BCG Matrix and Ansoff Matrix

2020230 Sashwat Agarwal

2020269 Lavya M Jain

2020289 Sai Vishal

2020251 Pooja Bhansali

2020272 Tarun Rathi

2020276 Vidhi B

Department of Business and Management, Christ (Deemed to be University)

BBA 333: Marketing Management

Mr Prakash N

August 16,2021

1|Page
Introduction about the Industry – Restaurants

A restaurant is a place where food and drinks are prepared and served to clients. Restaurants
are inspected by health inspectors in many countries to ensure that public health standards are
met, such as maintaining sufficient hygiene and cleanliness. Although most meals are served
and consumed on the premises, numerous restaurants also provide food delivery and take-
away services. Eateries come in a wide range of styles and pricing categories, with cuisines
and service ranging from low-cost fast food and cafeterias to mid-priced family restaurants to
high-end luxury places.

In 2002, India had over 22 lakh hotel and restaurant outlets. In 2010, the food service and
restaurant business were valued at Rs.43,000 crores, and it was increasing at a healthy rate of
15-20 percent per year.

Financial Facts about restaurant after 2020

1. Sales in the restaurant industry are predicted to be $659 billion in 2020, down $240
billion from the previous year.
2. 12.5 million people – At the end of 2020, the restaurant business will employ 3.1
million fewer people than planned.
3. 110,000 – Temporarily or permanently shuttered restaurant locations

While opening a restaurant the following items should be considered:

 Patience and Perseverance

 Restaurant Concepts
 Location
 Restaurant Equipment and menu
 Restaurant Management
 Service and promotion

2|Page
Introduction about the Companies

McDonald’s

McDonald's is an American cheap food organization, established in 1940 as a café worked by

Richard and Maurice McDonald, in San Bernardino, California, United States. McDonald's is
the world's most profitable restaurant company, with over 69 million customers served daily
in more than 100 countries. Burgers, various types of chicken, french fries, chicken
sandwiches, soft drinks, desserts and breakfast dishes are the most popular things sold at
McDonald's. It also serves salads, vegetarian options, wraps, and other regional specialties in
most markets. They renamed their business as a cheeseburger stand and then developed it
into a restaurant, with the logo of Golden Arches first appearing in 1953 at a place in
Phoenix, Arizona. In 1955, Ray Kroc, a finance manager, joined the organization as an
establishment specialist and continued to buy the chain from the McDonald siblings.
McDonald's used to have its headquarters in Oak Brook, Illinois, but in June 2018, it
relocated its global headquarters to Chicago.

3|Page
Burger King

Burger King (BK) is an American global chain of cheeseburger drive-through joints. The
company was founded in 1953 as Insta-Burger King, a Jacksonville, Florida–based eatery
network, and is based in Miami-Dade County, Florida. After Insta-Burger King got into
financial difficulties in 1954, David Edgerton and James McLamore, two Miami-based
franchisees, purchased the company and rebranded it "Burger King." Throughout the
following
50 years, the organization changed hands multiple times, with its third arrangement of
proprietors, an association of TPG Capital, Bain Capital, and Goldman Sachs Capital
Partners, taking it public in 2002. Burger King's menu has grown to include a broader and
more diverse range of items than only burgers, French fries, drinks, and milkshakes. The
"Whopper" was added to the menu for the first time in 1957, and it has since become Burger
King's signature product.

4|Page
Purpose for choosing the Companies

We chose McDonald’s and Burger King as they are giants in the fast food restaurants
industry. Food is something that we all love and enjoy to eat and hence, we chose these two
companies. Both the companies are considered to provide the best balance of the three “fast
food characteristics”: quick service, good quality food, and, of course, great prices.

Both companies have a good competition. Even during the pandemic, both companies support
each other. Burger King's Twitter letter encouraged its followers to order from other
competing fast-food franchises, pointing to chains like McDonald's, Pizza Hut, and KFC, to
mention a few. User Testing's survey studies the campaign's impact on customer loyalty,
perception, and company values at the global level. Both, Burger King and McDonald’s are
considered to be favourite hangout places for youngsters like us and hence, we have chosen
these to understand the matrices better.

Burger King India listed on the bourses at nearly double its issue price, bringing into focus a
fast-food chain that has been in the country just six years, thus competing in burger market in
India, which up until now was dominated by one player: McDonald’s. Domestic investors
were familiar with the McD name through its master franchise in the west and south of India,
Westlife Development, a listed player.

BCG Matrix

Boston Consulting Group (BCG) developed a tool called growth-share analysis, which helps
a company decide what to keep, sell, or expand based on a graphical representation of what it
offers and its distribution channels. As a result, a matrix of four squares is presented to show
a company's products and services, the market share on the y-axis, and the rate of market
growth.

 Dogs - When a company's product fails to grow properly or has a low market share,
its product counts as a "dog" that should be sold, liquidated, or repositioned.
 Cash Cows - A cash cow refers to a product with a relatively large market share that
is in a low-growth area.
 Stars - Often, high-growth markets that have a large number of high-growth products
are considered "star" markets and should receive more investment.

5|Page
  Question Marks - If the company hasn't maintained a significant market share at the
same time as experiencing rapid growth, this is a questionable opportunity.

Ansoff Matrix

Ansoff Matrix or Product/Market Expansion Grid is used in the analysis of and planning for
growth strategies. Four growth strategies are represented in the matrix, along with their
associated risks. There are four strategies in Ansoff Matrix.

 Market Penetration - The process of acquiring a higher market share by expanding

sales. Ways to implement the market penetration strategy:
a. Bringing in new clients by lowering prices
b. Distribution and promotion efforts should be increased.
 Product Development - The goal of product development is to introduce new
products into existing markets. When firms have a deep understanding of their current
market, they develop innovative product solutions that meet the needs of their current
market.
 Market Development: The objective in this strategy is to expand into new markets
using existing products. A business is most likely to succeed when it develops new
markets by:
a. Possessing proprietary technology that can be applied to new markets and
b. Providing existing customers with benefits.
 Diversification: An approach focused on entering a new market through the
introduction of new products. Diversification can be achieved in two ways:
a. Related diversification: Existing businesses and new products/markets are
capable of synergizing.
b. Unrelated diversification: An existing product or market could not be
synergized with a new one.

6|Page
Analysis of BCG Matrix of McDonald’s

Stars

 Star segments are those that compete and function in industries with high sales growth
and a large market share.
 With a large market share and fastest market growth rate, Mc Flurry is considered to
be the company’s star product. The company is able to generate income on the
product because of significant investment in promoting, marketing and advertising.
The Company should invest more in Mc Flurry, to convert into a cash cow product.
 In terms of geographical segment, Europe segment is considered the star segment as it
has generated highest income for McDonald’s.

Cash Cow

 Cash cow segments bring monetary stability to the company. These companies have
high market share but low sales growth.
 Cash cow products of the company include Fish-o-Fillet burgers and fries, and Mc
Chicken. These generate the highest profit even while spending less amount in
marketing and other areas. McDonald’s has to stay alert, to ensure that the products
don’t lose its attractiveness. If it happens, then the products may be phased out from
the market.
 The America segment is considered to be a cash cow segment because competition is
the fast food market is fierce and customers have a plethora of replacement
restaurants to choose from.

Question Mark

 Companies in this segment have low market share and compete in high growth
industries.
 McDonald’s Ice cream cones are considered as question mark products because of
high market growth rate and low market share. If the company invests more then it
may be able to convert it into a star product else the product must be wiped off the
market.
 Segment in APMEA (Asia Pacific/Middle East/Africa) falls in this category. In Asian
Pacific countries, the potential for industry sales growth is high. However,
McDonald’s like its competitor Yum brands, is not making the most of this potential.
McDonald's has been slow in responding to the competing strategy.

7|Page
Dogs

 Dogs are the ones whose market share and market growth rate are low. The best
strategies for the dog segments are retrenchment and liquidation.
 McDonald’s Coffee is considered as the dog product for the Company due to its lower
market share and growth rate. Essentially, the company is not investing a significant
amount in the product to bring it to the market to grow their market share. The
company is keeping this product only in the hopes of turning it into a hit; if they fail
to do so, they will have to remove the product and liquidate it in the market.
 Fortunately, none of the segments of McDonald’s belong to the domain of Dogs.

BCG Matrix of McDonald’s

8|Page
Analysis of Ansoff Matrix of McDonald’s

Market Penetration

 McDonald’s uses various strategies for promoting its existing products in the existing
markets. The company offers a variety of meals that include the main course, fries,
and a beverage. The happy meal for kids is one of the examples.
 McDonald’s has also set up drive-through facility for its customers to make
purchasing easier. It also offers home delivery service to serve the customers. It
continues to offer discounts and coupons to the consumers on group purchases.
 Everything in McDonald’s is priced to end at .99. This is a creative pricing approach
the company uses. McDonald’s uses a variety of methods to aggressively promote its
products in current markets, including TV ads, billboards, newspaper ads, social
media, and so on.
 The goal of each marketing campaign is to encourage current customers to try other
items on the menu or to return for more.

Market Development

 McDonald's expands their market by offering new goods in existing markets. Their
primary strategy is to grow into new geographic markets. The company currently
operates in almost 120 countries and plans to expand their reach to other countries.
 In addition, the company introduces customised products based on market conditions.
For example, in India, the McAlloo Tikki and in Saudi Arabia, the McArabia was
introduced. This aids in the development of consumer attractiveness in these localized
markets.
 When entering new markets, McDonald’s lowers its rates to help itself establish and
grow its customer base. The company is able to successfully enter new markets and
grow using all of these techniques.

Product Development

 Product development is the introduction of new items in McDonald's existing markets.

 McDonald's spends a lot of time trying to figure out what customers want and then
developing new products to meet their demands. India is one such case. In India,
people do not consume beef. McDonald's launched a full menu devoid of any beef-
based items.

9|Page
  Likewise, it has been followed in other countries too. Even in the U.S, McDonald's
continues to introduce new drinks, burgers, and desserts like Oreo McFlurry and
M&M's McFlurry.
 These approaches contributes to the launch and success of new goods in the
company's existing markets.

Diversification

 Diversification is considered as the riskiest strategy. The company focuses on

horizontal diversification rather than vertical diversification.
 To compete with Starbucks and other coffee shops, McCafe was founded. McStops is
another such company's ventures. In addition, McDonald's has opened The Golden
Arch Hotel in Switzerland. These are considerably different from the company's
current practices.
 Furthermore, companies have been formed to compete in businesses where
McDonald's previously did not participate. These riskier initiatives will enable
McDonald's prosper and increase its income and sales.

Ansoff Matrix of McDonald’s

10 | P a g e
Analysis of BCG matrix of Burger King

Stars

 The financial services strategic business unit is a star in the BCG matrix of
Burger King. It works in a market that has the potential to grow in the future.
 The star product of the company is the Hershey’s pie. It has earned quite recognition
from people. Burger King should implement a product development plan as well for
this SBU, in which it researches and develops unique features for this product.
Burger King will benefit from this by attracting more customers and increasing sales.
 With a 20% market share in this category, Burger King's Number 2 brand
Strategic business unit is a shining star in the BCG matrix. It is also the market
leader in this sector.

Cash Cow

 In Burger King's BCG matrix, the strategic business unit of supplier management
services is a cash cow. This has been in existence for decades and has brought in a
large amount of money for Burger King.
 The cash cow product of this company are Oreo and strawberry shake. In this sector,
Burger King has the ability to affect the market as well. As a result, it should invest
in research and development in order to innovate the brand. This will aid in the
growth of the category and convert this cash cow into a star.
 This business unit has a 30% market share in its sector. Burger King's recommended
strategy to improve their cash cow products are is to invest enough to maintain this
critical business unit operational level.

Question Mark

 In Burger King's BCG matrix, the local foods strategic business unit is a question
mark. Consumers are increasingly focusing on local foods, according to recent
market trends. As a result, this market is rapidly expanding..
 In this quadrant, Burger King's cheap ice cream cones are the fundamental soft
serves because they don't generate much cash but are highly appreciated by
customers and can be made into star items.

11 | P a g e
  This important business unit operates in a fast-expanding market. However, in recent
years, this critical business segment has been losing money. Burger King's best course
of action is to divest in order to avoid any further losses.
 In this lucrative sector, Burger King has a small market share. Burger King's advised
strategy is to drive for market penetration, which entails making its product available
in more locations. Burger King's sales will improve as a result, and this important
business segment will become a cash cow.

Dogs

 For the past five years, this critical business unit has been losing money. Burger
King's proposed plan is to exit this important business segment and minimise losses.
 The product here is the whopper burger which has gained quite popularity even
though it is slightly on the expensive side. This helps the organisation to gain more
profits and have better outcomes.
 This company is in a market category that has been shrinking for the previous five
years. Burger King's best approach is to invest enough in the company to turn it into a
cash cow. This will secure Burger King profits if the market grows again in the future.

BCG Matrix of Burger King

12 | P a g e
Analysis of Ansoff matrix of Burger King

Market Penetration

 Increase production capacity – Increased production capacity would also result in

increased efficiency and effectiveness, particularly in terms of minimising overhead
expenses.
 Increased marketing investment – Burger King will be able to reach more people
within the same market by engaging in communication and investing in marketing
activities and advertising.
 Reduce operational costs – Burger King's market expansion will be aided by
increased cost and accessibility.

Market Development

 Research and development – R&D should concentrate on finding and comprehending

various market cultures, trends, and consumer behaviours - and how they differ from
present market consumer behaviour patterns.
 New customer segments – Burger King can potentially expand into other consumer
segments within the same market.
 Customer education – This market knowledge is necessary for customers to grasp the
items and services available.

Product Development

 Strategic partnerships – Burger King can gain access to innovative product

developments and processes through strategic alliances with a modest
financial investment and consequently little risk.
 Product quality – Burger King will be able to reach new market and consumer
categories, as well as target new customer groups, as a result of this.
 Launch new products – Burger King frequently engages in research and
development to better understand and uncover new areas of consumer demand.

Diversification

 Vertical diversification – Burger King's vertical diversification strategy entails

launching new goods under existing product lines in order to achieve growth and
company development.

13 | P a g e
  Horizontal diversification – Burger King engages in horizontal diversification when it
decides to introduce and engage with new product developments and launches that
are unrelated to its present items.

Ansoff Matrix of Burger King

Learning Outcomes

Through this CIA, we got to learn about BCG Matrix (created by Boston consulting group)
which helped in evaluating the strategic position of the business brand portfolio and its
potential. We also learnt about Ansoff matrix which helps in figuring out which of four
strategic directions you should take to successfully grow your business.

McDonalds and Burger king, the two giants in the fast food restaurants industry helped us to
get a better understanding of the concept on a real life basis.

14 | P a g e
References

https://www.managementstudyguide.com/bcg-matrix.htm

https://www.professionalacademy.com/blogs-and-advice/marketing-theories---explaining-the-ansoff-
matrix

https://bcgmatrixanalysis.com/bcg-matrix-of-mcdonalds/

https://ansoffs.com/ansoff-matrix-of-mcdonalds/

https://www.case48.com/bcg-matrix/13879-Burger-King

15 | P a g e