BCG MATRIX

&
POTER’S FIVE FORCE
MODEL

Prepared By:
Anuj Gandhi
3907, PGDPM(09-11)
Placing products in the BCG matrix results in 4
categories in a portfolio of a company
BCG Matrix
Stars (=high growth, high market share)

- use large amounts of cash and are

leaders in the business so they should also
generate large amounts of cash.

- Frequently roughly in balance on net

cash flow. However if needed any attempt
should be made to hold share, because
the rewards will be a cash cow if market
share is kept.
Cash Cows (=low growth, high market
share)

-Profits and cash generation should be

high, and because of the low growth,
investments needed should be low. Keep
profits high

-Foundation of a company
Dogs (=low growth, low market share)

-avoid and minimize the number of dogs

in a company.

-beware of expensive ‘turn around

plans’.

- deliver cash, otherwise liquidate

Question Marks (= high growth, low
market share) have the worst cash
characteristics of all, because high
demands and low returns due to low
market share.
- If nothing is done to change the market
share, question marks will simply absorb
great amounts of cash and later, as the
growth stops, a dog.
- Either invests heavily or sell off or
invest nothing and generate whatever
cash it can. - - Increase market share or
deliver cash
Justification STAR:-
The rating on Reliance Industries Ltd.
reflects the company's global scale of
integrated operations with a strong
competitive position in its core
petrochemical and oil refining business
and intermediate financial risk profile
In The Scenario Of Reliance Global Management
Services Has Achieved A Considerable Position In The
World Market. Besides All These Factors A High
Investment And Growth Rate Is Being Procured.

RELIANCE ENGINEERING ASSOCIATES (P) LTD:

Reliance engineering associates (p) ltd has not been in
form of providing lot of amount as per current base;
hence it needs lot of amount to stand the business.

RELIANCE RETAIL: Reliance Retail is the retail business

wing of the Reliance business having high growth rate
and high market share. They are not for long term
investment but they generated cash for the organization
QUESTION MARK Justification:

RELIANCE PETROLEUM LTD: In the current

reliance market condition, this is something
equalizing to high growth rate and low or
optimum investment.
JUSTIFICATION (CASHCOWS)
RANGER FARMS LTD: Ranger Farm deals in
food , fruits and vegetables and consumer
products hasn't achieved a dominant market
position, that's what don't generate much cash.
We need much cash because things are
changing every minute in Reliance Retail of the
market conditions to stand the firm rigidly. low
growth and high investment is primarily
observed.
RELIANCE BIOPHARMACEUTICALS:
Reliance Biopharmaceuticals is providing world-class
therapies and recombinant biopharmaceuticals for the
treatment of both acute and chronic diseases in
European market. This requires focused efforts at
keeping large amount of cash to grow their market
share.

RELIANCE OILS & GAS: Krishna-Godavari (KG) D-6

block is amongst the five largest deepwater gas projects
globally. It was the largest discovery of natural gas in
world in financial year 2002-2003. Gas production is
expected to transform India’s energy landscape having
low growth rate and is expected to double market share
the current level of indigenous gas production.
Justification: (DOGS)
PETROCHEMICALS: Revenue for the
petrochemicals segment for the year
decreased marginally from Rs 53,000
crore to Rs. 52,767 crore (US$ 10.4
billion). According to recession period their
low market share in a highly low growth
market.
Overview about Pharma Industry
 Estimated $700 bn in 2007.
 Growth rate 6% in CAGR(Compound
Annual Growth Rate).
 Expected to reach $937 bn in 2012.
Industry Competition
 Most competitive industries in the
country with as many as 10,000 different
players.
 Top player in the country has only 6%
market share and top five have 18%.
 High growth prospects.
 Very low entry barriers.
 Fixed cost requirement is low and need
for working capital is high.
Bargaining Power of Buyers

 End user of the product is different from

the influencer (read Doctor).
 Consumer has no choice but to buy
what doctor says.
 Buyers are scattered and they as such
does not wield much power in the
pricing of the products.
Bargaining Power of Suppliers

 Pharma industry depends upon several

organic chemicals.
 Very competitive and fragmented industry.
 Chemicals are largely a commodity.
 Suppliers have very low bargaining power.
 Pharma industry can switch from their
suppliers without incurring a very high cost.
Barriers to Entry

 Most easily accessible industries for an

entrepreneur in India.
 Capital requirement for the industry is very low,
creating a regional distribution network is easy.
 Point of sales is restricted in this industry in India.
 Creating brand awareness and franchisee
amongst doctors is the key for long-term survival.
 Quality regulations by the government may put
some hindrance for establishing new
manufacturing operations.
 Impending new patent regime will raise the
barriers to entry.
Threat of Substitutes
 One of the great advantages of the
pharma industry.
 Demand for pharma products continues
and the industry thrives.
 Key reasons for high competitiveness in
the industry is that as an on going
concern.
 Key reasons for high competitiveness in
the industry is that as an on going
concern.
Conclusion
 Industry is not static in nature, it's dynamic.
 Larger players in the industry will survive with
their proprietary products and strong
franchisee.
 In the Indian context, companies like Cipla,
Ranbaxy and Glaxo are likely to be key
players.
 Change in the patent regime, will see new
proprietary products coming up, making
imitation difficult.
 Government too will have bigger role to play.
THANK YOU