BCG MATRIX, GE FOR A PRODUCT PORTFOLIO
ERUKULLA SURESH -138919
SCHOOL OF MANAGEMENT, NIT WARANGAL
SUBJECT: MARKETING ENVIRONMENT AND ANALYSIS
SUBMITTED TO DR.RITANJALI MAJHI, ASSISTANT PROFESSOR, SOM
9TH OCTOBER 2013
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). These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it. The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested. “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.”
1. “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.
Relative market share: One of the dimensions used to evaluate business portfolio is relative market share. Higher corporate market share results in higher cash returns. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits. Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share.
Market growth rate: High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. Therefore,... [continues]
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