Bcg Matrix of Coca Cola Pakistan

Continues for 1 more pages »
Read full document

Bcg Matrix of Coca Cola Pakistan

By | November 2010
Page 1 of 2
The BCG Growth-Share Matrix
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

[pic]

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 -...

Rate this document

What do you think about the quality of this document?

Share this document

Let your classmates know about this document and more at Studymode.com