BCG Matrix Analysis and Examples
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ScribdTranslationsBCG Matrix Analysis and Examples
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ScribdTranslationsBCG model
Strategic planning is the process of creating and maintaining a fit relationship.
strategic between the objectives and capabilities of the organization, on one hand, and its marketing opportunities
in constant change, on the other hand. It involves defining a clear mission for the company,
establishing objectives aligned with the mission, designing a judicious portfolio of activities
and coordination of functional strategies. The most well-known method of portfolio planning
this is prepared by Boston Consulting Group, a leading consulting firm
managerial.
The method evaluates the company's strategic business units from the perspective of
market growth rate and from the relative market share. The four possible types of units
are: stars, milking cows, dilemmas and millstones.
Using the Boston Consulting Group model, the company classifies all its units
activity strategies according to the growth-development matrix. On the vertical axis, the rate of
Market growth indicates the degree of attractiveness of the market. On the horizontal axis, the relative market share
indicates the strength of the company in the market.
The Boston Consulting Group model, also known as the B.C.G. matrix.
market share growth was developed by an American management consulting firm
the same name. With the help of this matrix, the existing activities (products) are grouped in
the portfolio of an enterprise in four categories, based on two criteria:
growth rate of the market, activity (product). A threshold for differentiation has been considered
the 10% threshold that distinguishes a fast-growing market from a slow-growing one,
to stagnate or decrease.
relative market share held by an enterprise in that market. As a threshold for
1.00 was considered the difference that distinguishes leader products from non-leader ones.
enterprise.
Thus, depending on the quadrant in which the activities (products) of the enterprise are placed,
These will have suggestive names, allowing for an analysis of them.
B.C.G. Matrix
0.1 products with a low rate
1-2 products with a high quota
0-10% products with low growth rate
10%-20% products with a high growth rate
The products in the "Dilemmas" quadrant are products that operate in a market that is in
rapid growth. These products require liquidity, they contribute to the company's development,
thus, their evolution is uncertain. Thus, the 'dilemmas' will be products at the launch stage,
and it is still not certain whether they will be a success or not.
"Stars" represent products that act on a rapidly growing market, they
holding the position of leader. As a result, contributes to the increase in business turnover of
enterprise, as well as improving its image. Generally, a product that is in
the growth phase is placed in this quadrant.
“"Milking cows" represents products that hold a leading position in a market that is in a
slow growth, stagnation or even decline. These products are certain values of the enterprise, in
the sense that they bring profits and provide liquidity for the financing of other products located in
old quadrants. A product in the maturity phase can be situated in this quadrant.
"Millstones" are products that are in a slowly growing, stagnant, or declining market.
as they fail to maintain the leadership position. They do not contribute to achieving profit.
the company and neither at improving its image. Since it requires liquidity, it raises
the problem of their maintenance or abandonment, but only after a thorough analysis of all
economic-financial aspects. Generally, a product in the decline phase is situated in
this dial.
Next, we will analyze some of the services of GFK Romania - Market Research Institute, in
based on the growth rates and market share ratios presented in the following table:
Product Growth rate Relative market share
Ad-hoc studies 6 1,2
Qualitative studies 18 1.3
Product testing studies 13 0.6
Packaging testing studies 19 0.9
Forecast studies 6 1.3
Concept testing studies 5 0.3
For these products, the BCG matrix will be:
20%
Qualitative studies
Product testing studies
Packaging testing studies
10%
Ad-hoc studies Concept testing studies
Forecast studies
0
% 2 1 0
Relative quota of
market
From the BCG matrix we can draw the following conclusions:
- The services 'Product Testing Studies' and 'Packaging Testing Studies' have a delicate position on
the market due to high production costs and high selling prices; for this reason
these services are not market leaders.
- The services 'Ad-hoc Studies' and 'Forecast Studies' are leaders in the market, recording volume
to achieve and bring revenues to the company, these are the profitable services.
The service "Qualitative Studies" is in a growth phase and is in a position of
leader in the sofa beds section.
- The "Concept Testing Studies" service is in a slowly growing market and does not hold a position.
of leader
III. The EXON company has three strategic activity segments (products),
characterized as follows:
Figure of
No. business Dynamics The turnover of the most
SAS
crt. market powerful competitor-thousands of euros
-mii euro-
1 SAS 1 10,000 2.5% 40,000
2 SAS 2 5,000 6% 6.250
3 SAS 3 20,000 2% 12,500
It is requested:
1. Represent and characterize the company's activity portfolio using the BCG method.
2. Analyze the following competitive situations:
recommend a type of policy for each positioned activity;
b. to increase the responsiveness in competitive battle, recommend
acquisition of an activity. There are two activities available of the type: "star"
(CA = 10,000 thousand euros), "dairy cow" (CA = 14,000 thousand euros). Argue
the recommendation made.
c. characterize the portfolio of activities by a comprehensive analysis of them (before and
after purchase).