Bcg Matrix 3k1ag

BCG growth matrix

Companywide Strategic Planning • Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities

This type of business plan involves adapting the firm to take advantage of opportunities in its constantly changing environment. 1. 2. 3. 4.

Annual plan Marketing plan Strategic plan Operational plan

Companywide Strategic Planning Steps in Strategic Planning

Companywide Strategic Planning Defining a Market-Oriented Mission

• The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment • Market-oriented mission statement defines the business in of satisfying basic customer needs

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Companywide Strategic Planning Setting Company Objectives and Goals

Business objectives

• Build profitable customer relationships • Invest in research • Improve profits

Marketing objectives

• Increase market share • Create local partnerships • Increase promotion

Companywide Strategic Planning Deg the Business Portfolio

The business portfolio is the collection of businesses and products that make up the company Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company

Companywide Strategic Planning Analyzing the Current Business Portfolio

Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses • Company division • Product line within a division • Single product or brand

Characteristics of Strategic Business Units (SBUs) An SBU HAS…  A distinct mission and specific target market  Control over its resources  Its own competitors  Plans independent of other SBUs

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Companywide Strategic Planning Analyzing the Current Business Portfolio Identify key businesses (strategic business units, or SBUs) that make up the company Assess the attractiveness of its various SBUs

Decide how much each SBU deserves

Boston Consulting Group Portfolio Matrix Star

Cash Cow Portfolio Matrix Question Mark

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BCG • BCG analysis is mainly used for Multi Category / Multi Product companies. • All categories and products together are said to be Business portfolio. • Thus, the various entities of a business portfolio may move forward by a different pace and with a different strategy. • The BCG analysis actually helps in deciding which entities in a business portfolio are actually profitable, which are duds, which the company should concentrate on and which gives the company a competitive advantage over others.

Portfolio Matrix Strategies Build

Hold

Harvest

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Companywide Strategic Planning:

BCG BCG Growth Share Matrix – The BCG growth share matrix was developed by Henderson of the BCG group in 1970’s. The matrix classifies businesses / SBU’s by 1) Relative Market Share – The market share of the business / SBU / Product in the market as compared to its competitors and overall product / category. 2) Market growth rate – The growth rate of the industry as a whole is taken into consideration from which the growth rate of the product is extrapolated. This growth rate is then pitched on the graph.

Strategies – Cash Cow • High market share but low growth rate (most profitable). • As the market is not growing, that cash cow gains the maximum advantage by generating maximum revenue due to its high market share. • Thus for any company, the cash cows are the ones which require least investment but at the same time give higher returns. • These higher returns enhance the overall profitability of the firm because this excess revenue can be used in other businesses which are Stars, Dogs or Question marks.

Strategies • Retention of the market share • Customer satisfaction programs, loyalty programs and other such promotional methods • Harvest –The company reduces the amount of investment and tries to take out maximum cash flow from the said product which increases the overall profitability.

Stars in the BCG Matrix • High market share and high growth rate • Investment requirements are high.

Strategies • Sales promotion • Advertising • Hold – The company investment is high

Question Marks in the BCG Matrix • New entry products with good growth rate but market share is unknown.

Strategies • New customer acquisition strategies • Build : Increase investments.

Dogs in the BCG matrix • Low market rate and low growth rate • Negative profitability

Strategies • Divest – to release the amount already invested • Revamp the product