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BCG Matrix

Group MembersBatch 22-A Group No 3 y Amit Gupta 01 y Pooja Krishnan 33 y Prabir Ghosh 34 y Kalpana Sharma 36 y Mahesh Deshmukh 59 y Vijaylaxmi Naickar 64

INTRODUCTIONy In the commercial arena, the choice of an effective

strategy is perhaps the most important and the toughest decision to take. y The decision to select the best strategy to meet the enterprise s objectives is rendered complex by multifarious considerations. y BCG Matrix developed by a group known as Boston Consulting Group, USA.

Contdy it seeks to place the different products of an

organization in different grids y In terms such as:y Profitability y percentage growth in sales y market share position

y when all the products of the company are put in four

cells that is the market standing of the company can be analyzed in four different classes namely, stars, cash cows, dogs and question marks.

BCG Matrix

Contdy Stars (=high growth, high market share) use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept. y Cash Cows (=low growth, high market share) profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high Foundation of a company

Contdy Dogs (=low growth, low market share)

avoid and minimize the number of dogs in a company. beware of expensive turn around plans. deliver cash, otherwise liquidate Question Marks (= high growth, low market share) have the worst cash characteristics of all, because high demands and low returns due to low market share if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog. either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash y

Nestle Indiay Nestle had established in 1866 y Headquarters in Vevey, Switzerland y Nestle has growth today to be the world s biggest food

and beverages company. y the company is known today by its several strong brands which are dominating the markets the world over. y With six factories and a large number of co-packers, Nestle India is a vibrant company offering a number of products in the Indian market.

Nestle India and BCG Matrixy Nestle has a wide range of products and is the market

leader in food business over the world. y It has a limited number of brands on India. y The peculiarity of these brands is that those brands which are established ones are really ones which dominate the market while, the brands which are not so well established are not so on account of any qualitative deficiency.

Contd

Contdy The diagram shows the construction of a BCG Matrix for Nestle India. y

y

Each product in the matrix finds an explanation herein below: Product: Nescafe : leading coffee brands dominance which is unparalleled by any other brand High market share and high growth rate Product: Ceralac : leading baby food products witnesses quite a long hold in its market share major contributor for Nestle India s revenues.

Contdy Product: Maggi Noodles: First preference of Indian children in terms of instant food. high market share but the market growth rate of Noodle consumption is not very high. number of purchasers. y Product: Milo: removed off the shelves potential to expand importance to Milo

Contdy Product: Maggi Sauce significant contender leader has been highlighted with top television celebrities huge potential to be converted into a star. y Product: Maggi Pickles limited variety sales of Maggi Pickles has never really trigged It is not a dog

Contdy Product: Maggi Soup

y y y y y

Packaged soup market in India has a good future. never been rejected demand for soup itself is underdeveloped Product: Kit Kat has an upper edge over its competitors. has lost some of the prominent recognition lacks significant market share Product: Bar One Product: Nestle Milk Product: Nestle Butter Product: Nestle Fruit N Milk

Contdy Product: Nestea taste conscious Indian consumer. the diverse and typical taste tendered is not in favour. facts are not totally against Nestea. It s a cash cow y Product: Milky Bar stage of a power brand. primary acceptance of Milky bar lack of core quality It s a dog

Contdy Product: Nestle Dahi Unaware of the product Offered in selected outlets lack of a growing market y Product: Crunch and Munch Since both these chocolates of Nestle cater to the same

market and are also similar in composition and variety

SUGGESTIONSy It has to focus on its distribution system and offer

better incentives for retailers who have till date been clinging on to its products. y It has to stop adopting a brand focus promotion strategy. y trying to impose a foreign taste on the local consumers.

LIMITATIONSy Proper corroborative research is required before taking

any action. y proper reporting of its figures is not available. y limited survey of one city (Mumbai). y Not much data was available

Conclusiony This marks the ends of the construction and the study

of the BCG matrix for Nestle India. The attempt herein made was primarily to focus on each brand in particular, as offered by Nestle in India, to analyse its pros and cons, to look for prospects and to find solutions for them to perform better.

Bibliographyy BOOKS: L. M. Prasad, Business Policy: Strategic Management, 247, (Sultan Chand & y

Co., New Delhi, 2001) WEBSITES: (last visited on February 22, 2005) visited on March 1, 2005) (last visited on March 1,2005) (last visited on March 2, 2005) (last visited on December 29, 2004)