Presentation on PORTFOLIO ANALYSIS- BCG MATRIX PRESENTED BY RAHUL KANEKAR
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Presentation on PORTFOLIO ANALYSIS- BCG MATRIX
PRESENTED BYRAHUL KANEKAR
Portfolio Analysis – BCG Matrix
• BCG Introduction• Elements of BCG• Advantages and Limitations• Nestle Case • Nestle Portfolio• Application of BCG on Nestle• Conclusion
BCG Matrix – Introduction
BCG Matrix – Introduction
BCG Matrix
Elements of BCG
Advantages
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
• BCG Matrix is also known as growth share matrix (aka Product Portfolio Matrix)
• It is a chart that was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyse their business units
• It help corporations to analyse their business units, that is, their product lines
• This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis
• The BCG-Matrix is helpful for managers to evaluate balance in the companies' current portfolio in the form of Stars, Cash Cows, Question Marks and Dogs.
• BCG Matrix is constructed by taking Growth on one axis and relative market share of the portfolio on another axis.
Different Elements of BCG Matrix
BCG Matrix Elements of BCG Advantages Nestle
CaseNestle
Portfolio
Application of BCG on
Nestle Conclusion
• Products which require less money to maintain but yield high profitsCash Cow
• High potential, Relative Market share low but future is brightStars
• Consuming lot of resources with little growth
Question Mark
• Definite underperformers, low market share and low growthDog
Hang on to these and
nurture them
Invest in this product
Examine closely either dump or
convert into star
Dumped
Advantages & Limitations of BCG Matrix
BCG Matrix
Elements of BCG
Advantages&
Limitations
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
Advantages:• BCG-Matrix is applicable to large companies that seek volume and experience effects• The model is simple and easy to understand• It provides a base for management to decide and prepare for future actions.• If a company is able to use the experience curve to its advantage, it should be able to manufacture and sell
new products at a price that is low enough to get early market share leadership. Once it becomes a star, it is destined to be profitable.
Limitations:• It neglects the effects of synergies between business units.• High market share is not the only success factor.• Market growth is not the only indicator for attractiveness of a market.• Sometimes Dogs can earn even more cash as Cash Cows.• The model uses only two dimensions – market share and growth rate. This may tempt management to
emphasize a particular product, or to divest prematurely.
Nestle Case Overview
BCG Matrix
Elements of BCG
Advantages
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
• NESTLÉ India is a subsidiary of NESTLÉ S.A. of Switzerland. With eight factories and a large number of co-packers
• Nestlé India is a vibrant Company that provides consumers in India with products of global standards• Nestlé’s products include baby food, medical food, bottled water, breakfast
cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks
We are taking these four products of Nestle for Portfolio Analysis using BCG Matrix :1. Mineral Water2. Milk Pack3. Noodles4. Chocolates/ Juices
Nestle Market Share of Products
BCG Matrix
Elements of BCG
Advantages
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
Mineral Water Milk Pack Noodles Chocolates/Juices
• Market Growth of Nestle Water is 85%
• Market Share of Nestle water is 89%
• Market Growth of Nestle Milk Pack is 55%
• Market Share of Nestle Milk Pack is 65%
• Market Growth of Nestle Noodles is 75%
• Market Share of Nestle Noodles is 43%
• Market Growth of Nestle Juices is about 40%
• Market share of Nestle Juices is 38%
Application of BCG on Nestle Products
BCG Matrix
Elements of BCG
Advantages
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
Stars Question Marks
DogsCash Cows
Mar
ket G
row
thMarket Share
High Low
High
Low
Conclusion
BCG Matrix
Elements of BCG
Advantages
Nestle Case
Nestle Portfoli
o
Application of BCG on Nestle
Conclusion
From the BCG Matrix we noticed that,
Nestle Mineral water(Stars) is having High Market Growth and High Market share
Nestle Milk Pack(Cash Cows) is having Low Market Growth and High Market share
Nestle Noodles(Question Marks) is having High Market Growth and Low Market Share
Nestle Chocolates/Juices(Dogs) is having Low Market Growth and Low Market Share.
Nestle Mineral Water requires high funding to fight competition and maintain growth rate. And hope is that they become next cash cows
Nestle Milk Pack generates cash in excess of the amount of cash needed to maintain the business Nestle Noodles must be analysed carefully in order to determine whether they are worth the
investment required to grow market share Nestle Juices division is typically “break even”, generating barely enough cash to maintain the
business’s market share. They are thought to be sold off.
Related Documents
