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Boston Consulting Group (BCG) Matrix: Presented by

The document describes the BCG growth-share matrix, which classifies business units into four categories - stars, question marks, cash cows, and dogs - based on their relative market share and the market growth rate. Stars have high relative market share and operate in high-growth markets, while cash cows have high relative market share but operate in low-growth markets. Question marks have low relative market share but operate in high-growth markets, while dogs have low relative market share and operate in low-growth markets. The matrix is used to assess resource allocation and make decisions about investing in or divesting from business units.

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Shamsher Khan
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78 views19 pages

Boston Consulting Group (BCG) Matrix: Presented by

The document describes the BCG growth-share matrix, which classifies business units into four categories - stars, question marks, cash cows, and dogs - based on their relative market share and the market growth rate. Stars have high relative market share and operate in high-growth markets, while cash cows have high relative market share but operate in low-growth markets. Question marks have low relative market share but operate in high-growth markets, while dogs have low relative market share and operate in low-growth markets. The matrix is used to assess resource allocation and make decisions about investing in or divesting from business units.

Uploaded by

Shamsher Khan
Copyright
© © All Rights Reserved
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
You are on page 1/ 19

BOSTON CONSULTING GROUP

( BCG ) MATRIX

PRESENTED BY:
Shamsher Khan
Bilal Ahmed
M. Umar hayat
INTRODUCTION

BCG MATRIX is developed by BRUCE HENDERSON in the early


1970’s.

According to this technique, businesses/ products are classified as low/ high


performers depending upon their market growth rate and relative market
share.
Relative Market Share & Market Growth

• To understand the Boston Matrix, you 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)


• 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 this year - (individual sales last year)
Individual sales last year

• Markets experiencing high growth when the total market share


available is expanding, and there’s plenty of opportunity for
everyone to make money.
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 into 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.
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 & cash generation.
• Attempts should be made to hold the market share otherwise the star
will become a CASH COW.
• SAMSUNG Mobile phones and tablets can be seen in star category. 
Cash Cows
Low growth , High market share

• They are foundation of the company & 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.
• SAMSUNG HOME APPLIANCES
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.
• like SAMSUNG PRINTER, Galaxy 7 has gained negative image due
to battery overheated.
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.
• SAMSUNG TV business decline due to small demand from various
countries. 
• SAMSUNG WATCH  is not able to gain attention from a customer and
higher competitor is APPLE watch.
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 & dividing a company into Strategic business unit (SBU).


• Assessing & 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.
BCG MATRIX WITH CASH FLOW
BENEFITS

• BCG MATRIX is simple and easy to understand.


• It helps you to quickly & simply screen the opportunities open to
you
• It 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
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.
THANK YOU

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