BCG Matrix of Hindustan Unilever
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 your business portfolio may move forward by a different pace and with a different strategy. The BCG analysis actually helps you in deciding which entities in your business portfolio are actually profitable, which duds are, which you should concentrate on and which gives you a competitive advantage over others.
Once you know which businesses stand where in your business portfolio, you also come to know which businesses need investments, which needs harvesting (making money), which needs divesting (reducing investment) and which needs to be completely taken out of the business portfolio. For a major organization like HUL, ITC etc which have multiple categories and within the categories, they have multiple lines of products; the BCG analysis becomes very important. At a holistic level, they get to make a decision on which product to continue and which product to be divested. Which product can give new returns with good investment, and which products are reaching the apex of market share.
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.
Thus by having 2 basic but at the same time very important factors on X axis and Y axis, the BCG matrix makes sure that the classifications are concrete....