The BCG growth-share matrix is
a tool used internally by management to assess the current state of value of a firm’s units or product lines
. The growth-share matrix aids the company in deciding which products or units to either keep, sell, or invest more in.
When should BCG matrix be used?
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.
How do you use the BCG matrix?
To use the BCG matrix,
a company will review its portfolio of products or SBUs, then allocate them to one of four quadrants based on their market share, growth rate, cash generation and cash usage
. This is then used to determine which products receive investment, and which are diversified from.
What is BCG matrix technique?
The Boston Consulting Group Matrix (BCG Matrix), also referred to as the product portfolio matrix, is
a business planning tool used to evaluate the strategic position of a firm’s brand portfolio
.
Brand equity can be positive or
. The BCG Matrix is one of the most popular portfolio analysis methods.
What do you do with the BCG matrix for dogs?
Special Considerations. According to the BCG matrix,
companies should liquidate, divest, or reposition
these “pets.”1 In reality, though, such a move might not make financial sense because dogs may already have such low value and could distract management during the sale process.
What is BCG matrix explain with an example?
To get stars, for example, a company must invest in product development. If you have a star as a company, the strategy for this product must be aimed at gaining as much market share as possible. An example of a product that can be classified as ‘Star’ in the BCG Matrix is the
LED lamp from Philips
.
What are the advantages of BCG matrix?
BCG Matrix Advantages
» It
provides a high-level way to see the opportunities for each product in your portfolio
. » It enables you to think about how to allocate your limited resources to the portfolio so that profit is maximized over the long-term. » It shows if your portfolio is balanced.
What do cash cows symbolize in BCG matrix?
Explanation : Cash Cows symbolize
Stable
in BCG matrix. Cash cows are the leaders in the marketplace and generate more cash than they consume. These are business units or products that have a high market share but low growth prospects.
What BCG matrix model is and how it works to evaluate position of firms?
BCG matrix is a framework created by Boston Consulting Group to
evaluate the strategic position of the business brand portfolio and its potential
. It classifies business portfolio into four categories based on industry attractiveness (growth rate of that industry) and competitive position (relative market share).
Is BCG matrix still relevant?
Even though the BCG Matrix has fallen from grace,
it is still alive
and has left an imprint on management education and practice. Despite being largely discredited in academic circles, many practitioners still view it as an important corporate portfolio planning technique.
What are the four major growth strategies?
- Market penetration. The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. …
- Market development. …
- Product development. …
- Diversification.
How do you calculate BCG?
- Step 1: Choose the product. BCG matrix can be used to analyse Business Units, separate brands, products or a firm as a unit itself. …
- Step 2: Define the market. …
- Step 3: Calculate the relative market share. …
- Step 4: Find out the market growth rate. …
- Step 5: Draw the circles on a matrix.
What were the two dimensions used under BCG matrix?
The matrix assess products on two dimensions.
The first dimension looks at the products general level of growth within its market. The second dimension then measures the product’s market share relative to the largest competitor in the industry.
What companies use the BCG matrix?
- Fanta, a Coca-Cola product, is one such example where the business units can be seen as a question mark. …
- Coca-Cola is one such example of Cash Cows. …
- Diet coke, a Coca-Cola product, is on such example of Dogs.
Are there circumstances where the BCG matrix could be misleading?
Limitations of BCG Matrix
BCG matrix classifies businesses as low and high, but generally businesses can be medium also. Thus, the
true nature of business may not be reflected
. Market is not clearly defined in this model. High market share does not always leads to high profits.
What are the four quadrants in BCG matrix?
The four quadrants are designated
Stars (upper left), Question Marks (upper right), Cash Cows (lower left) and Dogs (lower right)
. Place each of your products in the appropriate box based on where they rank in market share and growth.
