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7/27/2019 bcgmatrix-110820045725-phpapp01

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Sinhgad Collage of Commerce

Subject- Strategic Management

Topic - BCG MATRIX

Class SYBMS

Submitted to Prof. Vijay Kapoor


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INDEX

Definition

History

Diagram & its Explanation

Strategic Implication

Advantages & Disadvantages

BCG OF M&M


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AKNOWLEDMENT

I WOULD LIKE TO THANK TO MYCOLLEGE , MY BMS CO-ORDINATORPROF. RITIKA HEMDAVE AS WELL AS

TO PROF.VIJAY KAPOOR .FOR GIVINGSUCH KIND OF OPPORTUNITY FORDOING THIS PROJECT OR

PRESENTATION .


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GROUP MEMBERS

NAME ROLL NO. SIGNITURE

RAKESH

MALPEDI

23

ATUL PATHAK 33

BHAVESHSINGH

43

VIJAYMOURYA

30


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WHAT IS BCG MATRIX ?

BCG Growth share matrix developed byBoston consulting group of USA andpopularly known as BCG Matrix takes a

two dimensional views.

I. Industry growth rate.

II.Relative market share.


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History

In 1970, Bruce Henderson of BostonConsulting Group {BCG} created a chart forthe corporation to analyses their business

units {products and brands} on the basis oftheir relative market share and industrygrowth rate.

The terms in the BCG Matrix like Stars, Cash

Cows, Question marks, Dogs becamecommonly used terms in business meetingsas they became very popular.


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Stars

Stars are the unit with a high market sharein a fast growing industry.

Star represent the best profits and growthopportunities in the organizations.

Generates high revenues and alsorequires huge cash for sustaining theSTAR position.

Product is in growth stage.

For e.g.: Nescafe, caracal.


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Cash Cows

A cash cow is a product or a business unitthat generates unusually high profitmargins.

They are the business with low growth rateand high market share.

Generating cash more than its

requirement which can be used by otherunits.

Product in maturity Stage.

For e.g.: Maggie Noodles


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Question Marks

Question Marks are the units with low marketshare in a fast growing industry.

They required large amount of cash to grow

their market share. for e.g.: Promotionalexpenses.

They have the potential to generate profits and

achieve a dominant position in market. Product is in introduction stage, in a fast

growing market.

For e.g.: kit Kat, Nestle butter &milk etc.


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Dogs

Dogs often have little future and are big cashdrainer on the company.

Generating cash just to BREAK-EVEN. It is a

self sustaining unit. They do not generate any profit for the overall

business and hence can be sold off and hired

off. Product is in decline stage, with no chance of

revival.

For e.g.: Nestea, Milky Bar, Munched etc.


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Strategic Implication Of BCG MATRIX

BCG Matrix helps in determining thecompetitive advantage of each SBU

BCG Matrix will work when:

1) Market of each Division / SBU is welldefined.

2)Relative market share is an indication ofan SBUs competitive position.

3)Market growth, cash investment andprofits of the SBU are positively co-related.


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Advantages

1) Diversification with sustainable profits.

2)Allocation of Scarce Resources of thecompany.

3) Higher profits and Growth rates

4) Raising Equity Capital only when

necessary.


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Disadvantages1) Other important dimensions which are also

significant apart from relative market shareand growth rate are the product life cycle,presence of competitive advantage, etc.

2) Long term profitability is influenced to a greatextent by controlling costs and overheads.

3) Value of a business is often linked to other

factors like synergy, competitive advantageetc

4) Instead of 4 cells there should be 6 cells

high, medium and low.


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BCG OF M&MINTRODUCTION

Mahindra Group is one of the largest corporategroups of India. It is a US $6.3 billionconglomerate with employee strength of over

50,000.

It is ranked amongst Forbes Top 200 list of theWorld's Most Reputable Companies and in the

Top 10 list of Most Reputable Indian companies.


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SBU OF M&M

Tractors

Two Wheelers

Utility Vehicles


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Place of Tractor

AMGR of Tractor industry = 18%

Market share of M&M = 29% (MarketLeader)

2nd largest player is Tafe group (messytractor)

Market share of Tafe group = 23%

RMS of M&M Tractor = 1.26x


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10%

12%

14%

16%

18%

20%

8%

6%

4%

2%

0%

0

.1

x0

.2

x

1x

0

.5

x0

.4

x0

.3

x

10x

4x

2x

Businessg

rowthRate

TR

ADITIONALBCG

MATRIX

Relative Market share
http://images.google.co.in/imgres?imgurl=http://www.the-aps.org/education/sixstarscience/images/star_hg_clr.gif&imgrefurl=http://www.the-aps.org/education/sixstarscience/index.htm&h=350&w=350&sz=98&hl=en&start=1&usg=__9F2mqYWPLQz02f8MtJrP-LGth6o=&tbnid=dVZnU7Ol_pZeNM:&tbnh=120&tbnw=120&prev=/images%3Fq%3DStar%26gbv%3D2%26hl%3Denhttp://images.google.co.in/imgres?imgurl=http://www.taurangaboatsales.co.nz/uploads/images/Art%2520Text/Green%2520Question%2520mark.jpg&imgrefurl=http://www.taurangaboatsales.co.nz/&h=320&w=304&sz=9&hl=en&start=7&usg=__Vqz3vv0aQ9fJV_SJNCWD4LAQjEc=&tbnid=3VgDMoM_z16TCM:&tbnh=118&tbnw=112&prev=/images%3Fq%3Dquestion%2Bmark%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://www.sustainabletable.org/blog/archives/cash%2520cow.jpg&imgrefurl=http://www.sustainabletable.org/blog/%3Fm%3D200611&h=144&w=216&sz=59&hl=en&start=16&usg=__peX80hboFJDZ3xfmeSXcEYco3Nc=&tbnid=uc7P_VNxGME8gM:&tbnh=71&tbnw=107&prev=/images%3Fq%3Dcash%2Bcows%26gbv%3D2%26hl%3Denhttp://images.google.co.in/imgres?imgurl=http://www.doggonebizzy.com/images/sad_dog.jpg&imgrefurl=http://www.doggonebizzy.com/wst_page3.html&h=479&w=500&sz=118&hl=en&start=5&usg=__tMJrla81ESmpHRqF3WmE2hid5lQ=&tbnid=blWuZhsleF6iSM:&tbnh=125&tbnw=130&prev=/images%3Fq%3Dsad%2Bdog%26gbv%3D2%26hl%3Den


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Place of Two Wheelers

AMGR of two wheelers industry = 12%

Market Share of M&M two Wheelers = 1%

Market Share of Hero Honda = 52%

RMS of M&M two wheelers = 0.02x


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10%

12%

14%

16%

18%

20%

8%

6%

4%

2%

0%

0

.1

x0

.2

x

1x

0

.5

x0

.4

x0

.3

x

10x

4x

2x

Businessg

rowthRate

HIGH

LOWTR

ADITIONALBCG

MATRIX



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Place of Utility Vehicles

AMGR of Utility vehicle industry = 8.7%

Market Share of M&M Utility Vehicle =42% (Market Leader)

Market Share of Tata Motors in UV = 21%

RMS of M&M Utility Vehicle = 2x


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10%

12%

14%

16%

18%

20%

8%

6%

4%

2%

0%

0.1x0

.2x

1x

0.5x0

.4x0.3x

10x

4x

2x

BusinessgrowthRate

TRADITIONALBCGMATRIX



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Conclusion

SBU AMGR M&M

mktShare (a)

Largest

Competitor Mkt.

share (b)

X = a/b

TRACTORS 18% 29% 23%(TAFE)

1.26

TWO

WHEELERS

12% 1% 52% (HEROHONDA)

0.02

UTILITYVEHICLES

8.7% 42% 21% (TATAMOTORS)

2.00


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APPROPRIATE STRATEGIES

TRACTORS (STAR)

HOLD STRATEGY (Invest to protect) Build capacity expansion

Increase investment Increase advertisement and promotion

Increase market reach


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CONT

UTILITY VEHICLES (CASH COW)HOLD STRATEGY (INVEST TO PROTECT)

Increase advertisement and promotion Increase market reach Increase Investment


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CONCLUSIONThough 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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