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Boston Consulting Group Matrix

The document provides an overview of the Boston Consulting Group (BCG) Matrix, which classifies businesses based on their relative market share and market growth rate. It discusses the four categories in the BCG Matrix - stars, cash cows, question marks, and dogs. Stars are high market share businesses in high growth markets, while cash cows have high market share but operate in slow-growing markets. Question marks have low market share but are in high-growth markets, while dogs have low market share and operate in slow-growing markets. The document provides examples of how companies like ITC and mobile operators use the BCG Matrix to evaluate their business portfolios.

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Sheena Prasad
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114 views23 pages

Boston Consulting Group Matrix

The document provides an overview of the Boston Consulting Group (BCG) Matrix, which classifies businesses based on their relative market share and market growth rate. It discusses the four categories in the BCG Matrix - stars, cash cows, question marks, and dogs. Stars are high market share businesses in high growth markets, while cash cows have high market share but operate in slow-growing markets. Question marks have low market share but are in high-growth markets, while dogs have low market share and operate in slow-growing markets. The document provides examples of how companies like ITC and mobile operators use the BCG Matrix to evaluate their business portfolios.

Uploaded by

Sheena Prasad
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:-
Niharika
Sonu
Ankur
Vishal
Santosh
Rahul
Sameer
Honey
Satyajeet
Pankaj
Introduction
BOSTON CONSULTING GROUP (BCG) MATRIX is
developed by BRUC HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY 1970’s.
According to this technique, businesses or product are
classified as low or high performer depending upon
their market growth rate and relative market share.
RELATIVE MARKET SHARE AND
MARKET GROWTH

To understand the BOSTON MATRIX you need to


understand how market 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
Market experiencing high growth are one 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
classify into four categories:
STARS
QUESTION MARKS
CASH COWS
DOGS
It’s a 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 and cash
generation.
Attempts should be made to hold the market share
otherwise the star will become CASH COW.
CASH COW
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 profit 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 market, low market share

Most businesses star 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.
Investment should be high for question marks.
Why BCG matrix

To assess:
Profiles of product/businesses
The cash demand of products
The development cycle of products
RESOURCE ALLOCATION AND DIVESTMENT
DECISIONS.
PRACTICAL USE OF THE BCG MATRIX

THE BOSTON MATRIX THUS OFFER a very useful


map of the organization product or services strengths
and weaknesses at least in terms of current
profitability well as the likely cash flows. The need
which prompted this idea was indeed that managing
cash flow.
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 corporates cash resources can
best be used to maximize a company’s future growth
and profitability.
Limitation
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 profit all the time.
Business with low market share can be profitability
too.
PRACTICAL USE

MAHINDRA AND MAHINDRA


TATA GROUPS
ITC GROUP
MOBILE OPERATORS
BCG of ITC

Hotel
Paper board FMCG- Others
Packaging
Agri business

FMCG - CIGARETTES May be ITC InfoTech


BCG of mobile operators
Present players
Bharti airtel
Reliance communication
Vodafone
BSNL
Tata
Idea
Aircel
MTNL
Unitech
MTS
Loop
Stel
Videocon
HFCL
Etisalet
% share of subscriber by each operators
% share of revenue by main operators
BCG matrix for mobile industry

Relative market share


60

50 tata
aircel
40
idea
30
reliance
vodafone bsnl Relative market share
airtel
20

10

0
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0
From the BCG matrix
Airtel – is the star : having the highest market share
Rest all players are question marks
Strategy for airtel:- Protect market share – build market
share- invest heavily
For question marks- vodafone and idea airtel has the
potential to become future star so they should invest and
build market share.
reliance and tata has huge customer base still they are not
making huge revenue so they can divest to other business
Bsnl which had competitive advantage is losing and do not
seems to have a good future
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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