BCG Matrix

BCG Matrix is made by Boston Consultancy Group which is an American group.

It is used when a company has lot of categories of products. It helps the management in decision
making regarding the investment in products. Whether to invest in a particular product or not
depending upon the relative market share and the potential growth.

In this Matrix we have 4 quadrants -

 Cash cows : It consists of products with High relative market share and low market growth
rate. These are the most profitable products of an enterprise as their sales are very high. It
has no potential to grow in future as they are already at saturation level.
 Stars : It consists of products with High relative market share and high market growth rate.
There is potential to grow in future. Cash cows earn so much, the management takes
revenue from it and then invests it in stars which converts the stars into cash cows.
 Question marks : It consists of products with low relative market share but high market
growth rate. Such products create a dilemma in the mind of management regarding the
investment as the current market share is low but the potential to grow in future is present.
The management can also transfer money from cash cows to question marks to make them
stars and then eventually convert them into cash cows. If the management don’t invest in
question marks then the question marks will turn into dogs.
 Dogs : It consists of products with low relative market share and low market growth rate.
The company will not invest in such products which will gradually lead them to decline.

Now after preparing preparing a BCG Matrix for IDFC bank, we can say that

Their Cash cows is the Retail funding i.e. deposits of the customers which the bank uses to
lend loans to earn heavy interest on them which becomes their main source of income.

Coming to stars, One thing which they definitely want to invest in is funding to weaker
sections of the society, Increasing the retail funding to such sections of the society and for
which they are even trying to lower their interest rates which is also one of their long term
goals. Another is Digitalised funding i.e. overall funding process through internet that means
an automatic and faster process of funding so that they can compete with the Fintech
companies.

Talking about Question marks is one of their subsidiary companies i.e. IDFC First Bharat
Limited which is a Business Correspondent for IDFC Bank which offers various financial
services like loans, savings accounts, payment services and insurance to the underserved
rural women through a pan India network.

And the last quadrant talks about dogs which is their corporate funding i.e. funding or giving
credit to large corporate houses or start-ups. They want to decrease this as the risk involved
in repayment is very high and banks have also suffered big losses in regard to this type of
funding.