You are on page 1of 30

BOSTON CONSULTING GROUP

MATRIX

INTRODUCTION

BOSTON CONSULTING GROUP (BCG)

MATRIX is developed by BRUCE


HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY 1970s.

According to this technique, businesses or

products are classified as low or high


performers depending upon their market
growth rate and relative market share.

Relative Market Share


and Market Growth
To understand the Boston Matrix you need
to understand how market share and
market growth interrelate.

MARKET SHARE
Market share is the percentage of the total market that is

being serviced by your company, measured either in


revenue terms or unit volume terms.

RELATIVE MARKET SHARE


RMS = Business unit sales this year

Leading rival sales this year


The higher your market share, the higher proportion of

the market you control.

MARKET GROWTH
RATE
Market growth is used as a measure of a markets

attractiveness.

Markets experiencing high growth are ones where

the total market share available is expanding, and


theres plenty of opportunity for everyone to make
money.

THE BCG GROWTH-SHARE


MATRIX
It is a portfolio planning model which is based on

the observation that a companys business units can


be classified in to four categories:
Stars
Question marks
Cash cows
Dogs

It is based on the combination of market growth and

market share relative to the next best competitor.

STARS
High growth, High market share
Stars are leaders in business.
They also require heavy investment,

to

maintain its large market share.


It leads to large amount of cash consumption
and cash generation.
Attempts should be made to hold the market
share otherwise the star will become a CASH
COW.

CASH COWS

Low growth , High market share

They are foundation of the company and often

the stars of yesterday.


They generate more cash than required.
They extract the profits by investing as little
cash as possible
They are located in an industry that is mature,
not growing or declining.

DOGS
Low growth, Low market share
Dogs are the cash traps.
Dogs do not have potential to bring in much

cash.
Number of dogs in the company should be
minimized.
Business is situated at a declining stage.

QUESTION MARKS
High growth , Low market share
Most businesses start of as question marks.
They will absorb great amounts of cash if the

market share remains unchanged, (low).


Why question marks?
Question marks have potential to become
star and eventually cash cow but can also
become a dog.
Investments should be high for question
marks.

WHY BCG MATRIX ?


To assess :
Profiles of products/businesses
The cash demands of products
The development cycles of products
Resource allocation and divestment
decisions

The BCG Matrix for ITC Ltd.


Stars

Hotels

FMCG- Others

Paperboards/
Packaging.
Agri business.
Cows

Dogs

FMCG-Cigarettes

Maybe ITC
Infotech.

BENEFITS
BCG MATRIX is simple and easy to

understand.
It helps you to quickly and simply screen the
opportunities open to you, and helps you
think about how you can make the most of
them.
It is used to identify how corporate cash
resources can best be used to maximize a
companys future growth and profitability.

CONCLUSION

Though BCG MATRIX has its limitations it is one


of the most FAMOUS AND SIMPLE portfolio
planning matrix ,used by large companies
having multi-products.

We meet everyday needs for nutrition,


hygiene and personal care with brands that
help people feel good, look good and get
more out of life.
HUL

17

Companys Profile
Owned by the British-Dutch company Unilever

which controls 52% majority stake in HUL.


Formed in 1933 as Lever Brothers India Limited.
HUL

India's largest consumer goods company based

in Mumbai, Maharashtra.
Company was renamed in June 2007 as

Hindustan Unilever Limited.

18

CONTINUED . . . . . .
Hindustan Unilever's distribution covers over 2 million

retail outlets across India directly.


Its products include foods, beverages, cleaning

Has an employee strength of over 16,500 employees.

HUL

agents and personal care products.

Has annual turnover of around Rs.20736 crores in 2011-

12.
19

What is BCG Matrix?


BCG matrix is often used to prioritize which

products within company product mix get


more funding and attention

MARKET GROWTH and 4 category Stars,


Cash cows, Dogs, Question marks ?

HUL

It has 2 dimensions: MARKET SHARE &

20

Assumptions Of BCG
1. This matrix assumes that a larger market

share in a growth market leads to


profitability. An effort to obtain a large market
share in a slowly growing market requires
too much cash.
HUL

2. The higher the growth rate, the easier to gain

market share.
21

HUL
22

DOG
It has a small market share in a mature industry.
A dog may not require substantial cash because
dogs have low market share and a low growth
rate and thus neither generate nor consume a
large amount of cash.

HUL

QUESTION MARK (Problem Child)


It has a small market share in a high growth
market.
Question marks are growing rapidly and thus
consume large amounts of cash, but because
they have low market shares they do not
generate much cash.
It has the potential to gain market share and
become a star, and eventually a cash cow when
the market growth slows.

23

STAR

It has a large market share in a fast growing industry.


Stars generate large amounts of cash because of their
strong relative market share, but also consume large
amounts of cash because of their high growth rate.

CASH COW

HUL

It has a large market share in a mature, slow growing


industry.
As leaders in a mature market, they exhibit a return
on assets that is greater than the market growth rate,
and thus generate more cash than they consume.
Such business units should be "milked", extracting
the profits and investing as little cash as possible.

24

HUL Product Mix


The entire product range of HUL can be visualized in terms
of the following of the following segments:

FOOD BRANDS
(KISSAN, ANNAPURNA, KNORR, KWALITY WALLS, BROKE
BOND, TAJ MAHAL)

HOME CARE BRANDS


(SURF EXCEL, VIM, WHEEL, RIN, BLEACH, DOMEX)

HUL

PERSONAL CARE BRANDS


(PEPSUDENT, CLOSE UP, AXE, REXONA, SUNSILK, DOVE ,
LIFEBUOY, LIRIL, LUX, PEARS, FAIR & LOVELY, LAKEME,
PONDS, VASELINE, ETC.)

25

Growth And Market Share

HUL
26

Market Growth Analysis

HUL
27

Market Share Analysis

HUL
28

HUL
29

BCG of HUL

HUL
30