The bcg matrix is an excellent tool for analyzing the products or services of a company. The principle behind the technique is to provide a visual image. To ensure longterm value creation, a company should have a portfolio of products that contains both highgrowth products in need of cash inputs and lowgrowth products that generate. Vrio analysis for nike bcg matrix case study identified the four main attributes which helps the organization to gain a competitive advantages. Situational analysis, business strategy and bcg matrix. Bcg matrix has four types of scenarios with respect to the market share of the company, cash flow generation and growth rate of the industry in which company is operating.
The boston consulting group matrix is also known as the continue reading benefits of the bcg matrix. Oct 09, 2017 the boston consulting group matrix is a well known tool for portfolio analysis. The m atrix is established in 1970 by bruce d oolin henderson 1915 1992 for the bcg in boston. But, these challenges can be overcome by the efficient business strategies. Bcg analysis helps organizations focus on cash flow, investment and divisional requirements.
Boston matrix bcg matrix at the end of the 1960s, bruce henderson, founder of the boston consulting group, bcg, developed his portfolio matrix. Introduction boston consulting group bcg matrix is developed by bruce henderson of the boston consulting group in the early 1970s. Jan 20, 20 the bcg matrix is an assessment model in which products or functional business units are assessed on two features. The bcg matix contains the following four components. The bcg matrix is used for the evaluation of a organizations product portfolio in marketing and sales planning. The bcg model is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. Oct, 2016 bcg matrix limitations be that as it may, the shortsighted approach of the bcg business portfolio grids has brought about losing its prevalence as explanatory instruments. According to this technique, businesses or products are classified as low or high performers depending. Bcg matrix limitations be that as it may, the shortsighted approach of the bcg business portfolio grids has brought about losing its prevalence as explanatory instruments. Bcg matrix advantages and disadvantages lets learn finance. Pdf an analysis on bcg growth sharing matrix researchgate. May 01, 20 bcg matrix is a framework created by boston consulting group to evaluate the strategic position of the business brand portfolio and its potential. Using the boston consulting group portfolio matrix to analyze. Because of its flexibility in this area, the bcg matrix.
The composition of the portfolio can be critical tothe growth and success of the company. Although the bcg matrix is widely used and widely discussed in many strategy and marketing textbooks, it does carry significant practical limitations. Defining the market is one of the most important things to do in this analysis. An analysis on bcg growth sharing matrix munich personal. Bcg matrix explained smi strategic management insight. It was published in one of bcgs short, provocative essays, called perspectives. Boston consulting group matrix bcg this technique is particularly useful for multidivisional or multiproduct companies. Boston consulting group matrix professional academy. The authors extend the idea of the strategic business unit and subsequent strategic analysis of the bcg model to an academic institution. It is argued that relative competitive position and growth are the two fundamental parameters which must be considered in. How to use the bcg matrix smart insights digital marketing.
Sep 20, 2014 this long term perspective is a key strength of the bcg matrix as a strategic tool. The paper concludes by discussing the negative impact of following not. The bcg is simple and useful technique for strategic analysis. See all 2 formats and editions hide other formats and. For example, you can analyze your customer portfolio using the bcg matrix. Benefits of the bcg matrix the marketing study guide. Based on this assessment, the boston matrix helps in the longterm strategic planning of the companys portfolio, as it indicates where to invest, to discontinue or develop products.
Introduction to the bcg matrix the bcg matrix was developed by the boston consulting group in 1968. It is a portfolio matrix tool and is designed for larger companies to map, compare and analyze their existing business divisions strategic business units or sets of products. The boston consulting group bcg matrix since strategic planning is t he basis for decision making in any business david, et al. Bcg growthshare matrix otherwise called bcg lattice, bcg investigation, or boston box was created by bruce henderson in the mid1970s for boston consulting group. Full form of bcg matrix is boston consulting group matrix. The bcg matrix growthshare matrix is a method that comes from the consulting company boston consulting group bcg, thus the name bcg matrix or boston matrix. Bcg matrix also known as the growthshare matrix is used by organizations to classify their business units or products into 4 different categories. This long term perspective is a key strength of the bcg matrix as a strategic tool. Growth rate of an industry and the market share of a respective business relative to the largest competitor present in the industry are taken as the basis.
The bcg matrix can be used to determine what priorities should be given in the product portfolio of a business unit. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. So if samsung has a 20 percent market share in the mobile phone industry and apple its largest competitor has 60 percent so to speak. Second, the market growth potential for that product or its business unit. This article, the fourth in the series, examines the growth share matrix, a portfolio management tool developed by bcg founder bruce henderson.
The boston consulting group matrix is a well known tool for portfolio analysis. G matrix, method used in the strategic decisional processes to streamline. An analysis on bcg growth sharing matrix haradhan kumar mohajan premier university, chittagong, bangladesh email. The bcg matrix is a wellknown management model for analyzing a companys product portfolio. Nike bcg matrix case study solution and analysis of. G matrix is considered the oldest, the simplest and the most known matrix of analysis of the portfolio of activities.
Scribd is the worlds largest social reading and publishing site. The bcg matrix is a matrix designed by the boston consulting group back in 1970s. Based on qualitative research, this paper aims at identifying the causes of rise and fall of the b. It divides a market on the basis of its relative growth rate and market share and comes up with 4 quadrants cash cow, stars, question marks and dogs. Jan 16, 2020 the boston consulting group bcg growthshare matrix is a planning tool that uses graphical representations of a companys products and services in an effort to help the company decide what it. Introduction to the bcg growthshare matrix theory context and concept advantages of using the bcg growthshare matrix limitations and extensions of the bcg growthshare matrix prior assumptions limitations and criticisms related models and extensions practical. Concepts and applications by kingsley amah 1 published by kca. One of the more obvious benefits of the bcg matrix is its level of simplicity in that it only has two dimensions and four quadrants and its easy ability to recall continue reading limitations of the bcg matrix. Using the boston consulting group portfolio matrix to. The bcg matrix explained how does the bcg matrix work. Boston consulting group bcg matrix is a common approach to managing a portfolio of different strategic business units sbus or major product lines. The boston consulting groups strategy institute is taking a fresh look at some of bcgs classic thinking on strategy to explore its relevance to todays business environment. This straightforward and accessible 38page book is structured as follows. The ansoff matrix home michigan crossroads council.
Understanding the different quadrants can give crucial insights to maximise your return on investments. The bcg matrix method is the most wellknown portfolio management tool. To ensure longterm value creation, a company should have a portfolio of products that contains both highgrowth products in need of cash inputs and lowgrowth products that generate a lot of cash. It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position relative market share. The bcg matrix is an assessment model in which products or functional business units are assessed on two features. Sep, 2019 created by the boston consulting group, the bcg matrix also known as the boston or growth share matrix provides a framework for analyzing products according to growth and market share. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. The bcg matrix, also known as the boston growthshare matrix, is a tool to assess a companys current product portfolio. Bcg matrix also is known as the growthshare matrix is used by organizations to classify their business units or products into 4 different categories. Pdf an analysis on bcg growth sharing matrix semantic scholar. Bcg matrix, business organizations, business improvement. Presented by pinak paul, tanuja mallick, jyoti dudeja, ayushi singla presented to.
The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested. Shortcomings or limitations of bcg matrix bcg matrix. However, you can also use the model to determine the priority for other matters within a company. It is the most renowned corporate portfolio analysis tool. Visit our marketing theories page to see more of our marketing buzzword busting blogs if you are working with a product portfolio you have a range of tools at your disposal to determine how each one or a group of the products are doing. However, there are still a couple of cautions to be considered when using it.
The model is helpful in brand advertising, key administration and generation administration and business portfolio examination. Shortcomings or limitations of bcg matrix bcg matrix analysis. The growth share matrix or product portfolio boston. Copying and distribution of this pdf is prohibited without written permission. Also known as the boston box or grid, bcg charts are divided into four types of scenarios, stars, cash cows, dogs and question marks.
In developing the growthshare matrix, the boston consulting group bcg created arguably the most popular management technique ever day, 1981, with other models such as the shell directional policy matrix being developed later shell, 1975. The bcg matrix is a business method that was created by the boston consulting group in the 1970s. Pdf applying the bcg matrix to analyze egypts tourism. Oct 12, 2016 bcg growthshare matrix otherwise called bcg lattice, bcg investigation, or boston box was created by bruce henderson in the mid1970s for boston consulting group. An analysis on bcg growth sharing matrix semantic scholar. The divisions or products compromise the organisations business portfolio. The bcg growthshare matrix is a powerful strategic tool which allows managers to identify the stars, cash cows, question marks and. First, the relative market share that a certain product or its business unit has with respect to the competition. The creator of the bcg matrix used this variable to actually measure a companys competitiveness. The growth share matrix was created in 1968 by bcgs founder, bruce henderson. This business method bases its theory on the life cycle of products. Limitations of the bcg matrix the marketing study guide. So if samsung has a 20 percent market share in the mobile phone industry and apple.
The bcg matrix has its own limitations, since its a very simple tool using only two dimensionsmarket share and market growth. Situational analysis, business strategy and bcg matrix 1. Even so, it remains a useful tool in portfolio analysis. It provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates. Bcg matrix is the term used in the context of management. Dogs can evolve into question marks, stars into cash cows and cash cows change into dogs. It was developed in the early 70s by the boston consulting group.
At the height of its success, the growth share matrix was used by about half of all fortune 500 companies. It has given generations of marketers and business leaders a quick and simple way to think about the risks of growth. Apr 23, 2019 the bcg matrix has its own limitations, since its a very simple tool using only two dimensionsmarket share and market growth. Array of methodologies for analyzing internal and external environment of a business. Aside from their guileless ways to deal with the determinants of industry allure and upper hand, there are issues identifying with market definition. The growth share matrix is a diagram of the normal relationship of cash use and cash genera tion. Firstly, market growth may be directly influenced by unilever due to its market power. For example, as lipton is the worlds best selling tea brand, an increase in investment by. Jun 04, 2014 the boston consulting groups strategy institute is taking a fresh look at some of bcgs classic thinking on strategy to explore its relevance to todays business environment. To develop the efficiency of marketing decision making, the bcg matrix plays an effective tool for strategic planning of product performance in. In the 21st century, sustainable improvement of business faces various challenges for the global economic competition. The bcg matrix considers two variables, namely n market growth. The boston consulting group bcg growthshare matrix is a planning tool that uses graphical representations of a companys products and services in. Bcg matrix of nestle bcg matrix analysis of nestle.
May, 2018 bcg matrix is the term used in the context of management. Bcg stands for boston consulting group, a wellknown consultancy company that developed the bcg matrix in the 1970s. Nike bcg matrix case study solution and analysis of harvard. Organizational divisions can change as time passes. The boston consulting group matrix provides the recommendations for the development of strategic resource allocation and strategy development in the typical multibusiness company. Boston consulting group bcg matrix is a four celled matrix a 2 2 matrix developed by bcg, usa. A company should have at least one cash cow that can generate steady revenue, be used to fuel stars, and to develop stars from question marks. The boston consulting group bcg is a renowned organization. Pengertian analisis matriks bcg dan contohnya ilmu. Pengertian analisis matriks bcg dan contohnya matriks bcg atau bcg matrix adalah alat analisis bisnis yang digunakan untuk membantu perusahaan dalam mempertimbangkan peluang pertumbuhan dengan perencanaan strategis jangka panjang dan meninjau portofolio produk perusahaan tersebut agar dapat mengambil keputusan untuk berinvestasi, mengembangkan atau menghentikan produknya. Lane senior lecturer in marketing leeds metropolitan university leighton hall beckett park leeds tel. It is a matrix which helps in decision making and investments.