The four quadrants of the growth-share matrix. Growth-share matrix is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies. Understanding the tool BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential. It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position relative market share.
It facilitates a company think about its products and services and makes decisions about which it should keep, which it should let go and which it should invest in further. Also called the BCG Matrix, it provides a useful way of screening the opportunities open to the company and helps to think about where one can best allocate resources to maximize profit in the future.
The BCG Growth-Share Matrix is a four- cell 2 by 2 matrix used to execute business portfolio analysis as a footstep in the strategic planning process.
BCG matrix is often used to prioritize which products within company product mix get more funding and attention BCG matrix takes into account two strategic parameter into consideration namely, market share and market growth. To understand the Boston Matrix, one must understand how market share and market growth are interrelated.
Market share is the percentage of the total market that is being serviced by a company under consideration, measured either in revenue terms or unit volume terms.
Higher the market share, the higher the proportion of the market one controls. The Boston Matrix assumes that if the company under consideration is enjoying a high market share then it will be making more money.
This assumption is based on the idea that company has been in the market for long enough to have learned how to be profitable, and will Swot bcg enjoying scale economies that gives an advantage. Market growth is used as a measure of a market's attractiveness.
While, competition in low growth markets is often bitter, and while you might have high market share now, it may be hard to retain that market share without aggressive discounting. This makes low growth markets less attractive.
The result is large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows.
Question marks need to be examined carefully to determine if they are worth the investment required to grow market share. However, dogs are a cash trap because of the money is being tied up in a business that has little potential.
Such businesses are candidate for divestiture. So the cash being spent and brought in approximately nets out. If a star can maintain its large market share it will become a cash cow when the market growth rate declines.
There are typically four different strategies to apply: Make further investments for example, to maintain Star status, or to turn a Question Mark into a Star. Maintain the status quo do nothing.
Reduce the investment enjoy positive cash flow and maximize profits from a Star or a Cash Cow. For example, get rid of the Dogs, and use the capital you receive to invest in Stars and Question Marks.
Don't have a large market share in a growing market Question marks are essentially new products Question Marks might become Stars and eventually Cash Cows It need to increase their market share or they become dogs. Dog Market presence is weak Do not enjoy the scale economies Dogs should be avoided and minimized.
SWOT analysis The SWOT analysis is one of the very useful tool for understanding and decision-making for all sorts of situations in business and organizations.
A scan of the internal and external environment is a crucial part of the strategic planning process, which is being covered by SWOT analysis. It is used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
Strengths, Weaknesses are considered to be internal to the corporation or organisation where as Opportunities, and Threats are part of the external environment.
The analysis involves identifying the purpose of the business venture or project and recognizing the internal and external factors that are favorable and unfavorable to achieve that goal.
The method is being developed by Albert Humphrey, who led a convention at Stanford University in the s and s using data from Fortune companies. Uniqueness of the business or department that give it an advantage over others in the industry.
These are characteristics that place the firm at a disadvantage relative to its peers. These are the external factors that will boost the sales or profitability of the organisation.
These external elements in the environment could cause trouble for the business. The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective.
Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. SWOT analysis is a tool for auditing an organization and its environment.BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis.
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
It is a way of summarizing the current state of a company and helping to devise a plan for the future, one that employs the existing strengths, redresses existing weaknesses, exploits opportunities and defends against threats.
SWOT analysis of BCG (Boston Consulting Group) is covered on this page along with its segmentation, targeting & positioning (STP).
Analysis of Boston Consulting (BCG) . BCG has history of shaping the future. We began not as another management consulting firm, but as a pioneer of bold, new approaches to running a company. Read more. SWOT analysis of BCG (Boston Consulting Group) is covered on this page along with its segmentation, targeting & positioning (STP).
Analysis of Boston Consulting (BCG) also covers its USP, tagline / slogan and competitors.