Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs according to the growth-share matrix. Therefore, it is always important to perform deeper analysis of each brand or SBU to make sure they are not worth investing in or have to be divested.Strategic choices: Retrenchment, divestiture, liquidation, Cash cows. The composition of the portfolio can be critical tothe growth and success of the company. Its limitation is market growth rate is only one factor in industry attractiveness, and relative market share is only one factor in competitive advantage . The BCG Matrix (Boston Consulting Group Matrix) is the best-known portfolio planning framework. They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows. Assesses the attractiveness of an SBU's market and the strength of its position in the marketing. Intermediaries play an important role in matching ________. Therefore, business units that operate in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future. When examining market growth, you need to objectively compare yourself to your largest competitor and think in terms of growth over the next three years. BCG matrix can be used to analyze SBUs, separate brands, products or a firm as a unit itself. The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box. 18) A) market development B) market penetration C) relative market share D) market growth rate E) market segmentation 19) In the Boston Consulting Group approach, _____ serves as a measure of company strength in the market. The marketing control process consists of a) establishing goals, market scanning, and market share analysis. These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it. If there would be no support for cash cows, they would not be capable of such innovations.Strategic choices: Product development, diversification, divestiture, retrenchment, Stars. After concept testing, a firm would engage in which stage in developing and marketing a new product? | The Boston Consulting Group (BCG) Matrix is a portfolio management tool created in 1970 by Bruce Henderson. BOSTON CONSULTING GROUP MATRIX ( BCG ) This technique is particularly useful for multi-divisional or multi-product companies. It does not define what ‘market’ is. BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential. Dogs hold low market share compared to competitors and operate in a slowly growing market. An attractive idea must be developed into a ________. BCG matrix is a framework created by Boston Consulting Group It classifies business portfolio into four categories based on industry attractiveness and relative market share. Therefore, they require very close consideration to decide if they are worth investing in or not.Strategic choices: Market penetration, market development, product development, divestiture. High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. For example, if we would do the analysis for the Daimler’s Mercedes-Benz car brand in the passenger vehicle market it would end up as a dog (it holds less than 20% relative market share), but it would be a cash cow in the luxury car market. Some industries grow for years but at average rate of 1 or 2% per year. 22) According to the Boston Consulting Group approach, _____ provides a measure of market attractiveness. He's been using his knowledge on strategic management and swot analysis to analyze the businesses for the last 5 years. The divisions or products compromise the organisations “business portfolio”. It classifies business portfolio into four categories based on industry attractiveness (growth rate of that industry) and competitive position (relative market share). Evaluating Product Lines Using the BCG Matrix (VIDEO). The growth-share matrix defines 4 types of SBUs. After calculating all the measures, you should be able to plot your brands on the matrix. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits. Evaluating your business portfolio comprehensively, Identifying the best practices in the industry, Revealing organization's strong and weak points alongside opportunities and threats, Knowing the external factors affecting your company, Evaluating industry's level of competition and its profitability. Draw the circles on a matrix. A) relative market share B) market development C) market penetration D) market growth rate E) market segmentation Answer: D. Learn More : Share this Share on Facebook Tweet on Twitter Plus on Google+