Presented by:- Niharika

SonuAnkurVishal

SantoshRahul

SameerHoney

SatyajeetPankaj

Boston Consulting Group Matrix

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUC HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.

According to this technique, businesses or product are classified as low or high performer depending upon their market growth rate and relative market share.

Introduction

To understand the BOSTON MATRIX you

need to understand how market and market growth

interrelate.

RELATIVE MARKET SHARE AND MARKET GROWTH

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.

RELATIVE MARKET SHARERMS = Business unit sales this year Leading rival sales this year The higher your market share, the higher

proportion of the market you control.

MARKET SHARE

Market growth is used as a measure of a market’s attractiveness.

MGR = Individual sales – individual sales this year last yearMarket experiencing high growth are one

where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.

MARKET GROWTH RATE

It is a portfolio planning model which is based on the observation that a company’s business units can be classify into four categories:

STARSQUESTION MARKSCASH COWSDOGSIt’s a based on the combination of market

growth and market share relative to the next best competitor.

THE BCG GROWTH- SHARE MATRIX

Stars are leaders in business.They also require heavy investment, to

maintain its large market share.It leads to large amount of cash consumption

and cash generation.Attempts should be made to hold the market

share otherwise the star will become CASH COW.

STARSHigh growth, high market share

They are foundation of the company and often the stars of yesterday.

They generate more cash than required.They extract the profit by investing as little

cash as possible.They are located in an industry that is

mature, not growing or declining.

CASH COWlow growth, high market share

Dogs are the cash traps.Dogs do not have potential to bring in much

cash.Number of dogs in the company should be

minimized.Business is situated at a declining stage.

DOGSLow growth, low market share

Most businesses star of as question marks.They will absorb great amounts of cash if the

market share remains unchanged, (low).Why question marks?Question marks have potential to become star

and eventually cash cow but can also become a dog.

Investment should be high for question marks.

Question markshigh growth market, low market share

To assess:Profiles of product/businessesThe cash demand of productsThe development cycle of productsRESOURCE ALLOCATION AND

DIVESTMENT DECISIONS.

Why BCG matrix

THE BOSTON MATRIX THUS OFFER a very useful map of the organization product or services strengths and weaknesses at least in terms of current profitability well as the likely cash flows. The need which prompted this idea was indeed that managing cash flow.

PRACTICAL USE OF THE BCG MATRIX

BCG MATRIX is simple and easy to understand.

It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them.

It is used to identify how corporates cash resources can best be used to maximize a company’s future growth and profitability.

Benefits

BCG matrix uses only two dimensions, relative market share and market growth rate.

Problems of getting data on market share and market growth.

High market share does not mean profit all the time.

Business with low market share can be profitability too.

Limitation

MAHINDRA AND MAHINDRATATA GROUPSITC GROUPMOBILE OPERATORS

PRACTICAL USE

BCG of ITC

HotelPaper boardPackaging Agri business

FMCG - CIGARETTES

FMCG- Others

May be ITC InfoTech

Present players Bharti airtel Reliance communication Vodafone BSNL Tata Idea Aircel MTNL Unitech MTS Loop Stel Videocon HFCL Etisalet

BCG of mobile operators

% share of subscriber by each operators

% share of revenue by main operators

BCG matrix for mobile industry

airtel reliancevodafone bsnl

tata

idea

aircel

0

10

20

30

40

50

60

00.20.40.60.811.21.41.6

Relative market share

Relative market share

Airtel – is the star : having the highest market shareRest all players are question marksStrategy for airtel:- Protect market share – build

market share- invest heavilyFor question marks- vodafone and idea airtel has the

potential to become future star so they should invest and build market share.

reliance and tata has huge customer base still they are not making huge revenue so they can divest to other business

Bsnl which had competitive advantage is losing and do not seems to have a good future

From the BCG matrix

Though BCG matrix has its limitations it is one of the most famous and simple portfolio planning matrix, used by large companies having multi-products.

CONCLUSION