BCG Matrix PPT

 BCG or Boston Consulting Group is created by Bruce
Henderson of the Boston Consulting Group.
 It was developed and established during the early 1970s.
 According to the BCG Matrix technique, business and
products are classified on the basis of high or low performing
parameters.
 The ratings depend upon a business’s market growth rate
and relative market share.
INTRODUCTION

 Market share refers to the percentage of the total
market that is being served by a particular
organization.
 It is measured either in unit volume terms and
revenue terms.
Relative Market Share
and Market Growth

 Relative Market Share is calculated based on the
following formula:
Business unit sales this year/leading rival sales this
year.
Relative Market Share
and Market Growth

 Market growth rate is used as a parameter to
gauge market’s attractiveness rate.
 To calculate market growth rate, you need to
implement thus formula:
Individual sales this year - Individual sales last
year/ individual sales last year.

Market Growth Rate
As a matter of fact, markets where the total
market share is constantly expanding and
there are sufficient opportunities for everyone
to make money are the ones that experience
high market growth rate.

 The BCG Growth Share Matrix is nothing but a
portfolio planning model which is primarily based
on the notion that an organization’s business
unit can be segregated into four categories,
namely:
 Stars
 Question Marks
 Cash Cows
 Dogs
BCG Growth Share Matrix

The BCG Matrix model is entirely based on
the combination of market growth and
market share which is relative to the next
competitive domain.
BCG Growth Share Matrix

 Stars denote high growth and high
market share.
 Stars are mainly the leaders and top
performers in business.
 They need hefty investment in order to
maintain their large market share.
What do the STARS Denote?

 This, as a result, leads to large amount of
cash consumption and cash generation.
 Serious attempts should be constantly put
forth in order to hold the market share.
 Any failed attempt will be the STAR a CASH
COW.
What do the STARS Denote?

 CASH COWS relate to low growth and high
market share.
 Cash Cows are often referred to as the
foundation of a particular company and the
stars from the past.
 They are said to generate more cash than
what is actually required or expected.
Who are CASH COWS?

 Cash cows extract the profits by investing the
least amount of cash.
 They are often located in an industry which is
already established, nether growing nor
declining.
Who are CASH COWS?

 Dogs are said to denote low growth and
low market share
 They are the cash traps and do not have
the potential to bring in much cash.
The Attributes of
Dogs

 It is suggested to minimize the number of
dogs in a particular organization.
 Businesses comprising too many dogs are
often at a declining stage.
The Attributes of
Dogs

 Denotes high growth and low market share
 Businesses mostly start with a question
mark.
 If the market share remains unchanged or
low, question marks will absorb huge
amount of cash.
What are
QUESTION MARKS?

 They have the potential to become a star and
cash cow. However, it can also become a dog
eventually.
 It is to be mentioned that investments for
questions marks should be high.
What are
QUESTION MARKS?

The complete understanding of the BCG
Matrix framework helps in assessing:
 Profiles of businesses or products.
 The cash demands of products.
The Role and
Significance of BCG Matrix

 The development of the different cycles of
products.
 Divestment decisions and resource
allocations.
The Role and
Significance of BCG Matrix

 Here are the key objectives of the BCG Matrix
framework.
 Identifying and classifying a company into a
Strategic Business Unit (SBU).
 Comparing and assessing the prospects of each
Strategic Business Unit according to the following
criteria:
The relative market share of SBU.
SBU’s Industry Growth Rate.
Primary Objectives of a BCG Matrix

 Classifying all SBUs on the basis of BCG
matrix.
 Establishing strategic objectives for
Strategic Business Unit.
Primary Objectives of a BCG Matrix

 Here are the advantages of using the
BCG Matrix framework in businesses.
 BCG Matrix is an easy-to-understand
framework and can be seamlessly
implemented.
Benefits of the BCG Matrix Framework

 It helps in screening all opportunities that are
available or open to the prospective entrepreneur.
 The strategy is used in order to identify how
corporate capital cash resources can be best
utilized to maximize the potential of an
organization’s future growth and prosperity.
Benefits of the BCG Matrix Framework

 The BCG Matrix framework has certain
limitations as well. Here’s what you need
to know.
 It has limitations in terms of having only
two aspects; market growth rate and
relative market share.
Disadvantages of
BCG Matrix Framework

 The framework implementation often experiences
problems in extracting data on market growth and
market share.
 High market share doesn’t necessarily mean
profits every single time.
 On the contrary, businesses with low market share
can be rewarding as well. The framework requires
a bit of revision in this matter.
Disadvantages of
BCG Matrix Framework

To conclude, it is to be mentioned that the BCG matrix do
have certain limitations. But then, every strategic business
plan has their individual share of advantages and
disadvantages.
All prospective entrepreneurs should focus on the
advantageous aspects of BCG matrix and figure out scopes
that would help them to expand further possibilities in this
matter.

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BCG Matrix PPT

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