bcg matrix-market growth share matrix
Post on 02-Jul-2015
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DESCRIPTIONConcept of BCG matrix and explanation of different terms related to it along with example.
- 1. BCG Matrix PRESENTED BY: NAVNEET KUMAR DWIVEDI BALAJI INSTITUTE OF MODERN MANAGEMENT, PUNE
2. Contents of Presentation Concept of BCG matrix and explanation of different terms related to it along with example. Introduction Terms in BCG BCG Matrix- Question Mark BCG Matrix- Star BCG Matrix- Cash Cow BCG Matrix- Dog Conclusion 3. Introduction Developed by Bruce Henderson of the Boston Consulting Group in the early 1970s Matrix is a portfolio planning model Classifying companies into categories based on combinations of market growth and market share Maps the business unit positions within these two important determinants of profitability 4. Assumptions An increase in relative market share will result in an increase in the generation of cash A growing market requires investment in assets to increase capacity and therefore results in the consumption of cash 5. Terms Market Share/Relative Market Share Market share is the percentage of the total market that is being serviced by your company measured either in the revenue terms or unit volume terms. Market Growth Rate Rate at which market share of company grows year on year 6. BCG Matrix Portfolio planning model which is based on the observation that companys business unit can be classified in to four categories . Question Marks Stars Cash cows Dogs It is based on the combination of market growth & market share relative to the next based competitor. 7. BCG Matrix 8. BCG Matrix- Question Mark Most business start of as question marks They will absorb great amount of cash if the market share remains unchanged (low) Question marks have potential to become a star & eventually a cash cow but can also become dog Investment should be high for question marks. 9. BCG Matrix- Star Stars are leader in business They also require heavy investment to maintain its large market share. It leads to large amount of cash consumption & cash generation. 10. BCG Matrix- Cash Cow They are foundation of the company & often the stars of yesterday. They generate more cash than required. They require less of resources - Monetary & Human Resource They are located in an industry that is mature not growing or declining 11. BCG Matrix- Dog Dogs are the cash traps Dogs do not have potential to bring High cost Low quality Business is situated at a declining stage 12. Conclusion Benefits BCG matrix is simple & easy to understand It helps to quickly & simply screen the opportunity open to you, & help you think about how you can make the most of them It is used to identify how corporate cash resources can best be used to maximize companys future growth & profitability Limitations BCG matrix uses only two dimensions relative market share & market growth rate Problem of getting data on market share & market growth High market share does not mean profits all time Business with market share can be profitable too 13. Questions?