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Boston Consulting Group Matrix: Presented by

The Boston Consulting Group Matrix (BCG Matrix) classifies businesses into four categories - Stars, Cash Cows, Question Marks, and Dogs - based on their market share and market growth rate. It was developed by Bruce Henderson of the Boston Consulting Group in the 1970s to help companies analyze their business units and allocate resources. The BCG Matrix assesses the cash flow and investment needs of products and can help with decisions around resource allocation, development cycles, and divestment. While simple and easy to use, it only considers two factors and obtaining the necessary data can be challenging. Many large, multi-national companies still find it a useful portfolio planning tool.

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125 views20 pages

Boston Consulting Group Matrix: Presented by

The Boston Consulting Group Matrix (BCG Matrix) classifies businesses into four categories - Stars, Cash Cows, Question Marks, and Dogs - based on their market share and market growth rate. It was developed by Bruce Henderson of the Boston Consulting Group in the 1970s to help companies analyze their business units and allocate resources. The BCG Matrix assesses the cash flow and investment needs of products and can help with decisions around resource allocation, development cycles, and divestment. While simple and easy to use, it only considers two factors and obtaining the necessary data can be challenging. Many large, multi-national companies still find it a useful portfolio planning tool.

Uploaded by

ankitkhanijo
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BOSTON CONSULTING GROUP

MATRIX

PRESENTED BY:
 Shubham Agarwal
INTRODUCTION

 BOSTON CONSULTING GROUP (BCG) MATRIX


is developed by BRUCE HENDERSON of
the BOSTON CONSULTING GROUP IN THE
EARLY 1970’s.

 Accordingto this technique, businesses or


products are classified as low or high
performers depending upon their market
growth rate and relative market share.
Relative Market Share and
Market Growth
To understand the Boston Matrix we need to understand
how market share and market growth interrelate.
  
MARKET SHARE
 Market share is the percentage of the total market
that is being serviced by your company, measured
either in revenue terms or unit volume terms.

 RELATIVE MARKET SHARE


 RMS = Business unit sales this year
Leading rival sales this year

 The higher your market share, the higher


proportion of the market you control.
MARKET GROWTH RATE

 Market growth is used as a measure of a market’s


attractiveness.

 MGR = Individual sales - individual sales


this year last year
Individual sales last year

 Markets experiencing high growth are ones where


the total market share available is expanding, and
there’s plenty of opportunity for everyone to make
money.
THE BCG GROWTH-SHARE MATRIX
 It is a portfolio planning model which is based on the
observation that a company’s business units can be
classified in to four categories:
 Stars
 Question marks
 Cash cows
 Dogs
 It is based on the combination of market growth and
market share relative to the next best competitor.
 Lets watch an image of BCG matrix and a short movie
on BCG matrix to learn about it.
A short movie on BCG matrix
STARS
High growth, High market share

 Stars are leaders in business.


 They also require heavy investment, to
maintain its large market share.
 It leads to large amount of cash

consumption and cash generation.


 Attempts should be made to hold the

market share otherwise the star will


become a CASH COW.
CASH COWS
Low growth , High market share

 They are foundation of the company and


often the stars of yesterday.
 They generate more cash than required.
 They extract the profits by investing as

little cash as possible


 They are located in an industry that is

mature, not growing or declining.


DOGS
Low growth, Low market share

 Dogs are the cash traps.


 Dogs do not have potential to bring in

much cash.
 Number of dogs in the company should be

minimized.
 Business is situated at a declining stage.
QUESTION MARKS
High growth , Low market share

 Most businesses start of as question


marks.
 They will absorb great amounts of cash if
the market share remains unchanged,
(low).
 Why question marks?
 Question marks have potential to become
star and eventually cash cow but can also
become a dog.
 Investments should be high for question
marks.
WHY BCG MATRIX ?

To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of products
 Resource allocation and divestment

decisions
MAIN STEPS OF BCG MATRIX
 Identifying and dividing a company into SBU.
 Assessing and comparing the prospects of

each SBU according to two criteria :


1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
 Classifying the SBU’S on the basis of BCG

matrix.
 Developing strategic objectives for each SBU.
BENEFITS
 BCG MATRIX is simple and easy to
understand.
 It helps you to quickly and simply screen the

opportunities open to you, and helps 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 a


company’s future growth and profitability.
LIMITATIONS

 BCG MATRIX uses only two dimensions,


Relative market share and market growth
rate.
 Problems of getting data on market share and

market growth.
 High market share does not mean profits all

the time.
 Business with low market share can be

profitable too.
PRACTICAL USE
 MAHINDRA & MAHINDRA
 HLL
 IES
BCG MATRIX

scorpio

Jeep
balero
BCG product life cycle
CONCLUSION

Though BCG MATRIX has its limitations it is one


of the most FAMOUS AND SIMPLE portfolio
planning matrix ,used by large companies
having multi-products.

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