All about strategic management

1. Presentation on
PORTFOLIO ANALYSIS- BCG MATRIX
PRESENTED BY
RAHUL KANEKAR

2. Portfolio Analysis – BCG Matrix

3. • BCG Introduction
• Elements of BCG
• Advantages and Limitations
• Nestle Case
• Nestle Portfolio
• Application of BCG on Nestle
• Conclusion
BCG Matrix – Introduction

4. BCG Matrix – Introduction
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
• BCG Matrix is also known as growth share matrix (aka Product Portfolio Matrix)
• It is a chart that was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help
corporations to analyse their business units
• It help corporations to analyse their business units, that is, their product lines
• This helps the company allocate resources and is used as an analytical tool in brand marketing, product
management, strategic management, and portfolio analysis
• The BCG-Matrix is helpful for managers to evaluate balance in the companies' current portfolio in the
form of Stars, Cash Cows, Question Marks and Dogs.
• BCG Matrix is constructed by taking Growth on one axis and relative market share of the portfolio on
another axis.

5. Different Elements of BCG Matrix
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
•Products which require less money
to maintain but yield high profitsCash Cow
•High potential, Relative Market
share low but future is brightStars
•Consuming lot of resources with
little growth
Question
Mark
•Definite underperformers, low
market share and low growthDog
Hang on to
these and
nurture them
Invest in this
product
Examine closely
either dump or
convert into star
Dumped

7. Advantages & Limitations of BCG Matrix
BCG Matrix
Elements
of BCG
Advantages
&
Limitations
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
Advantages:
• BCG-Matrix is applicable to large companies that seek volume and experience effects
• The model is simple and easy to understand
• It provides a base for management to decide and prepare for future actions.
• If a company is able to use the experience curve to its advantage, it should be able to manufacture and sell
new products at a price that is low enough to get early market share leadership. Once it becomes a star, it is
destined to be profitable.
Limitations:
• It neglects the effects of synergies between business units.
• High market share is not the only success factor.
• Market growth is not the only indicator for attractiveness of a market.
• Sometimes Dogs can earn even more cash as Cash Cows.
• The model uses only two dimensions – market share and growth rate. This may tempt management to
emphasize a particular product, or to divest prematurely.

8. Nestle Case Overview
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
• NESTLÉ India is a subsidiary of NESTLÉ S.A. of Switzerland. With eight factories and a large number of co-
packers
• Nestlé India is a vibrant Company that provides consumers in India with products of global standards
• Nestlé’s products include baby food, medical food, bottled water, breakfast
cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks
We are taking these four products of Nestle for Portfolio Analysis using BCG Matrix :
1. Mineral Water
2. Milk Pack
3. Noodles
4. Chocolates/ Juices

9. Nestle Market Share of Products
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
Mineral Water Milk Pack Noodles Chocolates/Juices
• Market Growth
of Nestle Water
is 85%
• Market Share of
Nestle water is
89%
• Market Growth
of Nestle Milk
Pack is 55%
• Market Share of
Nestle Milk Pack
is 65%
• Market Growth
of Nestle
Noodles is 75%
• Market Share of
Nestle Noodles
is 43%
• Market Growth
of Nestle Juices
is about 40%
• Market share of
Nestle Juices is
38%

10. Application of BCG on Nestle Products
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
Stars Question Marks
DogsCash Cows
MarketGrowth
Market Share
High Low
HighLow

11. Conclusion
BCG Matrix
Elements
of BCG
Advantages
Nestle
Case
Nestle
Portfolio
Application
of BCG on
Nestle
Conclusion
From the BCG Matrix we noticed that,
Nestle Mineral water(Stars) is having High Market Growth and High Market share
Nestle Milk Pack(Cash Cows) is having Low Market Growth and High Market share
Nestle Noodles(Question Marks) is having High Market Growth and Low Market Share
Nestle Chocolates/Juices(Dogs) is having Low Market Growth and Low Market Share.
 Nestle Mineral Water requires high funding to fight competition and maintain growth rate. And
hope is that they become next cash cows
 Nestle Milk Pack generates cash in excess of the amount of cash needed to maintain the business
 Nestle Noodles must be analysed carefully in order to determine whether they are worth the
investment required to grow market share
 Nestle Juices division is typically “break even”, generating barely enough cash to maintain the
business’s market share. They are thought to be sold off.