Purpose of BCG Matrix
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This document presents a business policy to Mr. Husnain Manzoor on the BCG matrix analysis of Alokozay company's products. It explains the purpose of the BCG matrix is to assess a company's product portfolio. It then analyzes each of Alokozay's products in terms of industry growth rate and market share to categorize them as stars, cash cows, question marks or dogs. It finds that beverages and tea are stars, property and development and tissues are cash cows, and cooking oil and biscuits are dogs. The summary provides recommendations for Alokozay's strategies for each category.
Purpose of BCG Matrix
- 1. BUSINESS POLICY Presented To : Mr. Husnain Manzoor
- 2. PRESENTED BY Tehreen Bint Ilyas (FA12-MBT-089) Mashal Mahmood ( FA12-MBT-113) Haseeb Baloch (FA12-MBT-031) Ata ul Hassnain ( FA12-MBT-027) Fraz Asmat ( FA12-MBT-015) M.Ubair ( FA12-MBT-063)
- 3. PURPOSE OF BCG MATRIX The Boston Consulting Group (BCG) Matrix is a simple tool to • Assess a company’s position in terms of its product range. • Company think about its products and services • make decisions about which it should keep, which it should let go and which it should invest in further.
- 4. STARS Stars generate large sums of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate. If a star can maintain its large market share it will become a cash cow.
- 5. CASH COWS As a leader in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. They provide the cash required to turn question marks into market leaders.
- 6. QUESTION MARK Question marks are products that grow rapidly and as a result consume large amounts of cash Because they have low market shares they don’t generate much cash. Produce large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow.
- 7. DOGS Dogs have a low market share and a low growth rate and neither generate nor consume a large amount of cash. Dogs are cash traps because of the money tied up in a business that has little potential.
- 8. BETA Companies Interestrate ReturnRate Lipton 20% 21% 1% 0.01 Tetley 8% 21% 13% 0.13 Alokozay 15% 21% 6% 0.06 Supreme 18% 21% 3% 0.03 Tapal 17% 21% 4% 0.04 Beta 0.054
- 9. USE OF BETA It minimizes the market share. It also minimizes the risk in the market .
- 10. ALOKOZAY BCG TABLE Products IndustryGrowthMarketshare Tissues 17% 20% Cookingoil 10% 15% Tea 25% 30% Biscuits 8% 10% Propertyanddeveolpment 20% 25% Baverages 30% 35%
- 11. BCG MATRIX OF ALOKOZAY BCG MATRIX OF ALOKOZAY 30% Industry Growth Rate 8% 35% Baverages Organic, Question Mark Market share Stars Tea Inorganic Inorganic P & D Tissues Cows Organic Dogs Defensive Cooking oil 10% Biscuits
- 12. STARS Beverages and tea of Alokozay are in Stars of BCG matrix. Beverages have industry growth 30% and market share 35%. Tea have Industry growth 25% and market share 20%. If a beverages and tea maintain its large market share it will become a cash cow. So Alokozay should use Organic and Inorganic strategies for betterment.
- 13. QUESTION MARK Alokozay have no product in Question Mark. Because Alokozay have no product with low industry growth and high market share. If there is any product in question mark then company should use Inorganic strategy.
- 14. COWS Product and development and tissues of Alokozay are in Cows of BCG matrix. P&D have industry growth 20% and market share 25%. Tissues have Industry growth 17% and market share 20%. P&D and tissues exhibit a return on assets that is greater than the market growth rate So Alokozay should use Organic strategies for betterment.
- 15. DOGS Cooking oil and biscuits of Alokozay are in Cows of BCG matrix. Cooking oil have industry growth 10% and market share 15%. Tissues have Industry growth 08% and market share 10%. Cooking oil and tissues are cash traps because of the money tied up in a business that has little potential. So Alokozay should use Deffensive strategies for betterment.