Sinhgad Collage of Commerce

Subject- Strategic Management Topic - BCG MATRIX Class SYBMS Submitted to Prof. Vijay Kapoor

INDEX

Definition History Diagram & its Explanation Strategic Implication Advantages & Disadvantages BCG OF M&M

AKNOWLEDMENT
I WOULD LIKE TO THANK TO MY
COLLEGE , MY BMS CO-ORDINATOR PROF. RITIKA HEMDAVE AS WELL AS TO PROF.VIJAY KAPOOR .FOR GIVING SUCH KIND OF OPPORTUNITY FOR DOING THIS PROJECT OR PRESENTATION .

GROUP MEMBERS
NAME RAKESH MALPEDI ATUL PATHAK BHAVESH SINGH VIJAY MOURYA ROLL NO. 23 SIGNITURE

33
43 30

WHAT IS BCG MATRIX ?

BCG Growth share matrix developed by
Boston consulting group of USA and popularly known as BCG Matrix takes a two dimensional views. I. Industry growth rate. II.Relative market share.

History
In 1970, Bruce Henderson of Boston Consulting Group {BCG} created a chart for the corporation to analyses their business units {products and brands} on the basis of their relative market share and industry growth rate. The terms in the BCG Matrix like Stars, Cash Cows, Question marks, Dogs became commonly used terms in business meetings as they became very popular.

BCG Growth - Share Matrix

Stars
Stars are the unit with a high market share
in a fast growing industry. Star represent the best profits and growth opportunities in the organizations. Generates high revenues and also requires huge cash for sustaining the STAR position. Product is in growth stage. For e.g.: Nescafe, caracal.

Cash Cows
A cash cow is a product or a business unit
that generates unusually high profit margins. They are the business with low growth rate and high market share. Generating cash more than its requirement which can be used by other units. Product in maturity Stage. For e.g.: Maggie Noodles

Question Marks
Question Marks are the units with low market
share in a fast growing industry. They required large amount of cash to grow their market share. for e.g.: Promotional expenses. They have the potential to generate profits and achieve a dominant position in market. Product is in introduction stage, in a fast growing market. For e.g.: kit Kat, Nestle butter &milk etc.

Dogs
Dogs often have little future and are big cash
drainer on the company. Generating cash just to BREAK-EVEN. It is a self sustaining unit. They do not generate any profit for the overall business and hence can be sold off and hired off. Product is in decline stage, with no chance of revival. For e.g.: Nestea, Milky Bar, Munched etc.

Strategic Implication Of BCG MATRIX

BCG Matrix helps in determining the

competitive advantage of each SBU BCG Matrix will work when: 1) Market of each Division / SBU is well defined. 2)Relative market share is an indication of an SBUs competitive position. 3)Market growth, cash investment and profits of the SBU are positively co-related.

Advantages
1) Diversification with sustainable profits. 2) Allocation of Scarce Resources of the
company. 3) Higher profits and Growth rates 4) Raising Equity Capital only when necessary.

Disadvantages
1) Other important dimensions which are also
significant apart from relative market share and growth rate are the product life cycle, presence of competitive advantage, etc. 2) Long term profitability is influenced to a great extent by controlling costs and overheads. 3) Value of a business is often linked to other factors like synergy, competitive advantage etc 4) Instead of 4 cells there should be 6 cells high, medium and low.

BCG OF M&M INTRODUCTION

Mahindra Group is one of the largest corporate
groups of India. It is a US $6.3 billion conglomerate with employee strength of over 50,000.

It is ranked amongst Forbes Top 200 list of the

World's Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.

SBU OF M&M
Tractors Two Wheelers

Utility Vehicles

Place of Tractor
AMGR of Tractor industry = 18% Market share of M&M = 29% (Market
Leader) 2nd largest player is Tafe group (messy tractor) Market share of Tafe group = 23% RMS of M&M Tractor = 1.26x

Business growth Rate

10%

12%

14%

16%

18%

20%

10x

4x

2x
1x

0%
Relative Market share

2%

4%

6%

8%

0.5 x 0.4 x 0.3 x 0.2 x 0.1 x

TRADITIONAL BCG MATRIX

Place of Two Wheelers

AMGR of two wheelers industry = 12% Market Share of M&M two Wheelers = 1% Market Share of Hero Honda = 52% RMS of M&M two wheelers = 0.02x

LOW
Business growth Rate

HIGH 16%

10%

12%

14%

18%

20%

10x

4x

2x
1x

0%
Relative Market share

2%

4%

6%

8%

0.5 x 0.4 x 0.3 x 0.2 x 0.1 x

TRADITIONAL BCG MATRIX

Place of Utility Vehicles

AMGR of Utility vehicle industry = 8.7% Market Share of M&M Utility Vehicle =
42% (Market Leader) Market Share of Tata Motors in UV = 21% RMS of M&M Utility Vehicle = 2x

Business growth Rate

10%

12%

14%

16%

18%

20%

10x

4x

2x
1x

0%
Relative Market share

2%

4%

6%

8%

0.5 x 0.4 x 0.3 x 0.2 x 0.1 x

TRADITIONAL BCG MATRIX

Conclusion
SBU
AMGR M&M Largest mkt Competit Share (a) or Mkt. share (b) 29% 23% X = a/b

TRACTORS

18%

(TAFE)

1.26

TWO WHEELERS

12%

1%

52%

(HERO HONDA)

0.02

UTILITY VEHICLES

8.7%

42%

(TATA MOTORS)

21%

2.00

LO W
Business growth Rate

HIG 16% H 14%

10%

12%

18%

20%

10x

4x

2x
1x

0%
Relative Market share

2%

4%

6%

8%

0.5 x 0.4 x 0.3 x 0.2 x 0.1 x

TRADITIONAL BCG MATRIX

APPROPRIATE STRATEGIES
TRACTORS (STAR) HOLD STRATEGY (Invest to protect)
Build capacity expansion Increase investment Increase advertisement and promotion Increase market reach

CONT
TWO WHEELERS (QUESTION MARK ?) Exceptional case (Money hogger) Product is in early stage Try to build it and turn in to STAR Invest intensively

CONT
UTILITY VEHICLES (CASH COW)
HOLD STRATEGY (INVEST TO PROTECT)

Increase advertisement and promotion Increase market reach Increase Investment

CONCLUSION
Though BCG MATRIX has its limitations it is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multiproducts.

Reference
1. www .Google. com 2. Strategic Management- by Anita Bo bade 3. www. Wikipedia. com 4. www. Dog pile. com
5. www. M&M . com