A Study Of The BCG Matrix

For VIDEOCON

VAIS ARTI SHANTILAL

M.COM (B&F) PART-1

Executive Summary

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The BCG matrix or also called BCG model relates to marketing. The BCG
model is a well-known portfolio management tool used in product life cycle
theory. BCG matrix is often used to prioritize which products within company
product mix get more funding and attention.
The BCG matrix model is a portfolio planning model developed by Bruce
Henderson of the Boston Consulting Group in the early 1970's.
The BCG model is based on classification of products (and implicitly also
company business units) into four categories based on combinations of market
growth and market share relative to the largest competitor. This project is about
Study of BCG Matrix of Videocon Industrial Ltd.
Videocon Industries Limited (BSE: 511389, NSE: VIDEOIND) is a large
diversified Indian company headquartered in Gurgaon, Haryana. The group has
17 manufacturing sites in India and plants in Mainland China, Poland, Italy and
Mexico. It claims to be the third largest picture tube manufacturer in the world.
The group is a US$5 billion global conglomerate.
The Videocon group's core areas of business are consumer electronics and
home appliances. They have recently diversified into areas such as DTH,
power, oil exploration and telecommunication. In India, the group sells
consumer products like colour televisions, washing machines, air
conditioners, refrigerators, microwave ovens and many other home
appliances, through a multi-brand strategy with the largest sales and service
network in India.

OBJECTIVES
The objectives of this study are following:-

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1. To analyse the product portfolio of Videocon Company with respect to

BCG matrix.
2. To analyse the brands so placed and critically compare their placement.
3. To compare the outcomes so obtained and generate suggestions

PURPOSE
The purpose of the study is to analyse the product portfolio of Videocon
Company with respect to BCG matrix, to analyse the brands so placed

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and critically compare their placement, to compare the outcomes so

obtained and generate suggestions.

RESEARCH METHODOLOGY
The research will be based upon the secondary sources of data as the purview of
the research is restricted to application of the BCG concept onto Videocon
Company. The company is not involved in research methodology any way.

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In order to achieve the first objective secondary sources of data will be referred
i.e. books, internet, magazines, articles, websites, etc.
To fulfil the last two objectives, the help of hard facts and statistical data will be
taken, for such data collection various market surveys will be helpful. The data
will be analysed and valuable inputs will be given in form of suggested
strategies.

CHAPTER 1:- BCG MATRIX

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 portfolio.
Stars (high growth and market share) are the first priority for resources. Cash
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cows are also attractive businesses, but do not need as much investment. The
hardest choices are in the "Problem Child" segment, where the market is
attractive, but the company is weak relative to competition. These are "doubleor-quit" businesses. Businesses in the "Exit" segment should be the lowest
priority

for

scarce

resources.

The matrix was invented by Boston Consulting Group (BCG) in the 1970s to
help

organizations

with

their

portfolio

strategy.

When to use this framework:

Use this matrix when you have to make decisions on resource allocation across
a portfolio. It is versatile, able to be used for a portfolio of business units,
products or market segments. Its clarity and ease of understanding makes it a
powerful communication tool to explain difficult resource allocation decisions
to

the

Drawing

organization

[see

dangers].

insights:

a) Individual business units - Check that the strategic objective of a business

matches

its

quadrant:

Stars should receive the best people, and first priority for discretionary
investments. Critical to the future of the business, they must be defended
at all costs. Watch out for any loss of Relative Market Share.
Cash cows generate the funds required to invest in the higher growth
parts of the portfolio. Ensure enough investment to sustain their
leadership position - don't milk them dry!
For each of the Problem Children a binary decision must be taken.
Selected bets will be made with heavy investment to grow market share

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and make them the Stars of the future. Because they are coming from
behind, they will not deliver the short term returns of the stars. Therefore
the business must make these bets very selectively where they genuinely
believe they can achieve a leadership position, and make the tough
decision to ignore other high growth opportunities.
Exit quadrant. Frequently it will not make sense to divest or exit
businesses rapidly in this quadrant. Rather they will be set up to operate
with minimal resource drain on the rest of the portfolio, as the best people
and all discretionary resources are diverted to more attractive businesses.
Over time they will become a diminishing portion of the portfolio.

b) Overall portfolio health. The second decision that can be driven from this
analysis is "Do we need to rebalance our portfolio?" Do we have enough Stars?
Do we have too much deadwood in the Exit quadrant? Are we making too
many long term bets on Problem Children? Should we divest some of our Cash
Cows

and

invest

the

proceeds

in

higher

growth

businesses?

Limitations:
The primary danger is that this framework is too simplistic and neat,
determining major strategic decisions without considering other factors. For
example, when a low growth, high share business follows a cash cow
approach it may become a self-fulfilling prophecy. Lack of investment in
innovation may be exactly what is holding growth back. It is frequently easier to
grow market share from 40% to 45%, than to grow from 5% to 10%. Using
alternative axes (e.g. Competitive Position) can adjust for this, but brings in
more

subjective

judgment.

This framework should not be used in isolation the decisions it indicates can

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be confirmed by other analyses e.g. incremental returns on capital.

Underlying assumptions

of

this

framework:

1. High market share drives superior returns

2. Investment in higher growth markets delivers more attractive returns
3. Each part of the portfolio has similar resource/return dynamics
4. Resources can genuinely be allocated across the portfolio [this may not
be possible e.g. it may be hard to allocate talent across businesses]
5. Resources are constrained trade-offs need to be made across the
portfolio

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Alternatives
1) Alternative axis for market share could be Competitive Position a weighted
composite measure (e.g. brand equity, profit share) if market share is not a good
proxy

for

cash

flow

potential.

This

introduces

more

subjectivity.

2) An alternative axis for Market Growth could be Market Attractiveness a

weighted composite measure (e.g. business/product/segment profitability) if
growth rate alone is poorly related to long term value potential. Key to note is
that this axis is independent of company all competitors would rate this axis
the

same.

3) Include current market size on the framework, as a bubble chart (with the
market size proportional to the area of the circle). Market size makes no
difference to the right strategic objective of the individual elements of the
portfolio, but including it can provided an immediate visual picture of the
overall

strategic

health

of

the

portfolio.

4) Use historic growth rates, not expected future long term expected growth
rates. This removes more judgment from the matrix position, at the expense of
relevance.

CHAPTER 2 : INTRODUCTION TO VIDEOCON

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Videocon is an industrial conglomerate with interests all over the world and
based in India. The group has 17 manufacturing sites in India and plants
in China, Poland, Italy and Mexico. It is also the third largest picture
tube manufacturer in the world.

The Videocon group has an annual turnover of US$ 5 billion, making it one of
the largest consumer electronic and home appliance companies in India. Since
1998, it has expanded its operations globally, especially in the Middle East.

Today the group operates through five key sectors:

Consumer electronics
In India the group sells consumer products like Colour Televisions, Washing
Machines, Air Conditioners, Refrigerators, Microwave ovens and many other
home appliances, selling them through a Multi-Brand strategy with the largest
sales and service network in India. Videocon Group brands include Kenstar,
Next etc.
Mobile Phones
In November 2009 Videocon launched its new line of mobile phones

DTH
In 2009, Videocon launched its DTH product, called 'd2h'. As a pioneering offer
in

the Indian DTH market,

Videocon

offered LCD TVs

with

built-

in DTH satellite receiver with sizes 19" and 32".This concept in the DTH
service is relatively new in the presence of other players like ZEE TVs Dish

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TV, Tata Sky, Airtel Digital TV and Reliance's BIG TV providing only the set
top box.

Telecommunication
Videocon has subsidiary named Datacom Solutions Pvt Ltd which has license
for Mobile Service operations across India. It is commercial launch on 7th
march 2010 in Mumbai.

Company Background
Type

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Public Company

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Traded as

BSE: 532129
NSE: VIDEOIND

Industry

Conglomerate

Founded

1979

Founders

Venugopal Dhoot

Headquarters

Gurgaon, India

Key people

Venugopal Dhoot

Products

Consumer Electronics
Home Appliances
Components
Office Automation
Mobile phones
Wireless
Internet
Petroleum
Satellite television
Power

Revenue

181572.7 million(US$3.0 billion)(201213)[2]

Profit

-716.3 million (US$12 million)(201213)[2]

Employees

9,000 (2012)

Website

www.videocon.com
videoconworld.com

VIDEOCON PRODUCTS

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VIDEOCON LCD TV

Touch the true essence of multimedia entertainment with Videocon LCD

TV & experience tv as you've never seen it before.

VIDEOCON Refrigerators

Experience the new revolution in freshness with Eco Fresh refrigerators.

VIDEOCON Air Conditioners

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Intelligent technology, Intelligent design, Intelligent range. VIDEOCON

Air Conditioners.

VIDEOCON Washing Machine

The power of Quanta Wash with the edge of U V Ray technology.

STRATEGIC BUSINESS UNIT

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An SBU, in the strategic management sense, is normally an entire division in

large corporations or one of the firms of a diversified company that carries out a
certain business - in one of the business sectors the firm operates. This approach
entails the creation of SBU's to address each market in which the company is
operating.

SBU OF VIDEOCON COMPANY

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KEY STEPS TOWARDS STRATEGIC PLANNING

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MISSION
To delight & deliver innovative product through ingenious strategy intrepid
entrepreneurship, improved technology, insightful marketing and inspired
thinking about the future.

VISION
To bring happiness in every home with global presence offering high quality
e- products to ease & enrich human life

GOAL
To provide a much higher level of service to all those who seek information

CHAPTER :3 BCG MATRIX OF VIDEOCON COMPANY IN

COMPARISON TO OTHER ELECTRONIC COMAPNIES

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BCG MATRIX OF VIDEOCON COMPANY ACCORDING

TO ITS PRODUCTS

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PRODUCT LIFE CYCLE OF VIDEOCON

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 VIDEOCON LCD AT INTRODUCTION STAGE

VIDEOCON APPLIANCES IS AT STAR STAGE

VIDEOCON MOBILE PHONES & TELECOMMUNICATION

SERVICES IS AT CASH COW STAGE

VIDEOCON OIL & GAS DIVISION IS AT DOGS STAGE

CHAPTER 4 : REVIEW OF LITERATURE

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ARTICLE 1:- VIDEOCON LAUNCHES NINE MOBILE HANDSETS;

EYES 1 MN SALE MONTHLY

Author: - S. kaither
Publisher: - Times Of India
Year: - 2010

In this article it has discussed that

Videocon today launched nine mobile

handsets and it plans to sell a million devices per month in the country same
year. Videocon has been so far selling 2.5-3 lakh units a month. With the nine
launches, its offering has risen to a total of 21 handsets from 12 at present. Thus
the company plan to sell one million units every month as per the customer
approachable price. At present, global brands like Nokia, Samsung, LG, and
Sony Ericsson together with Indian players like Micromax have over 90 per
cent market share. Mobile phone market has been one of the fastest growing
markets. However, there is a big gap between the international brands and
domestic ones. Videocon aimed to bridge the gap.

ARTICLE 2:- VIDEOCON PLANS 500MW POWER PLANT IN

MAHARASHTRA

Author: - Amritha Pillay

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Publisher: -Business Today

Year: - 2010

The Videocon Group is planning to start a 500MW power plant in its homeland
and is looking for suitable land as well as a coal-transportation solution in
Maharashtra. It also expects to achieve financial closure for its Gujarat-based
1,200MW power plant by end-March. The financial closure for the first phase
of 600MW has been achieved; the second phases financial closure is getting
completed. After financial closure, power projects take another three and a half
years to be commissioned.

CHAPTER 5 : CONCLUSION

Videocon is an industrial conglomerate with interests all over the world and
based in India. The group has 17 manufacturing sites in India and plants

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in China, Poland, Italy and Mexico. It is also the third largest picture
tube manufacturer in the world.
Today the group operates through five key sectors:
Consumer electronics
Mobile Phones
DTH
Telecommunication
In BCG Matrix product or business unit are identified as Stars, Cash Cow,
Dogs, Question mark. BCG Matrix can use for resource allocation.
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 share)

BCG MATRIX Of Videocon according to its products:

VIDEOCON LCD at Introduction stage.

VIDEOCON APPLIANCES at Star stage.
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 VIDEOCON

MOBILE

PHONES

&

TELECOMMUNICATION

SERVICES at Cash Cow stage.

VIDEOCON OIL & GAS DIVISION at Dogs stage.

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