28-06-2013, 02:37 PM
BOSTON CONSULTING GROUP(BCG) MATRIX
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INTRODUCTION
BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.
According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.
THE BCG GROWTH-SHARE MATRIX
It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:
Stars
Question marks
Cash cows
Dogs
It is based on the combination of market growth and market share relative to the next best competitor.
STARSHigh growth, High market share
Stars are leaders in business.
They also require heavy investment, to maintain its large market share.
It leads to large amount of cash consumption and cash generation.
Attempts should be made to hold the market share otherwise the star will become a CASH COW.
CASH COWS
Low growth , High market share
They are foundation of the company and often the stars of yesterday.
They generate more cash than required.
They extract the profits by investing as little cash as possible
They are located in an industry that is mature, not growing or declining.
CONCLUSION
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.