This article explains the BCG Matrix in a practical way. After reading you will understand the basics of this powerful marketing and portfolio analysis tool. In this article we also provide you with a free downloadable template. What is the BCG Matrix?
BCG Caterpillar bcg matrix cats, dogs, cows, and stars! The decades old concept remains broadly valid. With care it can still be useful in strategic planning discussions. Business activity portfolios The original portfolio matrix was pioneered in the s by Bruce Henderson, founder of The Boston Consulting Group.
See his classic article at The Product Portfolio. By analyzing the cash flows possible according to the product position in the market, in terms of market share, and the prospects for growth of that market, he placed products or business activities into four categories.
Putting the animals into the BCG matrix pen! These have high market share in a low growth market and require little in the way of additional management attention, development capital or other resources, but will continue to yield a stream of cash for several more years.
Clearly stars and cows are potentially strengths, and the stars face an opportune situation, while question marks and pets or dogs as they have come to be known, look like weaknesses. For example, in this version of the matrix, the larger blob in the question marks cell could be a strategic issue to be accounted for in the corporate strategy; similarly the large bubble in the star cell.
Note the size of the bubbles can denote turnover. To some people the exercise becomes a trivial distraction from real strategy making.
No doubt in some hands the BCG matrix, as with many other management tools, does distract from, or even substitute for, the kinds of hard thinking and discussing that should characterize serious corporate strategic planning. There is a danger that linkages among the businesses or products may be overlooked.
For example, customers who support large cash cow businesses may do so because of some benefit they perceive from a pet or question mark, and if the pet disappeared they may take their business elsewhere. This just emphasizes the importance of having a sufficiently broad and varied representation of managers involved in the SWOT analysis workshops.
Using the BCG Matrix Assessments can be made using the graphic representation of the business activities, to assess the relative growth rate of businesses against the industry average, and to check the portfolio for balance of financial contributions to the overall corporate performance.
The matrix is simple and relatively easy to comprehend. As a graphic device, it can be an aid to strategic planning discussions, and keep participants focused on the decisions they have to address.
I suggest combining portfolio planning with shareholder value at business unit level. The BCG matrix complements other aspects of business analysis, and should be used in the context of a full SWOT analysis, not as a tool on its own.
It remains a speedy guide for allocating resources by strategic business unit, and for getting a sense of where the business lies in relation to the competition.
The BCG facilitates strategic planning discussions by simplifying a large number factors down to two main ones, growth and market share. It helps to explore the risks of different business growth scenarios.
Old fashioned fashion In my own view, helpful as these various tools can be, I would rather see strategies emerge from the Gap Analysis, which gives an indication of their required size and urgency, and a full scale SWOT analysis, which indicate the nature of the problems, or strategic elephants, which the set of strategies must solve.
I believe that strategies should be made to measure for the individual organization, rather than 'off-the-peg'; 'customized', not 'standard'. No two organizations need quite the same strategic design.
Various tools become highly regarded because of the consultant brand association, rather than on their merits for the individual organization needing strategies; hence BCG matrix rather than growth-share matrix.
Some resources on portfolio analysis you may find useful .The Boston Consulting Group (BCG) is a global management consulting firm with over 80 offices around the world.
Our consultants advise leading organizations in value creation strategies, innovation, transformation, supply chain management and more. The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.
Transcript of Caterpillar Inc. Thank you Caterpillar hired the best employees that are highly qualified engineers.
Task that given to them are in a team work. Caterpillar works in Functional departmentalization type. Moreover, Caterpillar also made a group of job for different product line. BCG Matrix Time line/History STRATEGY IN ACTION Caterpillar vs.
Komatsu STRATEGY IN ACTION Wal-Mart: IT as a source of cost leadership Case StudyInfosys and the Indian comparative advantage viii Full contents. The nature of strategic management STRATEGY IN ACTION, Management, Management.
BCG MATRIX Boston Consulting Group (BCG) Matrix or also called BCG model relates to marketing. This model is a known as portfolio management tool that used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.
BCG Solution Bar Code Graphics met with different groups at Caterpillar to align their business objectives and expectations regarding the certification of SP20 Shipping Labels. Once alignment among the stakeholders was defined Bar Code Graphics designed a solution which included;. BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis. Growth-share matrix. STRATEGY IN ACTION Caterpillar vs. Komatsu STRATEGY IN ACTION Wal-Mart: IT as a source of cost leadership Case StudyInfosys and the Indian comparative advantage viii Full contents. The nature of strategic management STRATEGY IN ACTION, Management, Management.
Case Study „Unilever“ page 8 Question 2 To what extent does it appear that Unilever followed | (i) the BCG Growth-Share Matrix, and | (ii) the General Electric Market Attractivenes-Competitive Position model approaches to portfolio planning during the /5(7).