The document provides an overview of the Boston Consulting Group (BCG) matrix, which was developed in the 1970s as a portfolio planning model. It classifies businesses or products into four categories based on their market growth rate and relative market share: stars, question marks, cash cows, and dogs. Stars are high growth, high market share businesses that require heavy investment. Cash cows are low growth, high market share businesses that generate cash. Question marks are high growth, low market share businesses that require investment. Dogs are low growth, low market share businesses that use cash. The matrix is used to assess product profiles, cash demands, development cycles, and resource allocation decisions.
2. INTRODUCTION
BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by BRUCE
HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY
1970’s.
According to this technique, businesses or
products are classified as low or high
performers depending upon their market
growth rate and relative market share.
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3. Relative Market Share
and Market Growth
To understand the Boston Matrix you
need to understand how market share
and market growth interrelate.
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4. MARKET SHARE
• Market share is the percentage of the total market that is
being serviced by your company, measured either in revenue
terms or unit volume terms.
• RELATIVE MARKET SHARE
• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher proportion of the
market you control.
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5. MARKET GROWTH
RATE
• Market growth is used as a measure of a market’s
attractiveness.
• MGR = Individual sales - individual sales
this year last year
Individual sales last year
• Markets experiencing high growth are ones where the total
market share available is expanding, and there’s plenty of
opportunity for everyone to make money.
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6. THE BCG GROWTH-SHARE
MATRIX
• It is a portfolio planning model which is based on the
observation that a company’s business units can be classified
in to four categories:
Stars
Question marks
Cash cows
Dogs
• It is based on the combination of market growth and market
share relative to the next best competitor.
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8. STARS
High growth, High market share
• Stars are leaders in business.
• They also require heavy investment, to
maintain its large market share.
• It leads to large amount of cash
consumption and cash generation.
• Attempts should be made to hold the
market share otherwise the star will
become a CASH COW.
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9. CASH COWS
Low growth , High market share
• They are foundation of the company and
often the stars of yesterday.
• They generate more cash than required.
• They extract the profits by investing as little
cash as possible
• They are located in an industry that is
mature, not growing or declining.
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10. DOGS
Low growth, Low market share
• Dogs are the cash traps.
• Dogs do not have potential to bring in
much cash.
• Number of dogs in the company should be
minimized.
• Business is situated at a declining stage.
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11. QUESTION MARKS
High growth , Low market share
• Most businesses start of as question marks.
• They will absorb great amounts of cash if the
market share remains unchanged, (low).
• Why question marks?
• Question marks have potential to become star
and eventually cash cow but can also become
a dog.
• Investments should be high for question
marks. 11
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12. WHY BCG MATRIX ?
To assess :
Profiles of products/businesses
The cash demands of products
The development cycles of products
Resource allocation and divestment
decisions
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13. MAIN STEPS OF BCG MATRIX
• Identifying and dividing a company into SBU.
• Assessing and comparing the prospects of
each SBU according to two criteria :
1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
• Classifying the SBU’S on the basis of BCG
matrix.
• Developing strategic objectives for each SBU.
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15. BENEFITS
• BCG MATRIX is simple and easy to understand.
• It helps you to quickly and simply screen the
opportunities open to you, and helps you
think about how you can make the most of
them.
• It is used to identify how corporate cash
resources can best be used to maximize a
company’s future growth and profitability.
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16. LIMITATIONS
• BCG MATRIX uses only two dimensions,
Relative market share and market growth rate.
• Problems of getting data on market share and
market growth.
• High market share does not mean profits all
the time.
• Business with low market share can be
profitable too.
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19. CONCLUSION
Though BCG MATRIX has its limitations it is one of the
most FAMOUS AND SIMPLE portfolio planning matrix
,used by large companies having multi-products.
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21. 21
Decision Making and Control
• Decision Making
• How to Make Good
Decisions
• Problem Solving
• Building Decision
Making Skills
• Controlling
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22. 22
Elements in Managerial Decisions
• Decision: A conscious choice
among alternative courses
of action.
• Therefore the 3 elements
are:
– A conscious choice among
alternatives
– A specific purpose
– A course of action
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23. 23
Approaches to Decision Making
• Rational (Logical
Approach)
• Intuitive Approach
• Unable to decide
(Indecisive Approach)
• Impulsive Approach
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24. 24
Kinds of Decisions a Supervisor Makes
• Routine data based
decisions
• Serious decisions having
important consequences
• Emergency decisions
requiring distinctiveness
• Problem- Solving
• Decisions beyond your
authority
* It is essential to recognize which decisions need to be made now and are most
important
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25. 25
A Simple Version of Decision Making
(The Logical Approach)
• Define the problem (conditions
and limitations) and the set of
objectives
• Analyze the problem: fact finding
• Develop alternative solutions:
brainstorming
• Decide on the best solution
• Convert the decision into action
• Follow up
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26. 26
Pattern of Problem Solving
• Describe the problem
• Search out the cause, get
the facts
• Define the real problem
and set objectives
• Develop alternative
solutions
• Decide on the best solution
• Implement the decision
• Follow up
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27. 27
Participative Problem Solving
• Argument for Group Decision Making :
– You get more info. And expertise relevant to
the decision
– You get more good ideas and can generate
more and better alternatives
– People thinking together can arrive at better
decisions because of the stimulation and
interplay of different points of view
– Participants are more committed to carrying
out
– Coordination and communication are simpler
and better because everyone understands
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28. 28
Participative Problem Solving
• Criticism of group decision
making:
– It takes longer in a group
– There is usually a dominator in a
group
– Group participants get involved in
winning arguments and showing
off
– If consensus is required people
may conform to get the meeting
over
– Consensus leads to mediocre
decisions
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29. 29
Group Decision Making Works Best When:
• Members are accustom to
working together as a team
and having differing expertise
and point of view but common
goals
• The leader is skillful at keeping
the meeting on target
• The group is rewarded for
making good decisions
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30. 30
Solving Peoples Problems
• Personal problems are not
yours to resolve but
LISTENING can help.
• Keep your own emotions
out of it.
• Try to identify the real
problem.
• If possible eliminate friction
(ex. Food Expeditor).
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31. 31
Win-Win Problem Solving
• Win-Lose: You win, worker loses
• Lose-Win: You lose, worker wins
(retreat and appeasement, no
stand)
• Lose-Lose: The compromise
• Win-Win problem solving means
you find a decision that satisfies
both of you.
– Include worker from the
beginning: From defining the
problem to carrying out an
agreement
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32. 32
Guidelines for Building Decision Making
Skills
• Be sure of your authority for
making decisions
• Accept responsibility fully
• Distinguish what's important
• Make the decision at the time it is
needed
• Be alert to signs of problems
needing solutions
• Keep an open mind
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33. 33
Guidelines for Building Decision Making
Skills
• Don’t solicit advise but do
consult your supervisor when
a problem is beyond your
ability to solve
• Make sure that you are not
part of the problem
• Learn from your mistakes
• Evaluate your decisions when
carried out
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34. 34
Controlling
• Controlling: process by which
supervisors measure, evaluate, and
compare results to goals, and standards
previously agreed upon, and take
corrective action when nessicary.
• Major area is COST.
• Productivity: efficiency which which
inputs are converted into outputs.
• Productivity standards: defined
acceptable quantity of work expected.
• Use control techniques.
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35. 35
Controlling Techniques
• Require records and reports
• Develop and enforce performance
standards
• Develop and enforce productivity
standards Develop and enforce
departmental policies and procedures
• Observe and correct employee actions
• Train and retrain employees
• Discipline when appropriate
• Be a good role model
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37. Aims
• Introduce the economic problem of scarcity
and relate this to the concept of strategy.
• Explore the meaning of organisational strategy
and competitive strategy.
• Investigate the processes by which strategy is
formulated within the organisation.
38. Learning Outcomes
• Summarise the economic problem and relate
this to the issue of strategy through a self-
assessment activity.
• Analyse the various definitions of strategy and
critically consider which is more appropriate
to your organisation.
• Critically examine the meaning of strategic
management and contrast this with a
‘Rationalist ‘ perspective via note taking.
39. The Economic Problem of Scarcity
• Insatiable Wants
• Scarce Resources
• Choices
• Opportunity Cost
40. Marvellous Markets?
• Markets are complex social institutions where
exchange takes place.
• Markets can fail to function properly (Market
Failure)
– Information Asymmetry
– Market Dominance
– Externalities
• We will look at Information.
41. Information Asymmetry
• Differences between simple and complex
exchange.
• Contrast buying a newspaper with the purchase of a
road.
• Information problems with complex exchange.
• Opportunism and the ‘hold up’ problem
• resolved by quasi-market behaviour or integration
• Whatever happened to ‘Trust’?
42. Marvellous Government?
• Do we always need regulation when markets
fail?
• Self-regulation
• market adjustment mechanisms
• Do we need Government to provide ‘public
goods’?
• What about the ‘merit good’ argument?
• How good is government?
43. Distinguish between public goods and
merit goods.
• Public goods are defined as products where, for any given
output, consumption by additional consumers does not
reduce the quantity consumed by existing consumers.
There are very few absolutely public goods, but common
examples include law, parks, street-lighting, defence etc. As
there is no marginal cost in producing the public goods, it is
generally argued that they must be provided free of charge,
because otherwise the people who benefit less than the
cost of using the public good, will not use it. That will lead
to a loss of welfare. Also the goods are mostly non-
excludable, that means that if once provided everybody can
use them, which when charged will lead to "free-riding".
44. Merit goods
• Merit goods are products generally not
distributed by means of the price system, but
based on merit or need, because people
although having perfect knowledge would buy
the wrong amount of them. These goods can
be supplied by free market, but not on the
right quantity. Merit goods are, for example,
education and to some extent the health-care.
They are provided by state as "good for you".
45. How does strategy fit in?
• strategy is the process by which individuals
and organisations make choices about scarce
resources so as to satisfy wants over time in
an environment of uncertainty. They are
aided in this process by market and non-
market forces.
46. Organisational Strategy
– “A strategy is defined as a pattern, of purposes,
policies, programmes, actions, decisions, or
resource allocations that define what an
organisation is, what it does, and why it does it.
Strategies can vary by level function, and by time
frame.”
(Bryson, 1995)
47. Competitive Strategy
– Strategy is the direction and scope of an
organisation over the long term: which achieves
advantage for the organisation through its
configuration of resources within a changing
environment, to meet the needs of markets and to
fulfil stakeholder expectations”
(Johnson and Scholes, 1999).
48. Mintzberg’s 5 P’s
• Strategy can be characterised as a
• Ploy
• Position
• Perspective
• Plan
• Pattern
Outwitting a rival
Place in the market
A powerful group
A consciously intended course of action,
general or specific
50. Planning and Strategic Management.
– "[Strategic management] is a means of
understanding the strategic position of the
organisation: formulating courses of action,
evaluating them and choosing between them; as
well as planning how the choice of strategy can be
put into effect and managing the resultant
changes." Johnson and Scholes (1994)
51. Planning and Strategic Management.
• planning is a sequence of analytical and
evaluative procedures to formulate an
intended strategy and the means of
implementing it. (Johnson and Scholes, 1999)
• is Planning unconcerned with emergent
strategy?
53. 22 April 2023 53
What is meant by Strategic Planning?
• What do you understand by the term
‘Planning’?
• Brainstorm your ideas.
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54. 22 April 2023 54
Strategic Planning
• “A disciplined effort to produce fundamental
decisions and actions that shape and guide
what an organisation is, what it does, and why
it does it”
Bryson (1995)
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55. 22 April 2023 55
Reassess the
process
Develop an effective
implementation process
Establish an effective organisational
vision
Review and adopt the strategic plan or plans
Formulate strategies to manage
these issues
Identify the strategic issues facing the
organisation
Assess the external and internal environments to identify
SWOTs (Strengths, Weaknesses, Opportunities and Threats)
Clarify Organisational Mission and Values.
Identify Organisational Mandates
Initiate and agree upon the strategic planning process.
1
10
The Planning Process
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56. 22 April 2023 56
Stage1: Initiate and agree upon the
strategic planning process.
• Agreement must be reached as to
• the purpose of the effort
• the preferred steps in the process.
• the form and timing of reports (the planning cycle)
• the role, function and membership of groups established to
oversee the effort.
• the role, functions and membership of any strategic planning
committee.
• the commitment of resources for the process.
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57. 22 April 2023 57
Stage 2: Identify Organisational
Mandates
• What Must be Done
• What must not be Done
• What Could be done
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58. 22 April 2023 58
Stage 3: Clarify Organisational Mission
and Values.
• the overriding purpose or intent of the
organisation must be established.
• an opportunity to establish broad policy goals.
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59. 22 April 2023 59
Stage 3: Clarify Organisational Mission
and Values.(cont)
• Stakeholders
– Bryson (1995) suggests identification of key
stakeholders is the key means to success in public
and non-profit organisations.
– But who are the stakeholders?
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60. 22 April 2023 60
A B
C D
Minimal
effort
Keep
informed
Keep
satisfied
Key
players
Low
High
POWER
LEVEL OF INTEREST
Low High
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61. 22 April 2023 61
Stage 3: Clarify Organisational Mission
and Values.(cont)
• Claims for mission
• Peeke (1994)
– it encourages the development of a clear sense of purpose.
– it facilitates decision making in the organisation
– the mission process facilitates organisation-wide communication.
– it aids evaluation activity.
– it clarifies marketing strategy.
– it is useful in the management of contraction (at least if the mission
has been devised proactively.
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62. 22 April 2023 62
Clarify Organisational Mission and
Values.(cont)
• "...even if the mission statement ends up in
everyone's wastebasket, there will still be
beneficial effects resulting from the thinking
and analysis involved in drafting it" (Bowman,
1990)
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63. 22 April 2023 63
Guiding principles for Mission
• It takes years not months
• True consensus is necessary within the top team
• Action is a better communicator than words
• Top team visibility is essential
• Top team continuity helps
• Strategy and Values should be formulated together
• Management should focus on the link between behaviour and
values.
• Make the mission inspirational but not unrealistic
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64. 22 April 2023 64
Stage 4: Assess the external and
internal environments
• The subject of future Lectures
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65. 22 April 2023 65
Stage 5: Identify the strategic issues
facing the organisation
• These are fundamental policy questions or
critical challenges that affect an organisation’s
mandates, mission and values; product or
service level and mix; clients, users, or payers;
or cost, financing, organisation or
management (Bryson, 1995,p.30)
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66. 22 April 2023 66
Stage 6: Formulate strategies to
manage these issues
• “A strategy is defined as a pattern, of
purposes, policies, programmes, actions,
decisions, or resource allocations that define
what an organisation is, what it does, and why
it does it. Strategies can vary by level
function, and by time frame.”
– (Bryson, 1995)
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67. 22 April 2023 67
Stage 7: Reviewing and Adopting the
Strategies and Plan
• This is important where official approval to
proceed is required or where joint
commissioning work is being undertaken.
• This stage represents the formal seal of
approval for the strategies to be adopted.
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68. 22 April 2023 68
Stage 8: Establishing an Effective
Organisational Vision
• ‘animating the dream’. These statements offer
aspirations about the future strategic direction
of the organisation and are often incorporated
in Mission Statements.
• In this stage the organisation is developing a
view of what it should look like once its
strategies are achieved and developed to their
full potential.
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69. 22 April 2023 69
Stage 9: Developing an Effective
Implementation Process
• Developing a document is not enough. For Strategies to be
realised.
– Individuals, teams etc. have know their roles and responsibilities
– action plans have to be developed
– timescale has to be considered (a planning cycle might develop).
– resources have to be committed, particularly to training
– communication processes have to be developed (and these have to be
effective)
– Review and monitoring procedures have to be considered (This may
involve, performance indicators, benchmarking)
– Accountability procedures must be put in place
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70. 22 April 2023 70
Stage 10: Reassessing Strategies and
the Planning Process
• The process is on going. But remember, new
strategies emerge and some old ones are
discarded whilst others remain.
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72. 22 April 2023 72
Where does Strategy come from?
What ‘Forces’ affect it?
• Which of the following forces dominate the current strategic
outlook of the organisation?
– Is there a rigorous planning regime?
– Are incremental adjustments being made to fit the organisation with
its environment?
– Do organisational culture and politics matter?
– Is there a dominant leader who determines the strategic outlook?
– Do outside forces dictate where you head?
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73. 22 April 2023 73
Where does Strategy come from?
What ‘Forces’ affect it?
• More importantly, what forces do you think
should dictate the future strategic outlook of
the organisation?
• THE SNOWFLAKE DIAGRAM re- Johnson and
Scholes (2001)
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74. 22 April 2023 74
Configurations of Strategy
Development
• Planning
• Incremental
• Cultural
• Political
• Command
• Enforced Choice
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75. 22 April 2023 75
The Planning Dimension
• Strategies are the outcome of rational, sequential, planned
and methodical procedures
• Definite and precise strategic objectives are set
• The organisation and environment are analysed
• Potential strategic options are generated and the optimum
solution chosen
• Defined procedures for implementation and the achievement
of the strategic objectives are developed
• The strategy is made explicit in the form of detailed plans
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76. 22 April 2023 76
The Incremental Dimension
• Evolutionary but purposeful strategy development
• Strategy is developed as issues arise
• Strategy is continually adjusted to match changes in the
operating environment
• Early commitment to a strategy is tentative and subject to
review
• Strategic options are continually assessed for fit
• Successful options gain additional resources
• Strategic options are developed from existing strategies by
experimentation and through gradual implementation
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77. 22 April 2023 77
The Cultural Dimension
A “way of doing things” in the organisation guides strategic
direction
• Strategies evolve in terms of a core set of shared assumptions
based on past experience, values and beliefs held by the
organisation’s members
• The shared assumptions guide
– the selection of goals and objectives
– the identification of strategic issues
– the selection of information
– the selection of strategies
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78. 22 April 2023 78
The Political Dimension
• Strategies are developed by negotiation and bargaining
between interest groups
• The interest groups seek to realise their own desired
objectives
• Their influence on strategy development increases with
power
• Power comes from the ability to create or control the flow of
scarce resources and the control and provision of information
• A strategy acceptable to powerful interest groups is achieved
by a process of accommodation and mutual adjustment
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79. 22 April 2023 79
The Command Dimension
• An individual is the driving force behind the organisation’s
strategy.
• Strategy is primarily associated with the institutionalised
power of an individual or small group.
• The strategy represents the aspirations for the organisation’s
future of this individual.
• The strategic direction may be related to a “vision” based on
rational understanding and intuition, or experience and
intuition.
• The individual becomes the representation of the strategy for
the organisation.
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80. 22 April 2023 80
The Enforced Choice Dimension
• Strategic choice is prescribed or limited by external forces
which the organisation is unable to control or influence.
• Organisations respond to environmental imperatives.
• Strategic change is instigated from outside the organisation.
• Barriers in the environment severely restrict strategic mobility.
PROF. IYER
82. Vision/Mission Statements
• Statements that explain who we are
– Type of organization
– Products/services
– Needs we fill
• Statements that explain our direction, our purpose,
our reason for being
– What difference do we make?
• Statements that explain what makes us unique
– Values
– People
– Combination of products and services
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83. Business Vision Statement
A statement that clearly defines the firm’s
“reason” for being in business
– Should significantly stretch the resources and
capabilities of the farm
– Should inspire people in the organization to
achieve things they never thought possible
– Should unite people in the organization toward
the pursuit of one common goal
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84. Business Vision Statement
• A guiding philosophy
• Consistent with organizational value
• Influenced by the strengths and weaknesses
of the business
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85. Components of a Vision Statement
• Core ideology
– Core Values - timeless guiding principles
– Core Purpose - reason for being
• Envisioned future
– Big Hairy Audacious Goals (BHAG) -
clearly articulated goals
– Vivid description - a graphic description of what
success and the future will be like
• Recognition of service to stakeholders
– Owners/creditors
– Employees
– Customers
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86. Mission Statements
• The mission statement of an organization is
normally short, to the point, and contains the
following elements:
– Provides a concise statement of why the
organization exists, and what it is to achieve;
– States the purpose and identity of the organization;
– Defines the institution's values and philosophy; and
– Describes how the organization will serve those
affected by its work.
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87. Vision vs. Mission
• The vision is more broad and future oriented –
the goal on the horizon
• The mission is more focused – how you will
get to the horizon
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88. Examples of Vision Statements
Ben & Jerry’s
Product: To make, distribute, and sell the finest quality all
natural ice cream and related products in a wide variety of
innovative flavors made from Vermont dairy products.
Economic: To operate the Company on a sound financial basis
of profitable growth, increasing value for our shareholders
and creating career opportunities and financial rewards for
our employees.
Social: To operate the Company in a way that actively
recognizes the central role that business plays in the
structure of society by initiating innovative ways to improve
the quality of life of a broad community: local, national, and
international.
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89. Examples of Mission Statements
Pawar Hybrids
Pawar Hybrids is a
regional agricultural
seed company
providing corn hybrids,
high oil corn seed
blends, and premium
alfalfas to farmers of
Maharashtra.
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90. Nashik Farms
To be a farm business that farms and/or manages land to
best satisfy the landowner. To be one of the very best
farmers and farm managers in our region. To rent farm
land by striving to obtain maximum income per acre,
thus creating maximum profits for the landlord and
tenant, through the use of distinguished management of
the land. We also have the motto that “appearance is
everything,” that goes for our equipment to your land.
We make every effort to ensure that the landowner’s
land is virtually weed free and well kept.
Examples of Vision Statements
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91. MBC Farms
Vision
MBC Farms will be an agribusiness focused on the profitable, progressive,
and sustainable production of premium quality identity-preserved grains,
oilseeds, and dairy products. MBC Farms will be a respected, responsible
neighbor and an asset to our community. We prefer a rural lifestyle and
are willing to embrace change as a means to that end. MBC Farms
provides the opportunity for our children and employees to participate in
production agriculture either as owners and/or managers of the business.
Mission
MBC Farms is a producer of grains, oilseeds, specialty crops, and milk. Our
mission is to be recognized by our business associates and competitors as
one of the top producers in our area and to make sure that productivity
translates into prosperity and growth for everyone involved with our
farm.
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92. Exercise
• Spend some time thinking about the vision and
mission of your Family.
• The exercises have a set of questions that will help
frame your thinking.
• Begin writing things down today; you can revise
and work on it more later.
• Remember developing vision and mission
statements are not immediate occurrences; they
take time, reflection and practice.
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