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TRINITY INSTITUTE OF PROFESSIONAL STUDIES
Sector – 9, Dwarka Institutional Area, New Delhi-75Affiliated Institution of G.G.S.IP.U, Delhi
Portfolio Analysis-BCG Matrix
Dr. Jaspreet Kaur Associate Professor
TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75
Boston Consulting Group(Growth share matrix)
• The SBUs/products are categorized into four cell matrix on the basis of – Market Attractiveness which shows Industry’s annual
growth rate– Business Strength which shows the Company’s Market
Share Relative to Largest Competitor
The Boston Consulting Group’s Growth-Share Matrix
20%-18%-16%-14%-12%-10%- 8%- 6%- 4%- 2%- 0M
arke
t Gro
wth
Rat
e
10x 4x 2x 1.5x 1x Relative Market Share
.5x .4x .3x .2x .1x
Dogs 87
3 ?Question marks? ?
21
Cash cows
6
Stars
5
4
Star Products• Leader expanding industry• Stars generate a large profits• They need substantial
investments to maintain growth
• Farthest down on experience curve relative to competition
• Stars increase the sales of a company like new markets, new channels of distribution
• Stars Increase the market share
Question Mark?• Question marks have a Low
market share in the industry• They need substantial cash
for their growth• Slow progress on experience
curve• They Increase sales and
market share (limited to niche)
• In case they are not successful they will have to Leave market
Cash Cow• They are the Leader in mature
or declining industry• They generate massive funds
for other SBUs• They have a high market
share• They have a high quality and
customer loyalty.• They bring in Maximize Cash
Flow like increase usage rate, modify expense structure and raise prices
Dogs• They have a Low market
share in a mature or declining industry
• Show a Slow progress on experience curve
• They have Cost disadvantages
• Their growth opportunities are limited
• Harvest or Divest
TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75
Strategies of BCG
• Star – Its is a Leader in Expanding Industry. The star should be BUILD which is Continue to increase market share even if it is at the expense of short-term earnings
• Question Mark– It has a Low market share in Expanding Industry. It should be Harvested if weak, BUILD if strong. If the chances are good, go after share. If the chances are bad, redefine business or withdraw.
TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75
Strategies for BCG
• Cash Cow – It is a Leader in mature or declining industry. The strategy should be to HOLD that is Maintain share and cost leadership till investment becomes marginal. Also one should Maximize cash flow
• Dogs – Has a Low market share in a mature or declining industry. It should be Divested which is an orderly withdrawal to maximize cash flow or concentrate on niches which needs limited effort.
TRINITY INSTITUTE OF PROFESSIONAL STUDIESSector – 9, Dwarka Institutional Area, New Delhi-75
Issues with Growth/Share Matrix
• Market growth is not always related to the cash usage.
• Market growth is not always related to cash usage.
• Market share is not always related cash generation.
• Multiple factors may bring in profitability.• Cash cannot be the only factor in analyzing the
portfolio.
Thank You