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BM Task

Quick Scoot (QS) is facing declining profits and increased competition in the e-scooter industry, necessitating a review of its product line using the Boston Consulting Group Matrix. Alpha is a 'Star' product generating $6 million in profit, while Delta is a 'Problem Child' with potential despite quality issues. The company should eliminate Gamma, classified as a 'Dog' with no contribution to fixed costs, while retaining Alpha and Delta to improve profitability.

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Prakhar Goyal
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6 views1 page

BM Task

Quick Scoot (QS) is facing declining profits and increased competition in the e-scooter industry, necessitating a review of its product line using the Boston Consulting Group Matrix. Alpha is a 'Star' product generating $6 million in profit, while Delta is a 'Problem Child' with potential despite quality issues. The company should eliminate Gamma, classified as a 'Dog' with no contribution to fixed costs, while retaining Alpha and Delta to improve profitability.

Uploaded by

Prakhar Goyal
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Quick Scoot (QS) is facing a lot of challenges, including declining profits and increased

competition in the e-scooter industry. To ensure the company remains profitable, the
management needs to examine the company's product line based on the Boston Consulting
Group Matrix, as well as the financial information presented, to decide which model to
eliminate based on its future potential as a money earner compared to its current financial
contribution.

To begin with, the company needs to identify which of its products are essential to keep.
Alpha, as a product, falls under the "Star" category in the Boston Matrix because of its high
market share as well as its growth potential. Currently, this product is the most profitable, as
it earns the company $6 million. Delta, on the other hand, falls under the "Problem Child"
category, also known as a "Question Mark." This product has a low market share but
operates in a high-growth industry, targeting students. Although Delta experiences some
quality control issues as well as cultural barriers as a result of outsourcing, this product
represents the future of the company. Therefore, QS needs to keep both Alpha and Delta.

The real choice is between Beta and Gamma because both companies made a loss in 2019.
Beta appears to be the poor performer because it has a loss of $2 million compared to the
loss of $0.8 million for Gamma. However, the case study indicates that Beta "is making a
contribution to fixed costs." This is an important factor because it implies that the revenue
generated by Beta is enough not only to cover its variable costs (such as materials) but also
contributes to the company's fixed costs (such as rent and salaries). If Beta were to be
dropped by QS, Alpha and Delta would still be required to pay the fixed costs, which would
result in the company earning less profit.

In contrast, Gamma is classified as a "Dog." It has a declining market share in a declining


market. The theory of strategy states that "dogs" are usually not worth holding on to. More
importantly, the financial data shows that Gamma has "no contribution to fixed costs." This
means that the money earned from selling Gamma does not cover the cost of production of
Gamma. In fact, it means that each Gamma sold is taking away cash from the business
without contributing anything towards paying the bills of the company.

Finally, the case states that QS has "very limited working capital." It cannot afford to throw
money away on a product that is not working. By eliminating Gamma, QS will stop losing
money on each sale. This money can be used to correct the quality problems with the Delta
model or to advertise the Alpha model to fight off the new competition.

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