BCG Tool for Analyzing Opportunities & Ability to Compete

Slides:



Advertisements
Similar presentations
4/20 Warm-up 1. Identify 2 competitors in the same market. 2. Explain how your business distinguishes itself from its competitors What do they want people.
Advertisements

BOSTON CONSULTING GROUP MATRIX
Marketing Management 3. Marketing Planning.
MG 506 (Fall 1999: Class 3) 9/29/99 Tuesday, September 28, 1999 n Term project n Cases/teams n Strategic Management n Web sites: –FaxSav, audible n Case:
Portfolio Analysis GE Tool for Analyzing Opportunities & Ability to Compete.
Developing and Enacting Strategic Marketing Plans and Amplifying Your Responsibility as a Middle Marketing Manager Lindell’s Notes L.P. Chew BA 315 Chapter.
1 Pertemuan Keduapuluhempat Marketing Strategies for Mature and Declining Markets.
Business policy and Strategic management
Strategic Marketing Planning
Copyright 2006 – Biz/ed Product Life Cycles and the Boston Matrix.
Strategic Planning ORGANIZATIONAL CAPABILITIES AND GOALS
Company and Marketing Strategy Course: Mkt 202 Lecturer: NNA
PRODUCT PORTFOLIO ANALYSIS IB BUSINESS & MANAGEMENT A Course Companion p
Marketing & Strategy Chapter 2.
Chapter 6 Portfolio Analysis Objective: to introduce one of a key element of self-analysis method which assess the strength of a business in the market.
1 2. Strategic Planning & The Marketing Process. 2 What Is Planning Establish objectives Determine how to accomplish them regardless of what happens in.
The Boston Matrix Tom Lu.
 Classify SBU & products ◦ Determine future cash contributions  Positive cashflow (+ve) ◦ Determine future cash requirements  Negative cashflow (-ve)
Marketing & Company strategy
Product and Brand Management
MARKETING STRATEGY Learning objectives:
Company and Marketing Strategy: Partnering to Build Customer Relationships Chapter 2.
Objectives Understand company-wide strategic planning and its four steps. Learn how to design business portfolios and develop strategies for growth and.
Principles of Marketing Chapter 2: Company & Marketing Strategy
Marketing: An Introduction Armstrong, Kotler
Discussion: How Can Disney Recover?
Company and marketing strategy: partning to build customer relationshp
Market Oriented Strategic Planning How do companies compete successfully in today’s market place? By creating and delivering superior value to target customers.
 BCG stands for Boston Consulting Group  BCG Matrix was designed in 1970s for product portfolio planning, based on the concept of product life cycle.
BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY u Strategy content includes the strategic options available to companies u Multinational companies.
PRODUCT PORTFOLIO ANALYSIS
Objectives Understand how strategic planning is carried out at the corporate, division, and business unit levels. Learn the major steps in the marketing.
Concepts & Context of Business Strategy. Business Strategy Mission Goals Objectives Strategies Tactics Sales oriented efforts Marketing oriented efforts.
Chapter 2 STRATEGIC PLANNING and the Marketing Process 2-1.
MGT-519 STRATEGIC MARKETING AAMER SIDDIQI. LECTURE 8.
Strategic Planning: Developing and Implementing a Marketing Plan.
Factors Influencing Strategic Choice Environmental Constraints Internal Environment Value system in Decision making Influence of Past Strategy Reaction.
FORMULATION OF STRATEGY: ANALYSING THE PRODUCT PORTFOLIO
1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R SIX Targeting Attractive Market Segments 6.
BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY Strategy content includes the strategic options available to companies –multinational companies.
PRESENTATION ON GE MCKINSEY MATRIX Submitted to: Mrs. Rutvi Umrigar Presented by: Ragini Patel Roll.no.-34 Sub.:- BPSM.
Marketing for Lawyers Marketing strategies Lesson 8
Company and Marketing Strategy Chapter: 2. Companywide Strategic Planning Strategic Planning The process of developing and maintaining a strategic fit.
BASIC STRATEGY CONTENT AND THE MULTINATIONAL COMPANY Strategy content includes the strategic options available to companies –multinational companies.
Boston Matrix Fred Lee Period 3.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Analysis Tools SWOT, PEST+C, Porter’s 5 Forces, BCG Matrix.
The Boston Matrix (Also called the BCG Matrix, the Growth-Share Matrix and Portfolio Analysis)
Tanveer Hussain Farrukh Kaleem Arslan Ali Rizwana Tabussum Rubila Qayyum.
Chapter 11 Managing products: product life-cycle, portfolio planning and product growth strategies © 2012 by McGraw-Hill Education.  This is proprietary.
Strategy Formulation:
Cell-1 Stars Cell-2 Question Mark Cell-3 Cash Cows Cell-4 Dogs
BCG MATRIX AND General Electric (GE) Matrix
The Boston Matrix IB Business and Management What is the Boston Matrix? It is a tool created by the Boston Consultancy Group It is designed to be used.
Edition Vitale and Giglierano Chapter 5 Concepts and Context of Business Strategy Prepared by John T. Drea, Western Illinois University.
Market Planning and Strategy. Market Research Plan SWOT analysis Marketing budget Business Objectives Marketing strategies Market Research.
Boston Matrix.  The range of products owned by a business  Also refers to Strategic Business Units (SBU), which are businesses or divisions owned by.
Business Portfolio Analysis By Nakato Ruth. Portfolio Analysis A common technique used to analyze an organization in relation to its environment. It mainly.
Company and Marketing Strategy Chapter Strategic Planning Strategic planning is defined as:  “The process of developing and maintaining a strategic.
The BCG matrix. The BCG matrix is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1968 to help corporations with analyzing.
Relative Market Share Position Industry Sales Growth Rate
Business policy and Strategic management
Strategic Intent and Mission.
Michael Porter’s Generic strategies
Corporate strategies Chapter 6.
Four Types of Strategies
Strategy Analysis and Selecting
BCG Growth/Share Matrix
Define strategic management and explain why it’s important
Portfolio Planning Used to help managers decide on investing scarce organizational resources among competing business opportunities. Useful for multibusiness.
Presentation transcript:

BCG Tool for Analyzing Opportunities & Ability to Compete Portfolio Analysis BCG Tool for Analyzing Opportunities & Ability to Compete

Types of Portfolio Analysis Growth Share Matrix (Boston Consulting Group) Industry Attractiveness/Business Position Matrix (General Electric)

Growth Share Matrix (Boston Consulting Group) Classification of SBUs/products into four cell matrix based on Market Attractiveness Indicator – Industry’s annual growth rate 10% traditional cutoff Business Strength Indicator – 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%- Market Growth Rate 10x 4x 2x 1.5x 1x Relative Market Share .5x .4x .3x .2x .1x Stars 5 4 3 ? Question marks 2 1 Cash cows 6 Dogs 8 7

Star Strategies Leader expanding industry Generates large profits Requires substantial investments to sustain growth Farthest down on experience curve relative to competition Increase sales – e.g. new markets, new channels of distribution Increase market share

Problem Child or ? Low market share in expanding industry Needs substantial cash to improve its position Slow progress on experience curve Increase sales (limit to niche or increase market share (limit to niche) Leave market

Cash Cow Leader in mature or declining industry Can generate funds for other SBUs Maintain market share e.g. ensure quality, build customer loyalty, develop substitute brands Maximize Cash Flow e.g. increase usage rate, rate of replacement, modify expense structure, raise prices

Dogs Low market share in a mature or declining industry Slow progress on experience curve Cost disadvantages and few growth opportunities Harvest or Divest Concentrate on niches requiring limited effort

The Boston Consulting Group’s Growth-Share Matrix 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- Market Growth Rate 10x 4x 2x 1.5x 1x Relative Market Share .5x .4x .3x .2x .1x

Strategy Implications BCG Star – Leader in Expanding Industry BUILD - Continue to increase market share – if necessary at expense of short-term earnings Problem Child – Low market share in Expanding Industry HARVEST if weak, BUILD if strong. Assess chances of dominating segment. If good, go after share. If bad, redefine business or withdraw.

Strategy Implications BCG Cash Cow – Leader in mature or declining industry HOLD - Maintain share and cost leadership until further investment becomes marginal Maximize cash flow Dogs – Low market share in a mature or declining industry DIVEST Plan an orderly withdrawal so as to maximize cash flow or concentrate on niches that require limited effort

Assumptions of Growth /Share Matrix High market share generates cash revenues ? High Market growth uses more cash resources ?

Issues with Growth/Share Matrix Market growth is not the only factor related to cash usage. Market growth is not necessarily related to cash usage. Market share is not necessarily related cash generation. Multiple factors lead to profitability. Cash is not the only factor in evaluating a portfolio.

Issues With Growth/Share Matrix Limited to industries where experience curve is relevant Appropriate for volume industries Overlooks perils of growth Measurement problems Product-market definition problems Difficult to implement strategies