Bcg matrix

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Bcg matrix

  1. 1. Sinhgad Collage of Commerce <ul><li>Subject- Strategic Management </li></ul><ul><li>Topic - BCG MATRIX </li></ul><ul><li>Class – SYBMS </li></ul><ul><li>Submitted to – Prof. Vijay Kapoor </li></ul>
  2. 2. INDEX <ul><li>Definition </li></ul><ul><li>History </li></ul><ul><li>Diagram & its Explanation </li></ul><ul><li>Strategic Implication </li></ul><ul><li>Advantages & Disadvantages </li></ul><ul><li>BCG OF M&M </li></ul>
  3. 3. AKNOWLEDMENT <ul><li>I WOULD LIKE TO THANK TO MY COLLEGE , MY BMS CO-ORDINATOR PROF. RITIKA HEMDAVE AS WELL AS TO PROF.VIJAY KAPOOR .FOR GIVING SUCH KIND OF OPPORTUNITY FOR DOING THIS PROJECT OR PRESENTATION . </li></ul>
  4. 4. GROUP MEMBERS 30 VIJAY MOURYA 43 BHAVESH SINGH 33 ATUL PATHAK 23 RAKESH MALPEDI SIGNITURE ROLL NO. NAME
  5. 5. WHAT IS BCG MATRIX ? <ul><li>BCG Growth share matrix developed by Boston consulting group of USA and popularly known as BCG Matrix takes a two dimensional views. </li></ul><ul><li>Industry growth rate. </li></ul><ul><li>Relative market share. </li></ul>
  6. 6. History <ul><li>In 1970, Bruce Henderson of Boston Consulting Group {BCG} created a chart for the corporation to analyses their business units {products and brands} on the basis of their relative market share and industry growth rate. </li></ul><ul><li>The terms in the BCG Matrix like Stars, Cash Cows, Question marks, Dogs became commonly used terms in business meetings as they became very popular. </li></ul>
  7. 7. BCG Growth - Share Matrix
  8. 8. Stars <ul><li>Stars are the unit with a high market share in a fast growing industry. </li></ul><ul><li>Star represent the best profits and growth opportunities in the organizations. </li></ul><ul><li>Generates high revenues and also requires huge cash for sustaining the STAR position. </li></ul><ul><li>Product is in growth stage. </li></ul><ul><li>For e.g.: Nescafe, caracal. </li></ul>
  9. 9. Cash Cows <ul><li>A cash cow is a product or a business unit that generates unusually high profit margins. </li></ul><ul><li>They are the business with low growth rate and high market share. </li></ul><ul><li>Generating cash more than its requirement which can be used by other units. </li></ul><ul><li>Product in maturity Stage. </li></ul><ul><li>For e.g.: Maggie Noodles </li></ul>
  10. 10. Question Marks <ul><li>Question Marks are the units with low market share in a fast growing industry. </li></ul><ul><li>They required large amount of cash to grow their market share. for e.g.: Promotional expenses. </li></ul><ul><li>They have the potential to generate profits and achieve a dominant position in market. </li></ul><ul><li>Product is in introduction stage, in a fast growing market. </li></ul><ul><li>For e.g.: kit Kat, Nestle butter &milk etc. </li></ul>
  11. 11. Dogs <ul><li>Dogs often have little future and are big cash drainer on the company. </li></ul><ul><li>Generating cash just to BREAK-EVEN. It is a self sustaining unit. </li></ul><ul><li>They do not generate any profit for the overall business and hence can be sold off and hired off. </li></ul><ul><li>Product is in decline stage, with no chance of revival. </li></ul><ul><li>For e.g.: Nestea, Milky Bar, Munched etc. </li></ul>
  12. 12. Strategic Implication Of BCG MATRIX <ul><li>BCG Matrix helps in determining the competitive advantage of each SBU </li></ul><ul><li>BCG Matrix will work when: </li></ul><ul><li>Market of each Division / SBU is well defined. </li></ul><ul><li>Relative market share is an indication of an SBU’s competitive position. </li></ul><ul><li>Market growth, cash investment and profits of the SBU are positively co-related. </li></ul>
  13. 13. Advantages <ul><li>Diversification with sustainable profits. </li></ul><ul><li>Allocation of Scarce Resources of the company. </li></ul><ul><li>Higher profits and Growth rates </li></ul><ul><li>Raising Equity Capital only when necessary. </li></ul>
  14. 14. Disadvantages <ul><li>Other important dimensions which are also significant apart from relative market share and growth rate are the product life cycle, presence of competitive advantage, etc. </li></ul><ul><li>Long term profitability is influenced to a great extent by controlling costs and overheads. </li></ul><ul><li>Value of a business is often linked to other factors like synergy, competitive advantage etc </li></ul><ul><li>Instead of 4 cells there should be 6 cells –high, medium and low. </li></ul>
  15. 15. BCG OF M&M INTRODUCTION <ul><li>Mahindra Group is one of the largest corporate groups of India. It is a US $6.3 billion conglomerate with employee strength of over 50,000. </li></ul><ul><li>It is ranked amongst Forbes Top 200 list of the World's Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies. </li></ul>
  16. 16. SBU OF M&M <ul><li>Tractors </li></ul><ul><li>Two Wheelers </li></ul><ul><li>Utility Vehicles </li></ul>
  17. 17. Place of Tractor <ul><li>AMGR of Tractor industry = 18% </li></ul><ul><li>Market share of M&M = 29% (Market Leader) </li></ul><ul><li>2 nd largest player is Tafe group (messy tractor) </li></ul><ul><li>Market share of Tafe group = 23% </li></ul><ul><li>RMS of M&M Tractor = 1.26x </li></ul>
  18. 18. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1x 0.2x 1x 0.5x 0.4x 0.3x 10x 4x 2x Business growth Rate TRADITIONAL BCG MATRIX Relative Market share
  19. 19. Place of Two Wheelers <ul><li>AMGR of two wheelers industry = 12% </li></ul><ul><li>Market Share of M&M two Wheelers = 1% </li></ul><ul><li>Market Share of Hero Honda = 52% </li></ul><ul><li>RMS of M&M two wheelers = 0.02x </li></ul>
  20. 20. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1x 0.2x 1x 0.5x 0.4x 0.3x 10x 4x 2x Business growth Rate HIGH LOW TRADITIONAL BCG MATRIX Relative Market share
  21. 21. Place of Utility Vehicles <ul><li>AMGR of Utility vehicle industry = 8.7% </li></ul><ul><li>Market Share of M&M Utility Vehicle = 42% (Market Leader) </li></ul><ul><li>Market Share of Tata Motors in UV = 21% </li></ul><ul><li>RMS of M&M Utility Vehicle = 2x </li></ul>
  22. 22. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1x 0.2x 1x 0.5x 0.4x 0.3x 10x 4x 2x Business growth Rate TRADITIONAL BCG MATRIX Relative Market share
  23. 23. Conclusion SBU AMGR M&M mkt Share (a) Largest Competitor Mkt. share (b) X = a/b TRACTORS 18% 29% 23% (TAFE) 1.26 TWO WHEELERS 12% 1% 52% (HERO HONDA) 0.02 UTILITY VEHICLES 8.7% 42% 21% (TATA MOTORS) 2.00
  24. 24. 10% 12% 14% 16% 18% 20% 8% 6% 4% 2% 0% 0.1x 0.2x 1x 0.5x 0.4x 0.3x 10x 4x 2x Business growth Rate HIGH LOW TRADITIONAL BCG MATRIX Relative Market share
  25. 25. APPROPRIATE STRATEGIES <ul><li>TRACTORS (STAR) </li></ul><ul><li>HOLD STRATEGY (Invest to protect) </li></ul><ul><ul><li>Build capacity expansion </li></ul></ul><ul><ul><li>Increase investment </li></ul></ul><ul><ul><li>Increase advertisement and promotion </li></ul></ul><ul><ul><li>Increase market reach </li></ul></ul>
  26. 26. CONT… <ul><li>TWO WHEELERS (QUESTION MARK ?) </li></ul><ul><li>Exceptional case (Money hogger) </li></ul><ul><li>Product is in early stage </li></ul><ul><li>Try to build it and turn in to STAR </li></ul><ul><li>Invest intensively </li></ul>
  27. 27. CONT… <ul><li>UTILITY VEHICLES (CASH COW) </li></ul><ul><li>HOLD STRATEGY (INVEST TO PROTECT) </li></ul><ul><ul><li>Increase advertisement and promotion </li></ul></ul><ul><ul><li>Increase market reach </li></ul></ul><ul><ul><li>Increase Investment </li></ul></ul>
  28. 28. CONCLUSION <ul><li>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. </li></ul>
  29. 29. Reference <ul><li>www .Google. com </li></ul><ul><li>Strategic Management- by Anita Bo bade </li></ul><ul><li>www. Wikipedia . com </li></ul><ul><li>www. Dog pile. com </li></ul><ul><li>5. www. M&M . com </li></ul>

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