“Marketing strategists term this a harvest strategy and consider it a no-brainer” (Hamel & Prahalad, 1994:125). “Few current business concepts are more prone to oversimplification than the growth/share model, with its labelling of products or divisions or whole companies as ‘dogs’, ‘question marks’, ‘stars’ or ‘cash cows’” (Seeger, 1984:94). “An apparent disadvantage of the matrix was that it assumed that market share was reliable indicator of future profitability” (Calandro & Lane, 2007:30). The above three quotations all criticise the BCG growth/share matrix and its practicality as a competitive tool. This paper discusses the advantages and limitations of the matrix and its application for Apple Inc. as a competitive tool. It concludes that the BCG matrix does have some advantages but is not appropriate for all businesses industries and should not be used as a sole analysis model. In the fast paced competitive modern business world using just the BCG matrix for evaluating a company’s portfolio can have disastrous consequences.
The paper is divided into five parts. Starting with an introduction, it moves on to the concepts of corporate strategy, portfolio analysis and the portfolio models. The third part discusses some of the advantages and limitations of the BCG matrix. The fourth deals with the implications of the BCG matrix when applied to Apple Inc. ending with the conclusion.
Corporate Strategy, Portfolio Analysis and Portfolio Matrix Models
“Always to be best, and to be distinguished above the rest”. This quote from Homer the 8thCentury Greek Poet epitomizes the aim of all organizations. This is where strategy comes in. “Strategy is the direction and scope of an organisation over the long term, which achievesadvantage in a changing environment through its configuration of resources and competenceswith the aim of fulfilling stakeholder expectations” (Johnson, Scholes & Whittington, 2005:9). One of the ways of... [continues]
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