FACULTY: MANAGEMENT SCIENCE

COURSE: STARTEGIC MANAGEMENT

COURSE CODE: MBA7205

LECTURER:

GROUP THREE

NAME REGISTRATION NUMBER SIGNATURE

ADONG ROSELINE SHOW 18/HD01/U/0009
AYO NANCY 19/HD01/U/0016
KIA BETTY 19/HD01/U/0133
OCEN PAUL 19/HD01/U/0026
OGWENG B’JOHN 19/HD01/U/0031
OGWANG OTIM JAMES 19/HDO1/U/0030

QUESTION
Q.5: Group Five
a) Strategic implementation is the action stage of strategic management and its success
depends on several factors. Discuss
b) Detail at least four approaches to strategic implementation of which any organization
may opt for.
Q.6: Group Six
a) Normally strategic planning is carried out in phases describe the different phases with a
help of practical examples.
b) “Strategy control remains fundamental because success today is no guarantee success
tomorrow.” Explain this statement.
Q.10: Group Ten
Write short notes on the following:
a) Strategic implementation approaches.
b) Corporate culture.
c) BCG model.
d) Strategic control.
Q.5
a) Strategic implementation is the action stage of strategic management and its success
depends on several factors. Discuss
b) Detail at least four approaches to strategic implementation of which any
organization may opt for

a)
Strategy Implementation refers to the execution of the plans and strategies, so as to accomplish
the long-term goals of the organization. It converts the opted strategy into the moves and actions
of the organization to achieve the objectives.
Simply put, strategy implementation is the technique through which the firm develops, utilizes
and integrates its structure, culture, resources, people and control system to follow the strategies
to have the edge over other competitors in the market.

Strategy Implementation is the fourth stage of the Strategic Management process, the other three

being a determination of strategic mission, vision and objectives, environmental and
organizational analysis, and formulating the strategy. It is followed by Strategic Evaluation and
Control.
Process of Strategy Implementation
I. Building an organization, that possess the capability to put the strategies into action
successfully.
II. Supplying resources, in sufficient quantity, to strategy-essential activities.
III. Developing policies which encourage strategy.
IV. Such policies and programs are employed which helps in continuous improvement.
V. Combining the reward structure, for achieving the results.
VI. Using strategic leadership.
The process of strategy implementation has an important role to play in the company’s success.
The process takes places after environmental scanning, SWOT analyses and ascertaining the
strategic issues.
There are six steps in our process guide to strategy implementation that you can follow and
ensure that your strategic plan evolves from just a plan, into a strategic implementation:
1. Define your strategy framework
2. Build your plan
3. Define KPIs
4. Establish your strategy rhythm
5. Implement strategy reporting
6. Link performance to strategy

Step #1: Define your strategy framework

On the one hand, strategy is something that should be embedded in everything that you do. It
should be in the DNA of the organization and its people. On the other hand, if you don't make an
effort to call it out explicitly, you won't get the focus or traction that you need.
Step #2: Build your plan
The next step of our process guide to strategy implementation is where you will start creating
your plan. Now that you've got your framework(s) in place, you're to move onto the actual
creation of your strategic plan. We've previously written in-depth guides to write strategic plans
so we won't cover that again here - but assuming you're using a framework similar to the one
above, here's how we'd suggest approaching the creation of your plan:
Step #3: Define KPIs
Step 3 of our process guide to strategy implementation requires you to define your KPIs. Key
performance indicators are one of the oldest management tools around - because they work.
They keep you honest about your progress and focused on your outcomes. They need to become
your beacons for implementing strategy. Here are a few tips when it comes to coming up with
your own - and some examples of KPIs that we use in our SaaS business.
Step #4: Establish your strategy rhythm
Step 4 of our process guide to strategy implementation is where you can start to establish your
strategy rhythm. The ironic thing about strategy implementation is that even though everyone
acknowledges how important it is - it's often the first thing to be forgotten about when the going
gets tough. People get so caught up in the day-to-day that they don't have time to focus on the
big picture items that will keep the organization moving forward. This rapidly becomes a self-
fulfilling cycle and is one of the most common reasons why strategies fail.
Step #5: Implement consistent & simple strategy reports
Step 5 of our process guide to strategy implementation focuses on reporting. Now that your
meetings are in place, you'll want to choose a consistent way of reporting the progress of your
strategy implementation. The main objectives of this report should be:
Consistency. Everyone knows what to expect and what they need to update prior to the
meeting(s).
Simplicity. The report should give an at-a-glance view of how the strategy is progressing.
Accountability. Ensure that the report includes the names of the owner of each goal
(accountability), as well as the names of the people actually getting things done (recognition).
Insightful. The report needs to include not only an overview of how the strategy looks now but
how it's progressing over time. Try to include a comparison period or graphs/charts that show
progress over time, to ensure momentum is maintained.
Step #6: Link performance reviews to strategy
The first 5 steps of our process guide to strategy implementation are the absolute basics to ensure
that you have success implementing and executing your strategy. But organizations who truly
succeed are those who manage to weave strategy implementation into the fabric of their
existence. An easy way to get started with this is to create a formal link between strategy and
performance reviews. Nothing shows people how important strategy is more than when it
impacts their reviews and potentially even their reward/remuneration.
There are several factors that seem to have a major impact on an organization’s ability to
implement.
1. Commitment. Commitment starts at the top but it must not end there. Middle management
and front-line supervisors must have the commitment needed to communicate the plan and enroll
the employees in the strategy. If they are not committed, the rest of the organization won’t be
either.
2. Ability and willingness to change. Strategy implementation requires change. Some
organizations embrace change while others resist to the bitter end. GM has known for years what
it needed to do to become more competitive. It simply was unable or unwilling to do it. Apple on
the other hand has reinvented itself from a computer company into an entertainment and
communications company. If you have been following the same strategy for 50 years, there is a
good chance it is time to change.
3. An organizational structure that supports the strategy. One of the most powerful
implementation tools available to a company is its organizational structure. A strategy’s
priorities are usually reflected in its organizational structure. A strategy may require centralized
control or decentralized flexibility. It may be designed to encourage product development or
generate efficiency through standardization. The organizational structure must be designed to
support the priorities required by the strategy. A significant change in strategy almost certainly
must be accompanied by a change in structure.
4. Ability to measure progress. Every implementation effort has an element of trial-and-error
learning. However, the learning opportunity is missed if you cannot measure your results. A
learning organization must be able to define success and measure its progress so it can learn what
works and what doesn’t.
5. A clear understanding of priorities. I believe you don’t have a strategy until you are willing
to identify who you won’t serve. Management is often distracted from its strategy by
opportunities that continually pop up. Opportunity driven is just another way of saying you have
no focus. Resources are always limited and if you don’t have clear priorities, you dilute
resources chasing the unimportant.

b)
Fundamentally, there are four different approaches to do formal strategic planning. The
approaches are: - 1. Top-Down Approach 2. Bottom-Up Approach 3. Mixture of the Top-Down
and Bottom-Up Approaches 4. Team Approach.
1. Top-Down Approach:
In a centralised company, such planning is done at the top of the corporation and the
departments and outlying activities are advised straightway what to do.
In a decentralised company, the CEO or the President may give the divisions guidelines
and ask for plans. The plans after review at the head office are sent back to the divisions
for modifications or with a note of acceptance.
2. Bottom-Up Approach:
The top management gives the divisions no guidelines but asks them to submit plans.
Such plans may contain information on:
(i) Major opportunities and threats;
(ii) Major objectives;
(iii) Strategies to achieve the objectives;
(iv) Specific data on sales/profits/market share sought;
(v) Capital requirements, etc.
These plans are then reviewed at top management levels and the same process, as in the
top-down approach, is then followed.
3. Mixture of the Top-Down and Bottom-Up Approaches:
This is practiced in most large decentralized companies. In this approach, the guidelines
given by the top management to the divisions are broad enough to permit the divisions a
good amount of flexibility in developing their own plans. Sometimes, the top
management may decide basic objectives by dialogue with divisional managers in respect
of sales and return on investments especially when divisional performance is measured
upon those criteria.
4. Team Approach:
The chief executive, in a small centralized company, often use his line managers to
develop formal plans. The same approach is used even by the president of a large
 company. In many other companies, the president meets and interacts with his group of
executives on a regular basis to deal with all the problems facing the company so that the
group can develop written strategic plans.
Within each of these approaches, there are many alternatives as follows:
(i) Complete SWOT analysis or not:
In some companies, the divisions supply the top management with perceived opportunities and
threats and with the strategies to exploit opportunities and avoid threats.
(ii) Depth of analysis:
Some companies, at the initial stage, do not make in-depth analysis of all aspects of planning.
They increase the intensity of analytical exercise gradually as experience is gained.
(iii) Degree of formality:

Divergent practices are in vogue as regards formality. For some large companies having
centralized organization structures, and comparatively stable environment and homogeneous
product lines, planning is less formal than large diversified companies with decentralized and
semi-autonomous product division structures.
High technology companies usually have more formal systems; yet, they recognize informality
in decision making and managerial activities associated with planning.
(iv) Reliance on staff:
It is up-to the managers to decide the extent of delegation.
(v) Corporate planner or not:
Large corporations employ corporate planners to help in the planning process. Smaller
companies cannot afford to this luxury.
(vi) Linkage with plans.
(vii) Getting the process started:
Strategic planning may begin with an effort to solve a particular problem. It may begin with a
SWOT analysis or simply with a review of current strategy.
(viii) Degree of documentation:
A balance has to be struck between too little and too much paper work.
(ix) Role of CEO:
The chief executive officer’s role is critical depending on the degree of complexity of
organizations.
Q.6:

a) Normally strategic planning is carried out in phases describe the different phases
with a help of practical examples.
b) “Strategy control remains fundamental because success today is no guarantee
success tomorrow.” Explain this statement.

a)
Strategic planning is the art of creating specific business strategies, implementing them, and
evaluating the results of executing the plan, in regard to a company’s overall long-term goals or
desires. It is a concept that focuses on integrating various departments (such
as accounting and finance, marketing, and human resources) within a company to accomplish its
strategic goals. The term strategic planning is essentially synonymous with strategic
management.
Major Phases In Strategic Planning And Management
The processes that define or characterize business growth/expansion and its overall success are
complex and dynamic. They are resource intensive endeavors that are steered by a skilled and
dedicated workforce. And hence you require detailed planning, informed decision-making, and
expert implementation in order to make a fledgling organization regain its upright economic
posture. The most proactive business improvement and transformation process involves a
strategic management process, which entails in-depth financial analysis and evaluation of
existing business practices and performances before executing radical changes to the prevailing
business structure or model. Theoretically, strategic planning and management occurs in a series
of transformative phases or steps. The ultimate goal is to actualize a series of performance goals
and objectives after a highly coordinated improvement process aimed at enhancing efficiency
and optimizing productivity. There are five major steps that define this entire change-oriented
undertaking and they are all discussed in brief below.
I. Process Initiation 
This stage is initiated by unsatisfactory business results, which act as the wakeup call to
implement some changes in the organizational structure and business model. This is
where the journey starts with a select team specially selected or even hired professionals
all tasked with the fulfillment of the change agenda. You can combine an experienced
company management team with a professional team hired from any reputed firm that
provides accounting services in Mentor. The team starts by planning the project in the
most basic form before scouring all the necessary business documents to identify all areas
that require overhauling. 

Discussion Phase
The discussion phase is meant to gather as much information, opinions, and input as possible. Set
up a regularly scheduled meeting with the employees and any other staff in your business who
will be involved with strategic planning. Make sure you have an agenda and clear expectations of
what you want to accomplish in each meeting. This will keep discussions on track and help
prevent distractions. In the first few meetings, try to answer questions that will help you define
the business’s current status, such as, “Where are we now?” and “Where are our
competitors?” Once you have a good idea of where the business is, you can focus in on specific
details in future meetings.
In addition to regular meetings with your employees at your business, you can also reach out to
vendors, investors, analysts, and other people outside of your company to gather information.
External people will have a unique perspective on not only your business, but also the industry
you’re operating in. Getting their opinions on where they think the industry is going and what
they think will change in the future can help you put together your strategic plan and determine
where you want your business to be down the road.
You can also conduct a SWOT analysis. SWOT stands for Strengths, Weaknesses,
Opportunities, and Threats. When you’re conducting a SWOT analysis, you and your employees
will examine what your business does well, where it can improve, any future opportunities to
pursue that could help facilitate growth and success, and any competitors or external factors that
could prevent the business from succeeding.
Your strengths should be pretty easy to identify. When you’re discussing your business’s
weaknesses, don’t be afraid to be candid. Every business has weaknesses and things to work on.
Any weakness you and your employees note means it’s something you’ll aim to improve on in
the future with a detailed initiative outlined in the strategic plan.
Opportunities available to your business may be pretty clear, while identifying threats to your
business can be more difficult. Speaking with people outside of the company should give you a
good idea of where the industry could be heading and if there are any major competitors or
challenges coming. If you can identify a number of threats and challenges to your business early
on, it puts you in a better position to address them if and when you encounter them down the
road.

II. Current Position Assessment 

The next step involves an in-depth company evaluation. You need to conduct various
assessments to gauge exactly where the company stands in terms of its competitive
advantage, workforce motivation, customer insights, and industry competence. The team
identifies specific strategic management plans and issues to address and then uses various
tools and approaches to assess the company’s strengths and weaknesses. You can conduct
PESTLE (political, economic, social, technological, legal/regulatory, and
ecological/environmental) analysis to evaluate the company’s standing in relation to the
inherent macro-environmental issues. And/or SWOT (strengths, weaknesses,
opportunities and threats) analysis to gauge the organization’s internal and external
metrics and their implications on its industry performance. 
Development Phase
After you’ve collected all of the information, it’s time for the development phase. This is when
you’ll start putting together your business’s strategic plan. A strategic plan consists of five key
components: a vision statement, a mission statement, goals and objectives, an action plan, and
details on how often the strategic plan will be reviewed and updated.
Decide with your employees what you will use to create the strategic plan. Are you going to
purchase software to help you create and house the plan? Or are you going to create the plan
yourself and save it in the cloud for easier access?
When you’re creating goals and objectives for your business, make sure they’re realistic and
measurable. Work with your employees to create goals and objectives for at least the next one to
three years. And discuss how these goals and objectives will be measured and tracked.
For example, if you have a goal of increasing sales by 10% in the next year, you can track this by
measuring sale numbers. Equally important is having an action plan to achieve these goals and
objectives. If you’re trying to increase your sales by 10% in a year, you can pursue more
marketing and social media outreach as part of your action plan. If an action plan doesn’t help
your business achieve its goals, the plan needs to be rewritten.

III. Strategy Formulation And Development 

The third step is more definitive because you have to determine the company’s mission,
vision, and business values and beliefs. The identified or set business vision will be used
to guide the business and to track its performance after a set period of time. Long-term
objectives are also highlighted for future success monitoring. All these strategic goals
will be derived or based on the identified competitive advantages and then tailored to
reflect an established set of company-wide strategies. This phase ends with a shorter
financial objective. 
Review and Updating Phase
A critical part of the strategic plan should address how often it will be reviewed and updated.
Designate someone to be responsible for reviewing, updating, and sharing any changes with the
rest of the company. Whether it’s you or another employee, you’ll want to make sure everyone in
the business is aware of the changes and how they affect the overall strategic plan.
The strategic plan is meant to be a fluid document; don’t fall into the trap of creating the
document and letting it sit on a shelf for years. If you developed meaningful objectives and
action plans, they should help with regularly checking the strategic plan. For example, if your
action plan requires you to put in sales numbers every quarter to track revenue, you could take
that time to review the rest of the plan.
You can also set an alert to check the strategic plan on a regular basis. Whether it’s every few
months, every quarter, or every year, a recurring alert can help you review and update the
document.
When you’re reviewing your strategic plan, you may find that you’re not on track to meet an
objective or goal that you previously set up. Don’t panic. Reassess the situation and, if you need
to, discuss the issues with your employees. Figure out what went wrong and why your business
isn’t on pace; maybe the goal was too ambitious or not realistic. Change the goal or objective and
update the action plan to help you get back on track.
You also may find that your small business has met a goal or objective earlier than you thought
you would. If so, you can create a new goal or objective to work toward, or try to maintain the
progress you’ve already made. Discuss the ideas with your employees to see what they think is
possible.

IV. Actual Implementation 

The actual execution of the strategic plan starts with the setting of organizational
priorities based on the SWOT and PESTLE analyses. Short- and medium-term SMART
goals are then set and Key Performance Indicators (KPIs) selected to track progress. An
annual budget is created to sustain the strategic plan and specific departments and
individual team members are allocated various goals. 

Strategic Planning Template Checklist

A good strategic planning template is like a checklist. The template will include different
sections for you to complete and help you cover a variety of topics. Using a thorough template
will help ensure you have a comprehensive strategic plan for your business.
You can use computer software for your strategic planning template, or you can create your own
with Microsoft Word or Excel. You can also download our Strategic Planning Template to use.

V. Performance Management 
The final phase involves change control and the monitoring of feedback. A calendar is
established and used for periodic progress reviews and a contextual communication
strategy is adopted by the whole company. Whole departments are trained and adapted to
the new operational strategy and progress reviews are modified in line with the new
business and stakeholder operations and performances.

b) “Strategy control remains fundamental because success today is no guarantee success

tomorrow.” Explain this statement.

Strategic control as a component of the strategic management process Strategic control provides
feedback to the formulation and implementation phases of the strategic management process.
Strategic control is defined as finding different methods to implement the strategic plan. It is
unique to handle and intends to handle the unknown and track the strategic implementation and
its results. It is primarily concerned with finding and assisting you in adapting to different
factors, including internal or external factors.

Types of strategic control

1. Premise control
A chosen strategy is based on certain assumptions or premises made during the strategy
formulation phase. Strategic planners need to make assumptions for two reasons: firstly it
is very seldom that detailed information on all the factors that may influence the choice
of the strategy is available to the strategic planners. Secondly it is necessary to simplify
the complexity of the organisations environment by making assumptions or premises.
Strategy formulation premises are primarily based on environmental and industry factors.
Premise control is used to systematically and continuously check whether the premises
and assumptions on which the strategy is based are still valid. If a key premise is no
longer valid, a change in strategy may be required. Premise control is a focused type of
strategic control.
2. Strategic surveillance
The second type of strategic control that reviews the content of a strategy is that of
strategic surveillance. During strategy formulation and implementation, the organization
narrows its focus to a relatively few numbers of factors. Strategic surveillance is a type of
strategic control whereby the organization monitors and interprets a broad range of events
both external and internal to the organization not previously identified that may affect the
course of its strategy. It is a broad or unfocused type of strategic control. It is based on
the idea that important yet unanticipated information may be discovered by a general
monitoring of multiple information sources. These sources could include conferences,
conversations, journals such as the Financial Mail and The Economist or newspapers
such as the Business Day or the Mail and Guardian.
3. Special alert control
Special alert control is the “thorough, and often rapid, reconsideration of the
organization’s strategy because of a sudden, unexpected event”. For example, the 11th of
September terrorist attacks on the World Trade Centre in New York triggered immediate
 and intense reassessment of various airline organizations’ strategies. Some of Sasol’s
strategic business units may reconsider their strategic choice in light of the second Gulf
War. Special alert control is a focused type of strategic control that supports strategic
surveillance and premise control in reviewing the content of a chosen strategy.
4. Implementation control
The strategy implementation process consists of various activities, initiatives and
programs that occur over a period of time. These may entail appointing key people,
restructuring the organization, allocating resources, performing certain functional tasks
related to the strategy and developing reward systems. Implementation control is the type
of control that must be exercised as the implementation process unfolds.
The purpose of implementation control is twofold. Firstly it provides managers
information regarding the success of the implementation process in terms of anticipated
performance levels and secondly it indicates if the basic strategic direction needs to be
altered. Implementation control is enabled through operational control.

Six Steps Of The Strategic Control Process

Whether your organization is using one or all four of the previous techniques of strategic
evaluation and control, each involves six steps:
Determine what to control.
What are the organization’s goals? What elements directly relate to your mission and vision? It’s
difficult, but you must prioritize what to control because you cannot monitor and assess every
minute factor that might impact your strategy.
Set standards.
What will you compare performance against? How can managers evaluate past, present, and
future actions? Setting control standards—which can be quantitative or qualitative—helps
determine how you will measure your goals and evaluate progress.
Measure performance.
Once standards are set, the next step is to measure your performance. Measurement can then be
addressed in monthly or quarterly review meetings. What is actually happening? Are the
standards being met?
Compare performance.
When compared to the standards or targets, how do the actuals measure up? Competitive
benchmarking can help you determine if any gaps between targets and actuals are normal for the
industry, or are signs of an internal problem.
Analyze deviations.
Why was performance below standards? In this step, you will focus on uncovering what caused
the deviations. Did you set the right standards? Was there an internal issue, such as a resource
shortage, that could be controlled in the future? Or an external, uncontrollable factor, like an
economic collapse?
Decide if corrective action is needed.
Once you have determined why performance deviated from standards, you’ll decide what to do
about it. What actions will correct performance? Do goals need to be adjusted? Or are there
internal shifts you can make to bring performance up to par? Depending on the cause of each
deviation, you’ll either decide to take action to correct performance, revise the standard, or take
no action.

Q.10: Write short notes on the following:

a) Strategic implementation approaches.
b) Corporate culture.
c) BCG model.
d) Strategic control

c)
BCG Model
The Boston Consulting Group Matrix (BCG Matrix), also referred to as the product portfolio
matrix, is a business planning tool used to evaluate the strategic position of a firm’s brand
portfolio. The BCG Matrix is one of the most popular portfolio analysis methods. It classifies a
firm’s product and/or services into a two-by-two matrix. Each quadrant is classified as low or
high performance, depending on the relative market share and market growth rate. Learn more
about strategy in CFI’s Business Strategy Course.

There are four quadrants in the BCG Matrix:

a) Question marks: Products with high market growth but a low market share.
b) Stars: Products with high market growth and a high market share.
c) Dogs: Products with low market growth and a low market share.
 d) Cash cows: Products with low market growth but a high market share.

. Dogs (or Pets)

If a company’s product has a low market share and is at a low rate of growth, it is considered a
“dog” and should be sold, liquidated, or repositioned. Dogs, found in the lower right quadrant of
the grid, don't generate much cash for the company since they have low market share and little to
no growth. Because of this, dogs can turn out to be cash traps, tying up company funds for long
periods of time. For this reason, they are prime candidates for divestiture.
Products in the dogs quadrant are in a market that is growing slowly and where the product(s)
have a low market share. Products in the dogs quadrant are typically able to sustain themselves
and provide cash flows, but the products will never reach the stars quadrant. Firms typically
phase out products in the dogs quadrant (as indicated by B) unless the products are
complementary to existing products or are used for a competitive purpose. 
Cash Cows
Products that are in low-growth areas but for which the company has a relatively large market
share are considered “cash cows,” and the company should thus milk the cash cow for as long as
it can. Cash cows, seen in the lower left quadrant, are typically leading products in markets that
are mature.
Generally, these products generate returns that are higher than the market's growth rate and
sustain itself from a cash flow perspective. These products should be taken advantage of for as
long as possible. The value of cash cows can be easily calculated since their cash flow patterns
are highly predictable. In effect, low-growth, high-share cash cows should be milked for cash to
reinvest in high-growth, high-share “stars” with high future potential. 
The matrix is not a predictive tool; it takes into account neither new, disruptive products entering
the market nor rapid shifts in consumer demand.
Products in the cash cows quadrant are in a market that is growing slowly and where the
product(s) have a high market share. Products in the cash cows quadrant are thought of as
products that are leaders in the marketplace. The products already have a significant amount of
investments in them and do not require significant further investments to maintain their position.
Cash flows generated by cash cows are high and are generally used to finance stars and question
marks. Products in the cash cows quadrant are “milked” and firms invest as little cash as possible
while reaping the profits generated from the products. 
Stars
Products that are in high growth markets and that make up a sizable portion of that market are
considered “stars” and should be invested in more. In the upper left quadrant are stars, which
generate high income but also consume large amounts of company cash. If a star can remain a
market leader, it eventually becomes a cash cow when the market's overall growth rate declines.
Products in the star quadrant are in a market that is growing quickly and one where the
product(s) have a high market share. Products in the stars quadrant are market-leading products
and require significant investment to retain their market position, boost growth, and maintain
a competitive advantage.
Stars consume a significant amount of cash but also generate large cash flows. As the market
matures and the products remain successful, stars will migrate to become cash cows. Stars are a
company’s prized possession and are top-of-mind in a firm’s product portfolio.
Question Marks
Questionable opportunities are those in high growth rate markets but in which the company does
not maintain a large market share. Question marks are in the upper right portion of the grid. They
typically grow fast but consume large amounts of company resources. Products in this quadrant
should be analyzed frequently and closely to see if they are worth maintaining.
Products in the question marks quadrant are in a market that is growing quickly but where the
product(s) have a low market share. Question marks are the most managerially intensive
products and require extensive investment and resources to increase their market share.
Investments in question marks are typically funded by cash flows from the cash cow quadrant.
In the best-case scenario, a firm would ideally want to turn question marks into stars (as
indicated by A). If question marks do not succeed in becoming a market leader, they end up
becoming dogs when market growth declines.
 Limitations of BCG Matrix
 BCG matrix has certain flaws. Because of these flaws, it should be used cautiously.
 BCG matrix is criticized as a very simplistic model. An ABU is affected not only by
market share and growth rate. Many other relevant factors, such as product
differentiation^niche market possibility, etc. affect the business operations of the SBU
BCG matrix and do not take into account all these factors.
 BCG matrix suggests a straight-forward Hnkage relative market Share’ and cost savings.
In reality, cost advantage may not accrue to an SBU simply due to high maShaS
Depending on the industry, an SBU with low simple, low-cost technology.
 Cash cow SBUs are supposed to generate substantial cash Sows because of their high
market share. It may not always be in some businesses; the capital investments needed to
remain competitive are so high that an SBU classified as a cash cow may find it very
difficult to yield substantial cash flows.
Problems with BCG Matrix Approaches
The BCG and other formal methods revolutionized strategic planning. However, such
approaches have limitations. They can be difficult, time-consuming, and costly to implement.
Management may find it difficult to define SBUs and measure market share and growth.
In addition, these approaches focus on classifying current businesses but provide little advice for
future planning. Management must still rely on its own judgment to set each SBU’s business
objectives, determine what resources each will be given, and figure out which new businesses
should be added.
Formal planning approaches can also lead the company to place too much emphasis on market-
share growth or growth through entry into attractive new markets. Many companies plunged into
unrelated and new high-growth businesses using these approaches that they did not know how to
manage with very bad results.
At the same time, these companies were often too quick to abandon, sell, or milk to death their
healthy mature businesses.
As a result, many companies that diversified too broadly in the past now are narrowing their
focus and getting back to the basics of serving one or a few industries that they know best.
Despite such problems, and although many companies have dropped formal matrix methods in
favor of more customized approaches that are better suited to their situations, most companies
remain firmly committed to strategic planning.
During the 1970s, many companies embraced high-level corporate strategy planning as a kind of
magical path to growth and profits. By the 1980s, however, such strategic planning took a
backseat to cost and efficiency concerns, as companies struggled to become more competitive
through improved quality, restructuring, downsizing, and reengineering.
Recently, strategic planning has made a strong comeback.
However, unlike former strategic-planning efforts, which rested mostly in senior managers’
hands, today’s strategic planning has been decentralized.
Companies are increasingly moving responsibility for strategic planning out of company
headquarters and placing it in the hands of cross-functional teams of line and staff managers who
are close to their markets. Some teams even include customers and suppliers in their strategic-
planning processes.
Such analysis is no cure-all for finding the best strategy.
But it can help management understand the company’s overall situation, see how each business
or product contributes, assign resources to its businesses, and orient the company for future
success. When used properly, strategic planning is just one important aspect of overall strategic
management, a way of thinking about how to manage a business.