4. The Boston consulting Group’s Growth share
Matrix (BCG Matrix)
It involves strategic
business units (SBUs)
being positioned in the
matrix on the basis of
market growth rate and
their market share,
relative to that of the
largest competitor.
Market growth rate
provides an indicator of
the relative
attractiveness of the
market served by each
of the business in the
company’s profile.
STAR
QUESTION
MARK
COW DOG
5. CLASSIFICATION
STARS
(high growth, high market share)
CASH COWS
(low growth, high market share)
DOGS
(low growth, low market share)
QUESTION MARKS
(high growth, low market)
6. CLASSIFICATION
STARS (high growth, high market share)
Stars are using large amounts of cash.
Stars are leaders in the business.
Stars are frequently roughly in balance on net cash flow.
CASH COWS (low growth, high market share)
Profits and cash generation should be high.
Because of the low growth, investments which are needed
should be low.
Cash Cows are often the stars of yesterday and they are
the foundation of a company.
7. CLASSIFICATION 1
DOGS (low growth, low market share)
Avoid and minimize the number of Dogs in a company.
Watch out for expensive ‘rescue plans’.
Dogs must deliver cash, otherwise they must be liquidated.
QUESTION MARKS (high growth, low market share)
They have the worst cash characteristics of all, because they have
high cash demands and generate low returns.
If the market share remain unchanged, it will absorb great amounts
of cash.
Either invests heavily, or sells off, or invests nothing and generates
any cash that one can.
8. Benefits of the BCG-Matrix
The BCG-Matrix is helpful for managers to evaluate balance in
the company’s current portfolio of Stars, Cash Cows, Question
Marks and Dogs.
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.
9. 2Limitations of BCG-Matrix
How to define market and how to get data about market
share.
A high market share does not necessarily lead to
profitability at all times.
The model employs only two dimensions – market share
and product or service growth rate.
Low share or niche businesses can be profitable too (some
Dogs can be more profitable than cash Cows).
The model does not reflect growth rates of the overall
market.
The model neglects the effects of synergy between
business units.
11. 3INTRODUCTION
The company was originally established in 1958 as Gold
Star, producing radios, TVs, refrigerators, washing
machines, and air conditioners.
The LG Group was a merger of two Korean companies,
Lucky and Gold Star, from which the abbreviation of LG
was derived.
The current "Life's good" slogan is an acronym.
Before the corporate Name change to LG, household
products were sold under the Brand name of Lucky, while
electronic products were sold under the brand name of
Gold Star.
12. LG GROUP
1. LG. Philips LCD
2. LG Chemical
3. LG Telecom
4. LG Powercom
5. LG Twins
6. LG Dacom
13. Business areas and main products
Mobile communications Digital appliance
CDMA Handsets
GSM Handsets
3G Handsets
Cellular Phones
Air Conditioners
Refrigerators
Microwave Ovens
Washing Machines
Vacuum Cleaners
Home Net
Compressors for Air
Conditioners and
Refrigerators
14. Business areas and main products
Digital display Digital media
Plasma TVs
LCD TVs
Micro Display Panel TVs
Monitors
PDP Modules
OLED Panels
USB Memory
Flat Panel Computer
Monitors
Home Theater Systems
DVD Recorders
Super Multi DVD Rewriters
CD
Notebook PCs
Desktop PCs
PDAs
PDA Phones
MP3 Players
New Karaoke Systems
15. Product of LG
Business Areas Products
Consumer Electronics LCD TV, Plasma Display, Display
Panel, Color Television, Home Theatre
System, Music system, DVD
Recorder/Player, MP3 & MP4 Player
Home Appliances Conditioner, Commercial Air
Conditioner, Refrigerator, Washing
Machine, Dishwasher, Microwave,
Vacuum Cleaner
Computer Products Laptop, Personal Computer, LCD
monitor, CRT monitor, Optical Storage
Devices
Mobile Phones Premium trend setter phone , Camera
Phone , Music Phone ,Color Screen
GSM Handset
16. Question Mark Cash CowStar Dog
TIME
REVENUE/PROFIT
Introduction Growth Maturity Decline
17. CONCLUSION
LG CONSUMER ELECTRONICS are
at INTRODUCTION STAGE (Question Mark).
LG HOME APPLIANCES are at STAR STAGE.
LG COMPUTER PRODUCTS are at CASH
COW STAGE.
LG MOBILE PHONES is at DOGS STAGE.
