The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". The growth-share matrix thus maps the business unit positions within these two important determinants of profitability.
BCG Growth-Share Matrix
This framework assumes that an increase in relative market share will result in an increase in the generation of cash. This assumption often is true because of the experience curve; increased relative market share implies that the firm is moving forward on the experience curve relative to its competitors, thus developing a cost advantage. A second assumption is that a growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. Thus the position of a business on the growth-share matrix provides an indication of its cash generation and its cash consumption.
The four categories are Explained with relative to Coca Cola Beverages Pakistan
• Dogs - Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture.
For e.g: The new beverage range launched by coca cola beverages “Splash mango,apple” although with intense advertisement spending and marketing in the start, was unable to capture a chunk of market share which was already under the market leader in bottled mango juices “Shezan” , Now with low advertisements budgets and low marketing expenses, the market share of splash did not grew and is neither generating much profits for the company.
• Question marks -... [continues]
Cite This Essay
(2010, 11). Bcg Matrix of Coca Cola Pakistan. StudyMode.com. Retrieved 11, 2010, from http://www.studymode.com/essays/Bcg-Matrix-Of-Coca-Cola-Pakistan-478708.html
"Bcg Matrix of Coca Cola Pakistan" StudyMode.com. 11 2010. 2010. 11 2010 <http://www.studymode.com/essays/Bcg-Matrix-Of-Coca-Cola-Pakistan-478708.html>.
- MLA 7
"Bcg Matrix of Coca Cola Pakistan." StudyMode.com. StudyMode.com, 11 2010. Web. 11 2010. <http://www.studymode.com/essays/Bcg-Matrix-Of-Coca-Cola-Pakistan-478708.html>.
"Bcg Matrix of Coca Cola Pakistan." StudyMode.com. 11, 2010. Accessed 11, 2010. http://www.studymode.com/essays/Bcg-Matrix-Of-Coca-Cola-Pakistan-478708.html.