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BOSTON CONSULTANCY GROUP

• Boston Consulting Group (BCG) Matrix is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an organization to examine different businesses in it’s portfolio on the basis of their related market share and industry growth rates. • According to this matrix, business could be classified as high or low according to their industry growth rate and relative market share. • Relative Market Share = SBU Sales this year leading competitors sales this year. Market Growth Rate = Industry sales this year - Industry Sales last year.

2. . • Generate cash but because of fast growing market require huge investments to maintain their lead. • Require little investment and generate cash that can be utilized for investment in other business units.GRAPHIC REPRESENTATION 1.Cash Cows• Represents business units having a large market share in a mature.Stars• Represent business units having large market share in a fast growing industry. slow growing industry.

• They neither generate cash nor require huge amount of cash.) 3. 4. Dogs• Represent businesses having weak market shares in lowgrowth markets. Question Marks• Represent business units having low relative market share and located in a high growth industry. • Require huge amount of cash to maintain or gain market share. .GRAPHIC REPRESENTATION(CONT.

BCG matrix classifies businesses as low and high.LIMITATIONS OF BCG • 1. High market share does not always leads to high profits. Growth rate and relative market share are not the only indicators of profitability • 5.Market is not clearly defined in this model. This four-celled approach is considered as to be too simplistic. • 2. • 3. . • 4.

APPLICATION OF BCG IN ITC .

•Agri business.The BCG Matrix for ITC Ltd. Stars •Hotels •Paperboards/ Packaging. Cows •FMCG-Cigarettes ? •FMCG•Safety Matches •Incense Sticks •Others Dogs .

16 FMCG-Cigarettes 8.Business wise Sales data Business/ Year Growth Value (Rs in Crore) % 2012 2010 10002.54 9230.9 12.4 FMCG-Others 85.04 . Net revenue 124.77 1253.99 577.1 4.58 11815.39 304.2 24.25 1780.53 1708.31 257.07 1565.29 13349.27 563.2 Hotels Agribusiness Paper & pkg.

Paperboards. Branded Apparel and Greeting Cards. Outstanding market leader • Cigarettes. . Gaining market share • Businesses of Packaged Foods & Confectionery. Hotels. Packaging and Agri-Exports.Market share of ITC Ltd.

3% 7. Dominance 70% share Packaging board – No.1 in branded segment 4.0% 87.2 20% share of greeting cards market.5% .7% Agri 1of the largest xporters business from India Hotels FMCG (Others) ITC Group ranks No.4% -7. 'Aashirvaad' atta is No.Segment Cigarettes Paper & Packg. 1 in Asia Contribution % Revenue PBIT 77.7% 3.3% 4.0% 10.4% 5.7% 7.