HL Marketing USING THE BCG MATRIX IN STRATEGIC DECISION MAKING IB BUSINESS & MANAGEMENT A COURSE COMPANION: P

USING THE BCG MATRIX IN STRATEGIC DECISION MAKING Businesses must ensure that they have a good range of cash cows, starts and a few question marks. This will help to ensure the long-term viability of the business, because when the cash cows eventually decline and die, there are plenty of rising stars to take their place. Selective investment in question marks will lead to a future supply of stars.

USING THE BCG MATRIX IN STRATEGIC DECISION MAKING Drug companies have been criticized in recent years by investors for having relatively few top products in the development state, despite the fact that at the same time their cash cows are still earning high revenues and profits. It is tempting to see the BCG matrix as the ideal way to make decisions on the marketing mix. It has a huge advantage for businesses in that it is quick and easy to do, meaning more management time can be devoted to the specific issues of the products on offer. However, some key issues with the model must be considered.

USING THE BCG MATRIX IN STRATEGIC DECISION MAKING Assumptions of BCG Matrix It assumes that your need a large market share to be successful. Many businesses operate extremely profitably by carving out niches in a larger market. Although not having anywhere near the sales of rival newspapers, the UK newspaper, has a worldwide reputation for financial news and operate profitably as a result.

USING THE BCG MATRIX IN STRATEGIC DECISION MAKING Assumptions of the BCG Matrix Second, the model assumes that a fast-growing market is where the opportunities can be found Although, there is no doubt its easier to gain new customers than poach from rivals, there are many examples of slow-moving markets that have been revolutionized by new entrants. Dyson is a company that can come from nothing to dominance in a very mature market by clearly differentiating its products from those of its competitors.

USING THE BCG MATRIX IN STRATEGIC DECISION MAKING As with all models, the BCG matrix is a useful tool that should be used in conjunction with a other information, rather than as a sole basis for decision making.