Bcg Growth Matrix
QUESTION 1
Product portfolio analysis can be used to examine products and brands in an organization. Examine the brands of Bidco Oil Company using the Boston Consulting Group (BCG) matrix.
INTRODUCTION
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". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage.
The framework assumes that an increase in relative market share will result in an increase in the generation of cash.
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.
Figure 1.0 Boston Consulting Group Matrix
The four categories are: 1. Question marks (High growth, Low market share)
Question marks (also known as a "problem child") are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
Characteristics of Question Marks are: * These products are in growing markets but have low market
Product portfolio analysis can be used to examine products and brands in an organization. Examine the brands of Bidco Oil Company using the Boston Consulting Group (BCG) matrix.
INTRODUCTION
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". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage.
The framework assumes that an increase in relative market share will result in an increase in the generation of cash.
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.
Figure 1.0 Boston Consulting Group Matrix
The four categories are: 1. Question marks (High growth, Low market share)
Question marks (also known as a "problem child") are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
Characteristics of Question Marks are: * These products are in growing markets but have low market
References: 1. ^ Entry for junk, Online Etymology Dictionary. Retrieved February 19, 2008. 2. ^ Origin of the term "spam" to mean net abuse, Brad Templeton 's website. Retrieved February 19, 2008. 3. ^ O 'guinn, Thomas (2008). Advertising and Integrated Brand Promotion. Oxford Oxfordshire: Oxford University Press. p. 625. ISBN 9780324568622. 4. http://www.marketingweek.co.uk/disciplines/direct-marketing/