Bcg Matrix Exercise Example
Bcg Matrix Exercise

BCG Matrix Template. Because of the limitations of the BCG Growth Share Matrix, we are not providing a BCG Matrix Template at this time. There are BCG Matrix Templates available online elsewhere. We felt that deeper analysis is required to create an accurate picture than what the BCG Growth Share Matrix provides. 2 The Boston Consulting Group The Boston Consulting Group’s Strategy Institute is taking a fresh look at some of BCG’s classic thinking on strategy to explore its relevance to today’s business environment. This article, the fourth in the series, examines the growth share matrix, a portfolio management tool developed by BCG founder. The Boston Matrix. Lesson; Exercise; Answer; The Boston Consulting Group’s Product Portfolio Matrix. Manor Way Tools began life as a small steel company at the end of the 19th Century. It was one of the first companies to put carbon into regular iron to create steel. It was strong and flexible. The matrix was invented by Boston Consulting Group (BCG) in the 1970s to help organizations with their portfolio strategy. This framework applies two inputs, market growth and market share to a portfolio of segments, products or businesses, and then draws conclusions about how resources (e.g. Talent, investment) should be allocated across the. The Boston Matrix. Lesson; Exercise; Answer; The Boston Consulting Group’s Product Portfolio Matrix – Answer Recap: Analyze your product portfolio using the Boston Matrix. Oliver is the market leader in handsaws with 40% of the market. Manor Way has only 25%. There is little house building and nowadays many amateurs use power tools.

On this page, we’ll discuss the basics of the BCG matrix (also called the growth-share matrix) and how you can use digital marketing in conjunction with it. If you need help, call us today at 888-601-5359 to speak with a strategist.

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What is the BCG matrix?

The BCG matrix, also known as the BCG growth-share matrix, growth market share matrix, or product portfolio matrix, helps businesses with the long-term planning of their products. This tool helps companies determine which products warrant discontinuing, development, or further investing.

Many businesses offer a variety of products to their customers, such as Johnson & Johnson. They offer a wide array of health and beauty products to customers. Some of these products include soap and lotion for all ages, facial cleansers, make-up wipes, pain relievers, and allergy medication.

With all these products, Johnson & Johnson needs to monitor the success of each of these products to figure out whether they should invest more into the products, discontinue them, or create a new product to replace the old one. This is where the BCG matrix can help.

The four quadrants of the BCG matrix

The BCG matrix fits products into one of four categories. The placement is based on market growth and market share. Each product falls into a different quadrant, which helps your business decide how to deal with different products.

Dogs

Dogs are products with low growth and low market share. These products are typically viewed as a waste. Money gets tied up into these products, but they do not produce enough of a profit to justify the investment.

Question Marks

Question Marks, also known as “Problem Child,” are products in a high growth market with low market shares. These products are called question marks because it is unclear which way they will swing. Will they rise into the Stars quadrant, or will they drop down to Dogs?

Stars

Products that are Stars have a high market share in high-growth markets. These products have the potential to become market leaders. They can eventually become Cash Cows, a quadrant that we’ll discuss next).

Cash Cows

Cash Cows are products that have a high market share in low-growth market. These are products that drive revenue for your business.

These are the four quadrants of the BCG matrix. This matrix can help you see where your products fall and help you decide how to proceed next.

How to use the BCG matrix

You know what the BCG matrix is, as well as the four components that define the Boston Consulting Group's matrix. The most value from the growth-share matrix, however, comes from understanding how to use it.

Learn more about using the BCG matrix, based on each quadrant, below:

Dogs

Summary: Dogs have a small chance of bringing your business a profit. Either remove Dog products or continue to offer them, without any further investment from your business.

Many companies end up pumping money into Dogs and get little in return. Most businesses remove Dog products as these items generally drain resources and waste money.

Some Dog products can generate a small amount of revenue at a small cost, however.

While most Dog products are bad for business, some benefit your business. They won’t generate a large amount of revenue, but they can generate a little cash flow for your business.

This scenario happens with discontinued products.

If someone owns a car that is no longer manufactured, they will still need replacement parts for that car if something goes wrong, for example. While it won’t earn your business a rapid, daily income, Dogs can be a product that earns your business a small profit occasionally.

Question Marks

Summary: Question Marks can become either Stars or Dogs, which is why they demand investing and development to deliver a return. Determine how much a Question Mark is worth to your business before proceeding.

Question Marks are tricky because you can invest a large sum of money into them and see no success. It requires a lot of time and investment to get these products into the Star quadrant. You need to invest a good chunk of money to get a return on these products.

This is a common issue that game developers face.

People who make games and apps create hundreds of games or apps, waiting for one to take off. Many of their games will drop down to Dogs, but it just takes one to rise up and become a Star (like Angry Birds).

When you have Question Mark products, you need to determine if they are worth the investment. These products can fall either way on the spectrum, so you need to prepare yourself for both possible outcomes.

Stars

Summary: Stars require cash to produce cash. Invest in Stars, but ensure they deliver a return, to turn them into Cash Cows.

If you want to harness the full potential of Stars, you need to invest money in these products constantly. They bring in a lot of cash for your business, but they also consume a lot of cash in the process.

When you have Star products, you will have a better return on investment (ROI) than other products. Even though you have to pump a large sum of money into these products, they provide your business with a sizeable return.

Stars are important to your business because they ensure future growth. When you have products that are Stars, they turn into Cash Cows.

Cash Cows

Summary: Cash Cows perform consistently, especially when it comes to ROI. Milk these products by continuing to support and invest in their success.

Cash Cows are well-established products that people trust and buy consistently. Brand names like iPhones, Tide, Charmin, and Crest are all Cash Cows. These are household names of brands that have built their reputation to attract people to buy them.

When you have Cash Cows, your return is far greater than your investment. The brand name and product quality are well established, so you don’t need to invest much money in advertising that to your audience. They already trust your products and buy them consistently, so you get a greater return on the small investment you make into these products.

You want to milk Cash Cow products as much as possible. It is important that you don’t go overboard with milking them and cause your brand to collapse. You want to get as much as you can out of these products until their popularity fades.

Advantages and disadvantages of the BCG matrix

The BCG matrix is an easy tool to use for any type of business. It’s broken down simply to help businesses understand where their products stand. Like all strategies, though, the growth-share matrix has its advantages and disadvantages.

When you use the BCG matrix, you can see all your products laid out clearly. You can compare yo

Bcg Matrix Exercises