The Boston Consulting group’s product portfolio matrix (BCG matrix) is designed to help with long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue or develop products.

What is BCG matrix What are its uses and limitations?

The BCG Matrix produces a framework for allocating resources among different business units and makes it possible to compare many business units at a glance. But BCG Matrix is not free from limitations, such as- BCG matrix classifies businesses as low and high, but generally businesses can be medium also.

Who developed BCG matrix and what is it used for?

Back in 1968 a clever chap from Boston Consulting Group, Bruce Henderson, created this chart to help organisations with the task of analysing their product line or portfolio. The matrix assess products on two dimensions. The first dimension looks at the products general level of growth within its market.

How is the BCG matrix used in business?

To use the BCG matrix, a company will review its portfolio of products or SBUs, then allocate them to one of four quadrants based on their market share, growth rate, cash generation and cash usage. This is then used to determine which products receive investment, and which are diversified from.

What do you do with the BCG matrix for dogs?

If you’re making money from the dog itself and it helps you sell other products, you definitely want to keep it around. Even if the dog itself isn’t profitable, if it helps you sell products that are profitable, you may not want to dump it right away.

Is BCG matrix still relevant?

Even though the BCG Matrix has fallen from grace, it is still alive and has left an imprint on management education and practice. Despite being largely discredited in academic circles, many practitioners still view it as an important corporate portfolio planning technique.

What is BCG injection?

The BCG vaccine protects against tuberculosis, which is also known as TB. TB is a serious infection that affects the lungs and sometimes other parts of the body, such as the brain (meningitis), bones, joints and kidneys.

What are four grand strategies?

• Stability Strategy.
• Expansion Strategy.
• Retrenchment Strategy.
• Combination Strategy.

How do you analyze the BCG matrix?

1. Choose the unit. BCG matrix can be used to analyze SBUs, separate brands, products or a firm as a unit itself. …
2. Define the market. Defining the market is one of the most important things to do in this analysis. …
3. Calculate relative market share. …
4. Find out market growth rate. …
5. Draw the circles on a matrix.

Why is Coca Cola a cash cow?

The only beverage that signifies the popularity of The Coca-Cola Company, Coca-Cola is defined as a cash cow that has a high market share but a low growth rate. Over time, this product has become a cash cow since it has reached the apex of its growth rate.

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How do you use BCG matrix?

1. Step 1 – Choose the Unit. …
2. Step 2 – Define the Market. …
3. Step 3 – Calculate Relative Market Share. …
4. Step 4 – Calculate Market Growth Rate. …
5. Step 5 – Draw Circles on the Matrix.

What does cow symbolize in BCG matrix?

Explanation : Cash Cows symbolize Stable in BCG matrix. Cash cows are the leaders in the marketplace and generate more cash than they consume. These are business units or products that have a high market share but low growth prospects.

Why would a firm want to hold onto a dog?

Thus, the company can focus its resources on other more competitive products such as the Star category. And, if the mature stage lasts long enough, the company will probably keep Dogs if they contribute something to the business, for example, contributing to overhead costs or other strategic needs.

What are question marks in marketing?

Question marks (also known as a problem child or Wild dogs) are businesses operating with a low market share in a high-growth market. They are a starting point for most businesses. Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows.

Does BCG prevent TB?

BCG vaccine has a documented protective effect against meningitis and disseminated TB in children. It does not prevent primary infection and, more importantly, does not prevent reactivation of latent pulmonary infection, the principal source of bacillary spread in the community.

Why is BCG vaccine given?

Introduction. BCG, or bacille Calmette-Guerin, is a vaccine for tuberculosis (TB) disease. Many foreign-born persons have been BCG-vaccinated. BCG is used in many countries with a high prevalence of TB to prevent childhood tuberculous meningitis and miliary disease.

How does TB vaccine work?

In people vaccinated against TB and later infected with the bacteria, activation of immune cells is delayed, allowing the bacteria to multiply.

Does every company have all the four categories of the BCG matrix?

BCG Model puts each of a firm’s businesses into one of four categories. The categories were all given remarkable names- Cash Cows, Stars, Dogs, and Question Marks.

What are the disadvantages of BCG matrix?

• Market growth rate is not an accurate measure of a market’s attractiveness to a business.
• Market share doesn’t actually predict how much cash a product generates. …
• It does not account for external factors, known as environmental factors. …
• It is only a snapshot of the current situation.

What does the dog symbolize in BCG matrix?

A dog is a business unit that has a small market share in a mature industry. A dog thus neither generates the strong cash flow nor requires the hefty investment that a cash cow or star unit would (two other categories in the BCG matrix). A dog measures low on both market share and growth.

What are the strategic implications of the BCG matrix?

The BCG matrix, also known as the Boston growth-share matrix, is a tool to assess a company’s current product portfolio. Based on this assessment, the Boston matrix helps in the long-term strategic planning of the company’s portfolio, as it indicates where to invest, to discontinue or develop products.

What is market share in BCG matrix?

In the BCG matrix, market growth and market share of the products (or service) of a company are compared to each other. This allows a company to determine whether they should invest in a product or whether they should de-invest, or even stop the product altogether.

What actions can help a firm grow?

• Build a sales funnel. The first way to quickly grow your business is by building a sales funnel. …
• Utilize a customer management system. …
• Research the competition. …
• Create a customer loyalty program. …
• Identify new opportunities. …
• Build an email list. …
• Form strategic partnerships. …
• Leverage global platforms.

What is the most common grand strategy?

Three common grand strategies are growth, stability, and defensive.

What are the three levels of strategy?

• Business-level strategy.
• Functional-level strategy.
• Corporate-level strategy.

What sodas does coke own?

• Products: Coca-Cola, Diet Coke, Coke Zero, Flavored Coca-Cola/Diet Coke, Coca-Cola Energy.
• Products: Sprite, Sprite Zero Sugar, Sprite Cranberry.
• Products: Fanta Orange, Fanta Zero, Fanta Grape, Fanta Pineapple.
• Products: Dasani purified water.

How do you write a BCG Matrix?

1. Step 1: Choose the product. BCG matrix can be used to analyse Business Units, separate brands, products or a firm as a unit itself. …
2. Step 2: Define the market. …
3. Step 3: Calculate the relative market share. …
4. Step 4: Find out the market growth rate. …
5. Step 5: Draw the circles on a matrix.

What is the product life cycle of Coca Cola?

Coca Cola – PLC The product life cycle was introduced in the 1950’s. It was used to explain the typical life cycle of a product from the time of its inception to its demise. The product life cycle is divided into four phases; these are product introduction, growth, maturity and decline.

What is the central purpose of strategic evaluation?

Evaluate effectiveness of control system to measure achievements. Evaluate effectiveness of strategies to be implemented efficiently. Evaluate effectiveness of the strategy implementation process.

Which of the following is based on BCG matrix Mcq?

Solution: The BCG matrix is based on Industry growth rate and relative market share.

What does a star mean in BCG?

Stars: The business units or products that have the best market share and generate the most cash are considered stars. … Stars can eventually become cash cows if they sustain their success until a time when a high growth market slows down. A key tenet of BCG strategy for growth is for companies to invest in stars.