting Group’s Growth-Share Matrix 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- 0 MarketGrowthRate 10x 4x 2x 1.5x 1x Relative Market Share .5x .4x .3x .2x .1x Dogs 8 7 3 ? Question marks ? ? 2 1 Cash cows 6 Stars 5 4
- 4. Star Products • Leader expanding industry • Stars generate a large profits • They need substantial investments to maintain growth • Farthest down on experience curve relative to competition • Stars increase the sales of a company like new markets, new channels of distribution • Stars Increase the market
- 5. Question Mark? • Question marks have a Low market share in the industry • They need substantial cash for their growth • Slow progress on experience curve • They Increase sales and market share (limited to niche) • In case they are not successful they will have to Leave market
- 6. Cash Cow • They are the Leader in mature or declining industry • They generate massive funds for other SBUs • They have a high market share • They have a high quality and customer loyalty. • They bring in Maximize Cash Flow like increase usage rate, modify expense structure and raise prices
- 7. Dogs • They have a Low market share in a mature or declining industry • Show a Slow progress on experience curve • They have Cost disadvantages • Their growth opportunities are limited • Harvest or Divest
- 8. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75 Strategies of BCG • Star – Its is a Leader in Expanding Industry. The star should be BUILD which is Continue to increase market share even if it is at the expense of short- term earnings • Question Mark– It has a Low market share in Expanding Industry. It should be Harvested if weak, BUILD if strong. If the chances are good, go after share. If the chances are bad, redefine business or withdraw.
- 9. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75 Strategies for BCG • Cash Cow – It is a Leader in mature or declining industry. The strategy should be to HOLD that is Maintain share and cost leadership till investment becomes marginal. Also one should Maximize cash flow • Dogs – Has a Low market share in a mature or declining industry. It should be Divested which is an orderly withdrawal to maximize cash flow or concentrate on niches which needs limited effort.
- 10. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75 Issues with Growth/Share Matrix • Market growth is not always related to the cash usage. • Market growth is not always related to cash usage. • Market share is not always related cash generation. • Multiple factors may bring in profitability. • Cash cannot be the only factor in analyzing the portfolio.
- 11. Thank You