Bcg matrix ( international hrm )

1

To Our Presentation

Boston consulting group

(BCG Matrix )

Daffodil International University

(Uttara Campus)

International HRMSemester Spring-2015

Presented by-

Name ID No.

Md .Toufique Hasan 141 -14 - 505

Md. Hedayetul Islam 141 - 14 - 512

Mohiuddin Majumder 141 - 14 - 513

Md. Abdul Khaleque 141 -14 - 514

• Founded by Bruce D Henderson

in 1963

• A global consulting firm with 42

offline countries

• In 1970, Bruce Henderson of Boston Consulting

Group {BCG} created a chart for the corporation

to analyses their business units {products and

brands} on the basis of their relative market

share and industry growth rate.

BCG Matrix

• BCG Growth share matrix developed by Boston

consulting group of USA and popularly known as BCG

Matrix takes a two dimensional views.

I. Industry growth rate.

II. Relative market share.

According to this technique business or product are

classified as low or high performers depending upon

their market growth rate and relative market share.

BCG Growth - Share Matrix

Relative market share and market

growth

Market share

• Market Share is the percentage of the business

unit sales to the total market that is being

services by your company measured either in

revenue terms or unit volume terms. In indicate

the business unit strength

MS= Business Unit Sales This Year

Total Market Size

MS= Market Share

Relative market share

• Is the percentage of the business unit

sales to the highest competitors sales

measured either in revenue terms or

unit volume terms it indicate the

business unit strength

• RMS= (business unit sale this year)

leading competitor sales this year

RMS= Relative Market Share

Market Growth Rate

• Market growth is used as a measure

of a market’s attractiveness

• Market experiencing high growth

are ones where the total market

share available is expanding and

threes plenty of opportunity for

everyone to make money.

MGR= (total market sales this year) – (total market sales this year)

total market sales last year

It is portfolio planning model which is based on

the observation that company’s business unit

can be classified in to four categories .

• Question Marks

• Stars

• Cash cows

• Dogs

It is based on the combination of market

growth & market share relative to the next

based competitor.

Stares

• High Growth, High Market Share stares are leaders in business

by having heavy high market share in a growing market share

they also require heavy investment to maintain its large market

share

its leads to large amount of cash

consumption and cash generations

Question Marks

• High Growth, Low Market Share

• Question marks are essentially new products where buyers have yet to discover them. Most businesses start of as question marks in growing markets but have low market share

• Question marks have high demand and low returns due to low market share. Investment should be high for question marks

• They will absorb great amounts of cash if the market share remains unchanged

• Question marks have potential to become stares and eventually cash cow but can become also a dog

Cash Cow

• Low growth, High Market Share

• They are foundations of the company

and often the stares of yesterday.

• They generate more cash then required.

• They extract the profit by investing as

littlie cash as possible

• They are located in an industry that is

mature, not growing or declining

Dogs

• Low Growth, Low Market Share

• Dogs are the cash trap

• Dogs do not have potential to bring

in much cash

• Number of dogs in the company

should be minimized

• Business is situated at declining

stage

Why bcg matrix

To asses

• Profile of product /business

• Cash demands of products

• The development cycle of product

• Resource allocation & divestment decisions

Main Steps in BCG Matrix

• Identify and dividing company into SBU.

• Assessing and comparing the prospects of each SBU

according to criteria:

SBU’s relative market share

Growth rate of SBUs industry

• Classifying the SBU’s on the basis on the BCG

Matrix

• Developing Strategic objective for each SBU.

Benefits

• BCG matrix is simple & easy to

understand

• It helps to quickly & simply screen the

opportunity open to you, & help you think

about how you can make the most of

them.

• It is used to identify how corporate cash

resources can best be used to maximize

company’s future growth & profitability.

Limitation

• BCG matrix uses only two dimensions relative

market share & market growth rate.

• Problem of getting data on market share &

market growth

• High market share does not mean profits all

time.

• Business with market share can be profitable

too.

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.

• As long as management understands that the BCG

growth/Share Matrix generates option which is

require further analysis and validation, this tool can

greatly enhance strategic decision making.