B. C. G.

Matrix
Tutorial For a tutorial on the theoretical concepts of the B.C.G matrix double click anywhere in the dark blue box to the left. Then click each screen to move through the tutorial.

B.C.G. Matrix

an interactive strategic model for use with Microsoft Excel designed by P.M.Cooke.

Using the Model It is recommended that the model is run using Excels "Full Screen" option to access this select "View" from the menu bar and select FULL SCREEN. Main Menu This gives three options: 1. Access to the help system 2. Data entry and production of a B.C.G. Matrix 3. A tutorial on the theoretical concepts of the B.C.G. Matrix Data Entry Select the data entry option from the main menu this will access the data entry screen The data entry screen has three command buttons 1. Printing the data entered 2. Viewing the B.C.G Matrix 3. Clearing data (ONLY use this when you have completely finished printing out the data and matrix you have constructed and no longer need the data) Entering data 1. Enter the parent company at the top of the "Portfolio Members " column 2. Enter the portfolio members in column A (Maximum 20 members) 3. Enter the data for, Market share %, largest rival % share of the market, Economic growth %, Industry growth rate %, and Revenue contribution % in relation to total portfolio revenue.(Enter all as a number not as a %) Computed fields The two pale blue columns show the resulting calculations for Relative Market Share, and the Growth Percentage Differential, from the data input. Matrix Co-ordinates This is a read only screen showing the co-ordinates used to construct the matrix. As the matrix forms a square with the X axis being intercepted centrally at below 1 and above 1, it follows that any relative market share above 2 would appear outside the model. To prevent this computed relative market shares over 2 are compensated for, and are capped at a value of 2 the computed circle is placed on the far left of the model. The actual value of relative market share is seen in the printed output for the matrix data. B.C.G. Matrix This is accessed using the command button to view the matrix, it shows the module resulting from the data input. The circles are positioned according to Relative Market Share and the Industry growth rate. The size of the circle directly relates to the revenue contribution made by the portfolio member as a percentage of total portfolio revenue. A label showing the revenue contribution is to the right of each circle.

Formulating an alternative axis

The standard matrix configuration shows the X axis being divided at 1 Experience has shown however that if the division is placed at 1 the only way a company can have a "Star" or a "Cash Cow" is where the portfolio member has the largest market share in the industry. It is a matter of personal choice, but if you feel the criteria is too strict then you may prefer to follow the school of thought that the X axis is intercepted at 0.75 or 0.8 Changing the axis 1. Go to the B.C.G Matrix either by using the command buttons or by using the sheet tab at the bottom of the screen. 2. Click the mouse inside the pink chart area ( this activates the edit mode) 3. Place the mouse pointer over the X axis ("Value X axis" appears) 4. Double click the X axis and select "Scale" 5. Amend the "Crosses at" box from 1 to 0.75 or 0.8 as required. 6. Select O.K. and return to the matrix.

B.C.G Matrix Data Entry PRESS 1. Enter Portfolio members in column A (Max. 20 members) and Parent Company into cell A7 2. Enter data in the columns corresponding to each member as a number e.g.1.5 not % (enter data in columns B,C,E,F,&H) 3. The blue columns (D and G)are computed for you 4. On completion of data entry use the command buttons (top right) only use clear matrix data when you wish to completely clear the portfolio (N.B. Matrix can be printed from B.C.G. matrix screen) Market Largest rival Relative Economic Industry Growth % Revenue Portfolio Member share % % share Market share growth % growth % Differential Contrib.% A 15 30 0.5 2 3 1 4 B 60 30 2.0 2 5 3 3 C 40 30 1.3 2 6 4 5 D 10 50 0.2 2 1 -1 4 E 20 45 0.4 2 -1 -3 5 F 10 15 0.7 2 7 5 3 G 15 24 0.6 2 2 0 2 H 35 20 1.8 2 3 1 20 I 12 45 0.3 2 4 2 2 J 19 23 0.8 2 1 -1 7 K 10 23 0.4 2 3 1 4 L 34 23 1.5 2 -2 -4 20 M 12 20 0.6 2 1 -1 3 N 20 67 0.3 2 -3 -5 3 O 14 14 1.0 2 1 -1 1 P 35 40 0.9 2 3 1 1 Q 30 50 0.6 2 5 3 3 R 25 35 0.7 2 1 -1 1 S 50 45 1.1 2 4 2 5 T 36 30 1.2 2 -1 -3 4 100

(enter data in columns B,C,E,F,&H)

High relative market share

BCG Growth Share Matrix

Low relative market share

Stars

Question Marks

2 Industry Growth Rate

20

7 1

20

Cash cows

Relative Market Share Position

Dogs

Compensated Portfolio Member Relative Market Share Relative Market Share Industry growth Rate Revenue Contrib. A 0.5 0.5 1 4 B 2.0 2.0 3 3 C 1.3 1.3 4 5 D 0.2 0.2 -1 4 E 0.4 0.4 -3 5 F 0.7 0.7 5 3 G 0.6 0.6 0 2 H 1.8 1.8 1 20 I 0.3 0.3 2 2 J 0.8 0.8 -1 7 K 0.4 0.4 1 4 L 1.5 1.5 -4 20 M 0.6 0.6 -1 3 N 0.3 0.3 -5 3 O 1.0 1.0 -1 1 P 0.9 0.9 1 1 Q 0.6 0.6 3 3 R 0.7 0.7 -1 1 S 1.1 1.1 2 5 T 1.2 1.2 -3 4