It is a simple and intuitive tool for portfolio analysis.
The Boston Consulting Group Matrix BCG Matrix can be used to analyze the different products being sold by the company in terms of their market share, sales generated on an annual basis and the potential for growth. Cash Cows Cash cows are those business products which are a significant source of income for a business entity and generate enough sales to obtain a significant market share in the local or global industry.
The market is at a mature stage for these products, nevertheless, these products continue to generate cash for the organization. The Cola market, as a specific part of the beverage industry has matured over the years, becoming concentrated by various companies selling their own brand of cola.
Coca-Cola as a beverage has been operating as a cash cow for the Coca-Cola Company, as the brand is sold across countries in a mature beverage industry.
The bottling partners in different locations help in making the finished beverages available to the market in their respective regions, enabling the organization to earn significant amount of revenues from its finished products categories. Since the industry is mature, the company needs to invest little effort to keep the sales high as the business unit has captured a large market to generate cash.
A slowdown in sales has been a temporary setback for the organization, however adjusting the business strategy has helped the management to regain its firm hold in the industry Estrel, Stars The products that are viewed as stars are defined by the key feature of having a high market share as compared to the other products which have a lower share in the market.
The market is still in the phase of development, therefore, the stars have the likelihood of further adding to the existing market share and create a steady source of revenue for a business entity.
The bottled water produced by the Coca-Cola Company can be categorized as a star for the organization. The reason for this classification is that the mineral water industry is still viewed as a gradually evolving segment on an international scale.
The rising number of people increases the need to produce more bottled water to fulfil the needs of the expanding population. Both of these business units are stars for the Coca-Cola Company as the rising need of bottled water opens up growth opportunities in the industry Estrel, Even though the company faces competition from other bottled water producers, the growing market offers it significant opportunities to attain a large market share and expand it further in future.
Nevertheless, an important consideration for the management is to ensure that the bottled water brands remain a source of significant sales as decline in sales can reduce the revenues. Question Marks The products that are categorized as questions marks seem to have a dubious outlook for the future development.
These products have not thrived into the market to such as extent that they can be recognized as stars. The market has growth opportunities, but these products have not been able to take benefit of these opportunities in an effective manner.
Minute maid is one such example where the business units can be seen as a question mark. As indicated by Kell the brand has received relatively favourable response in the past, however recent data shows that the brand is losing its popularity.
The health conscious consumers formulate a significant part of the industry, suggesting the growth potential, but diet coke has not been able to tap this market potential to gain sustainable revenues. Dogs The products that are included in the category of dogs are a part of mature industry, thus the chances of further growth are limited.
Another issue that raises question about the feasibility of these business units or products for the company is that they do not offer significant revenues to the organization.If you are working with a product portfolio, BCG growth-share matrix can give you a quick overview of how the products are doing and build a basis for further analysis.
To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of .
As you look at the BCG matrix, keep in mind this is just a business model that’s used to help businesses to predict and decide what works and what doesn’t work for them. It’s also a stepping stone that can be used to help with research. The Boston Consulting Group Matrix (BCG Matrix) can be used to analyze the different products being sold by the company in terms of their market share, sales generated on an annual basis and the potential for growth. Examples of using the BCG matrix Using the matrix of the Boston Consulting Group (BCG) you can quickly and visually analyze the product groups and branches of the company. You can proceed company analysis based on their share in the relevant market segment and in the market growth rate.
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 company’s future growth & profitability.
What is the BCG Matrix? The Boston Consulting group’s product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products.
It's also known as the Growth/Share Matrix. As you look at the BCG matrix, keep in mind this is just a business model that’s used to help businesses to predict and decide what works and what doesn’t work for them. It’s also a stepping stone that can be used to help with research.
As can be seen in the this example BCG matrix for Apple, the main product portfolios have been mapped onto the matrix. On a relative market share basis, looking at unit market share (rather than dollar market share), we can see that Apple is the number two provider of smart phones behind Samsung.
The BCG Matrix (also known as the Growth-Share matrix, the Boston Box or Product Portfolio matrix) is a tool used in corporate strategy to analyse SBUs or product lines based on two variables: relative market share and the market growth rate. SBUs can be divided .