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4/18/12
BCG Matrix
4/18/12
BCG Matrix
4/18/12
BCG Matrix
This tool was developed by Boston consulting group in 1970s. This is a relationship between Market Growth and Market share of a company/ its business unit or a product This was developed for large corporations with several divisions, called as Strategic Business Units (SBUs) for the allocation of resources 4/18/12 in the right place
BCG Matrix
Question marks - Question marks are businesses or products with low market share but which operate in higher growth markets. This suggests that they have potential, but may require substantial investment in order to grow market share at the expense of more powerful competitors. Management have to think hard about "question marks" - which ones should 4/18/12 invest in? Which ones should they they
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Cost Leadership
This is a strategy where a company aims to out-price its competitors by reducing overheads or the fixed costs associated with manufacture and distribution. It requires a focus on the efficiency of production lines and economies of scale. This strategy is employed where customers have the ability to change supplier easily and the products or services are 4/18/12 standardised and well understood by
Differentiation
This strategy is employed where a unique attribute of a product or service is highlighted relative to similar alternatives presented by the competition. It allows a higher price to be charged or a greater ability to command customer loyalty. Differentiation strategy is used where the company sees its key product competencies as a more profitable 4/18/12 advantage than simple cost
Focus
This strategy is aimed at a specific target consumer group, for example cultural, economic, political, geographical or age-related groups. The strategy employs either cost focus (3A) or differentiation focus (3B) within its target audience, and in this sense it is a narrower application of one of the aforementioned strategies. Saga holidays, for 4/18/12 example, focus on a specific group of
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Explanation
Rivalry: Rivalry is the means through which competitors fight for position by using tactics such as price, competition, advertisement battles, new product introduction, to lower the profits of competitors in the industry. Bargaining power of customers: It is the extent to which customers are successful in forcing prices down, or securing high quality or more service at the same price. Customers tend to be powerful when the 4/18/12 quantities they purchase form a large
Explanation
Bargaining power of suppliers: It is the extent to which suppliers can exert power on manufacturers in the industry, by threatening to either increase the prices or reduce the quality of goods and services. The greater the bargaining power of suppliers, the lower the profit potential for businesses operating in the industry. Threat of new entrants: It is the ease with which new competitors can enter the same product or service markets. New 4/18/12 entrants have substantial resources and
Explanation
Threat of substitutes products or services: It implies the extent to which business in other industries, offer substitute products, for an established product line. The availability of substitute products or services thus reduces the profit potential in the industry
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End of Presentation
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