CONCEPT OF BCG MATRIX

WHAT IS BCG MATRIX ?

• BCG Growth share matrix developed by Boston consulting group of USA and popularly known as BCG Matrix takes a two dimensional views.

I. Industry growth rate.II. Relative market share.

• Though BCG MATRIX has its limitations it is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multi-products.

HISTORY

• In 1970, Bruce Henderson of Boston Consulting Group {BCG} created a chart for the corporation to analyses their business units {products and brands} on the basis of their relative market share and industry growth rate.

• The terms in the BCG Matrix like Stars, Cash Cows, Question marks, Dogs became commonly used terms in business meetings as they became very popular.

BCG GROWTH - SHARE MATRIX

QUADRANTS OF BCG MATRIX

The BCG Growth Share matrix uses the dimensions of relative market share and the market growth rate to establish a 2*2 matrix containing 4 main quadrants:

1. Stars (high market growth, high market share), 2. Cash Cows (low market growth, high market share)3. Question marks (high market growth, low market share)4. Dogs (low market growth, low market share).

The ideal strategy is to hold on to the Stars and the Cash Cows, divest the Dogs and take a call on the Question Marks (hold/divest)

STARS

• Stars are the unit with a high market share in a fast growing industry.• Star represent the best profits and growth opportunities in the organizations.• Generates high revenues and also requires huge cash for sustaining the

STAR position.• Product is in growth stage.• For e.g.: Nescafe, caracal.

CASH COWS

• A cash cow is a product or a business unit that generates unusually high profit margins.

• They are the business with low growth rate and high market share.• Generating cash more than its requirement which can be used by other units.• Product in maturity Stage.• For e.g.: Maggie Noodles

QUESTION MARKS

• Question Marks are the units with low market share in a fast growing industry.

• They required large amount of cash to grow their market share. for e.g.: Promotional expenses.

• They have the potential to generate profits and achieve a dominant position in market.

• Product is in introduction stage, in a fast growing market.• For e.g.: kit Kat, Nestle butter &milk etc.

DOGS

• Dogs often have little future and are big cash drainer on the company.• Generating cash just to BREAK-EVEN. It is a self sustaining unit.• They do not generate any profit for the overall business and hence can be

sold off and hired off.• Product is in decline stage, with no chance of revival.• For e.g.: Nestea, Milky Bar, Munched etc.

ABOUT THE COMPANY

• Tata Group is an Indian multinational conglomerate holding company headquartered in Mumbai, Maharashtra, India

• It was founded in 1868 by Jamsedji Tata and gained international recognition after purchasing several global companies

•  In 2014-15, the revenue of Tata companies, taken together, was $108.78 billion

• These companies collectively employ over 600,000 people• Tata companies with significant scale include Tata Steel, Tata Motors, Tata

Consultancy Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels Company

BCG MATRIX OF TATA GROUP

STARS

TATA HOTELS

• Indian Hotels Company Limited (IHCL),branded as Taj Group, is a chain of hotels and resorts which was incorporated by the founder of the Tata group

• This company is a part of the Tata group, one of India's largest business conglomerates.

• As of 2015, Taj Group operates 108 hotels across India and 17 hotels in the UK, USA, Africa, Maldives, Malaysia, Bhutan, Sri Lanka and the Middle East 

TATA STEEL

• Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is an Indian multinational steel-making company

• It was the 11th largest steel producing company in the world in 2013, with an annual crude steel capacity of 25.3 million tonnes

TATA MOTORS

•Tata Motors Limited  (formerly TELCO, short for Tata Engineering and Locomotive Company) is an Indian multinational automotive manufacturing company

•It is the world's 17th-largest motor vehicle manufacturing company, fourth-largest truck manufacturer, and second-largest bus manufacturer by volume

•Its products include passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles.

TATA POWER

• Tata Power is an Indian electric utility company based in Mumbai, Maharashtra, India and is part of the Tata Group 

• It is India's second largest private power producer

• The core business of the company is to generate, transmit and distribute electricity With an installed electricity generation capacity of about 8,747 MW

QUESTION MARKS

TATA COMMUNICATIONS

• Tata Communications Limited is a global Telecom company owned by the Indian business conglomerate Tata Group

• Tata Communications also holds stake in Tata Teleservices Limited, the 6th largest mobile service provider in India with 62.57 million subscribers in April 2015.

• The company’s infrastructure includes sub-sea, terrestrial communications networks, data centers and it provides fixed line and wireless services

TATA TELESERVICES

• Tata Teleservices Limited (TTSL) is an Indian broadband and telecommunications service provider

• It operates under the brand name Tata DoCoMo in various telecom circles of India.

COWS

TATA GLOBAL BEVERAGES

• Tata Global Beverages Limited (formerly Tata Tea Limited) is an Indian multinational non-alcoholic beverages company headquartered in Kolkata, West Bengal, India and a subsidiary of the Tata Group

• It is the world's second-largest manufacturer and distributor of tea and a major producer of coffee

• Tata Global Beverages markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMČA. 

TATA CHEMICALS

• Tata Chemicals Limited (TCL) is an Indian global company with interests in chemicals, crop nutrition and consumer products headquartered in Mumbai, India

• The company is one of the largest chemical companies in India with significant operations in India and Africa

TRENT

• Established in 1998 and part of the Tata group, Trent operates Westside, one of India’s largest and fastest growing retail chains; Star Bazaar, a hypermarket chain and Landmark a family entertainment format store.

• Trent ventured into the hypermarket business in 2004 with Star Bazaar, providing an ample assortment of products made available at the lowest prices, aptly exemplifying its ‘Helping you spend less’ motto

TATA AIG

• Tata AIG General Insurance Company Limited is an Indian general insurance company, and a joint venture between the Tata Group and American International Group (AIG)

• It started its operations in India on 22 January 2001, provides insurance to individuals and corporates

• The Company's products are available through various channels of distribution like agents, brokers, banks (through bank assurance tie ups) and direct channels like Telemarketing, Digital Marketing, worksite etc.

TATA CONSULTANCY SERVICES

• Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company headquartered in Mumbai, Maharashtra

• It is a subsidiary of the Tata Group and operates in 46 countries

• TCS is now placed among the ‘Big 4’ most valuable IT services brands worldwide

• It is the world's 10th largest IT services provider, measured by the revenues

• It is ranked 64th overall in the Forbes World's Most Innovative Companies ranking, making it both the highest-ranked IT services company and the first Indian company

TITAN

• The company was established in 1984 as a joint venture between Tata and the Tamil Nadu Industrial Development Corporation

• Titan Company is a manufacturing company that produces India's largest and best-known range of personal accessories — watches, jewellery, sunglasses and prescription eyewear

• Precision engineering is another area of specialisation that Titan Company excels in

THE ANALYSIS

• Tata Steel, Tata Power, Tata Motors and Indian Hotels emerge as clear Stars (high market growth, high market share). Hence, they should be retained and the investment in these companies should be increased.• Tata Chemicals and Tata Tea emerge as the Cash Cows (low

market growth, high market share) and should be held on to for the time being.

RATAN TATA’S STATEMENT:

“We have two guiding arrows. One points overseas, where we want to expand

markets for our existing products. The other points right here, to India, where we

want to explore the large mass market that is emerging not by following but by

breaking new ground in product development and seeing how we can do

something that hasn’t been done before.”

CONCLUSION

• As the Tata Group continues to follow the inorganic route to growth, the challenges of integration need to be carefully dealt with.

• It is necessary for the group to take a look at some of their question marks like Voltas, Tata Teleservices and Tata Communications.

• Finally, given the brand equity of the Tata name, it is in the interest of newer companies to remain under the Tata Group.

Thank you