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  • 1. BCG Matrix : Product Portfolio MethodProf Sonali
  • 2. Prof Sonali
  • 3. BCG Matrix BCG matrix based on Product lifecycle Theory Determine what priorities should be given in the Product Portfolio of a business unit The BCG Matrix allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization. To ensure long-term value creation a company should have a portfolio of products that contain both high-growth products in need of cash inputs and low growth products that generate a lot of cash It has two dimensions : MARKET SHARE AND MARKET GROWTH Prof Sonali
  • 4.  A high growth product is for example a new one that we are trying to get to some market. Effort and resources to market it ,bnuild distribution channels ,build sales infrastructure Expected to bring gold in future iPodProf Sonali
  • 5.  A low growth product is for example an established product known buy the market . Limited budget for marketing Milking cow that brings constant flow of cash Colgate toothpasteProf Sonali
  • 6. Stars High growth High market share Use large amounts of cash Leaders in business Generate large amounts of cash Likely to grow into cash cow Needs lot of promotionProf Sonali
  • 7. Cash Cows Low growth high market Share Profits and cash generation should be high Foundation of a company Mature market Investment low Are the products that business strive forProf Sonali
  • 8. Dogs Avoid and minimize number of dogs in a company Beware of expensive turn around plans Deliver cash ,otherwise liquidate Low growth market low market shareProf Sonali
  • 9. Question Marks High growth low Market Share Worst Cash characteristics High demands low returns due to low market share Absorb great amounts of cash Either invest heavily or sell off or invest nothing and generate whatever cash it can New products ,buyers are yet to discover them Needs to increase market share quickly or they become dogs Either invest heavily to gain market share or sell themProf Sonali
  • 10. Conventional strategy Build shareInvest to increase market share HoldInvests just enough to keep the SBU in present position HarvestReduces amount of investment in order to maximize short term cashflows and profits from the SBUEffect of turning stars into cash cows DivestPhase it out or sellUse resources elsewhereProf Sonali
  • 11. ProblemProf Sonali
  • 12. References:- NetMba.comProf Sonali