fall2012_mgt301_1_mc110203558.pdf

7/27/2019 Fall2012_MGT301_1_MC110203558.pdf

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Mc110203558

Irfan shehzad

Mgt301 (1st assignment)

SOLUTION:

Boston Consulting Group (BCG) matrix:

The BCG matrix method is based on the product life cycle theory that can beused to determine what priorities should be given in the product portfolio of abusiness unit.

To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash.

It has 2 dimensions:

1: market share

2: market growth

The basic idea behind it is that the bigger the market share a product has or thefaster the product's market grows the better it is for the company.

1). Using the BCG approach, where a company classifies all its SBUsaccording to the growth-share matrix.

a). The vertical axis:

Market growth rate, provides a measure of marketattractiveness.

b). the horizontal axis:

Relative market share, serves as a measure of companystrength in the market.

2). Using the matrix, There are four types of SBUs can be identified:

Stars Cash Cows Question Marks Dogs

7/27/2019 Fall2012_MGT301_1_MC110203558.pdf


Stars: ( high-growth, high-share)

Businesses or products (they need heavy investment to finance their rapid growth potential.

Cash Cows: ( low-growth, high-share)

Businesses or products (they are established, successful, and need lessinvestment to hold share.

Question Marks:( low-share business units in high-growth Markets)

They require a lot of cash to hold their share.

Dogs: ( low-growth, low-share)Businesses and products (they may generate enough

Cash to maintain themselves, but do not have much future.

Boston Consulting Group (BCG) matrix

Y-AXIS

1

16%

14%

Market 12%

Growth 10%

Rate 08%

06%

04%

02%

10X 4X 1.5 X 1X .5X .4X .3X .2X .1X (X-AXIS)

Relative market share

Table #4,5

Star (HighGrowth + HighShare)

Bakery

Table # 1,2,3

Question Mark (HighGrowth + Low Share)

Milk

CSD (Gourmet Juices) Table # 06

Cash Cow

(Low Growth +High Share)

Water

Ice Cream

Table # 7,8

Dog

(Low Growth

+ Low Share)

Juices

7/27/2019 Fall2012_MGT301_1_MC110203558.pdf


Table # 4,5: Bakery

According to my knowledge, In Lahore there is low competitor of bakeryproduct as compared to others. Only Butt Sweets are working in city butthey are few verities. There for Gourmet falls in star in context of bakeryproduct due to competition and number of verities in bakery products. NowThey need heavy investment to capture the market, sustain ther e and getthe high share from bakery products.

Gourmet has shown 65% annual growth rate since its start in 1992. Also

i have gathered the following data from net regarding Gourmet as

per recent available data:

Estimated sale in 2008= 18000, 000/-



It is only for the Gourmet sweets which show their established and day by

day growing profit in the sweets (bakery items).it is Also the relative

market share of gourmet in sweets has shown significant increase in

2009-10 (1.02) from 2008-09 (0.79) as compared to nirala sweets and

fazal sweets. Also company growth rate of Gourmet is 21.45% in 2009-10.

Table # 06: Water, Ice Cream:

Gourmet need less investment in water and ice-cream to capture the highmarket share, because we know that only one time investment made infiltration plant and returns from market long tem. in this way lowinvestment used and it provide high shares from the market. Gourmet islies in cash and cow table in water and ice-cream.

Table # 1,2,3: Milk, CSD (Government Juices)

there are lots of milk shops in lahore because many rural areas are fondnear to it. So Gourmet needs lot of cast to capture the market. if they wantto get high shares from the market in milk,csd and gourmet juices.

7/27/2019 Fall2012_MGT301_1_MC110203558.pdf


Table # 07,08: Juices

Large number of competitors are manufactured juices in low cost. Juicesare available, same quantity at same price at many shops. So if gourmetkeeps these products it need to improve quality or decrease price of

juices. Then there is normal change, because people buy the same

product at any shop nearest to home.

Conclusion:

In every market many numbers of compactors’ are doing work and

providing services to the customers. we need to implement BCS matrix in

business for surviving and maintain the star place in the market.

Its also important for changing the place of goods from dog to cash andcow or question mark to star.

For more information:

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Cell no : 0343-8589584

Remember me in your prayers.

THE END

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