The Boston Consulting Group

What is the Boston Consulting Group?
A 2 by 2 matrix with market growth (high/low) and market share (high/low).

It provides a graphic representation for an organization to examine different businesses in it’s portfolio on the basis of their related market share and industry growth rates. It is a two dimensional analysis on management of SBU’s (Strategic Business Units).

What are inside the four cells of BCG?
Stars, Cash cows, dogs and question markets.
What are the strengths of the BCG?
1) Provides a simplistic way to view the business units under a companies control and consider which to invest more in or drop investment.

2) Usually the measurements required – market growth and relative market share – are available to the company, along with competitive measures, making it relatively easy to execute and prepare. Makes it a very good model for firms looking to pursue market share goals by allocating resources.

What is marketing strategy?
An organization’s strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan.
What are the different type of analysis that can be used in marketing strategy?
Situation analysis – SWOT/PESTLE
Portfolio analysis – BCG, GE
Growth Strategies – Ansoff’s, Porters
What are the negatives of the BCG?
1) It only considers ‘high’ and ‘low’ and sometimes factors may be in the middle, thus the true nature of the business may not be reflected. This four-celled approach is often considered to be too simplistic.

2) High market share does not always lead to high profits. There are also high costs involved with high market share.

3) Growth again might not be a good
indicator of appeal as there are other factors to consider such as profit margins amongst
others such as brand name and legal issues. In this case dogs may be better than cash cows
if their profit margins are high.

What is portfolio analysis?
PA allows management to identify and evaluate the various businesses
that make up the company. The reasons it is relevant is so businesses can decide which strategic business units should receive more/less investment, thus to develop growth strategies for adding new products or businesses to the portfolio.
Both the BCG and the GE Matrix have what drawbacks?
1) Rely on judgement 2) Hard to measure certain aspects 3) Make companies quick to abandon less attractive SBUs 4) Does not take into account competitor movements or innovation 5) Static
What are the various parts of the BCG? (4)
1) Stars (high growth, high market share), need heavy investment to finance their rapid growth, when growth slows turn to a cash cow

2) Cows (low growth, high business share), Established and successful so need less investment to hold their share

3) Question Marks/ Problem Children (Low share business, high growth), require cash to hold their share and can build into stars but could choose to phase them out

4)Dogs (Low growth, low share), may generate enough cash to maintain themselves but are not that promising . Cash neutral.

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