Strategic Management CIA:

BCG Matrix Of
Das Auto.

Devesh Sharma
Rhea Raj
5BBA-B
1411550 & 1411545

To create a BCG matrix, businesses gather market-share and growth-rate data on

their business units or products. One large square is drawn and is divided into four
equal quadrants. Along the top of the box, a market share or cash generation is
written, and a growth rate or cash use is written down the left side. On the top left is
high market share, and low market share is on the left. On the left-hand side, high
cash use is at the top and low cash use or growth rate is at the bottom.
Within the diagram, "stars" go in the upper-left quadrant, and "question marks" are
put in the upper-right square. At the bottom, "cash cows" go on the left, and "dogs"
are placed on the right. The diagram visually shows that stars have high market share
and a high growth rate, while question marks have low market share and a high
growth rate. On the bottom, cash cows have a low growth rate but a high market
share, and dogs have a low market share and a low growth rate.

The following ideas apply to each quadrant of the matrix:

Stars: The business units or products that have the best market share and
generate the most cash are considered stars. Monopolies and first-to-market
products are frequently termed stars. However, because of their high growth
rate, stars also consume large amounts of cash. This generally results in the
same amount of money coming in that is going out. Stars can eventually
become cash cows if they sustain their success until a time when the market
growth rate declines. Companies are advised to invest in stars.

Cash cows: Cash cows are the leaders in the marketplace and generate more
cash than they consume. These are business units or products that have a high
market share, but low growth prospects. Cash cows provide the cash required
to turn question marks into market leaders, to cover the administrative costs of
the company, to fund research and development, to service the corporate debt,
and to pay dividends to shareholders. Companies are advised to invest in cash
cows to maintain the current level of productivity, or to "milk" the gains
passively.

Dogs: Also known as pets, dogs are units or products that have both a low
market share and a low growth rate. They frequently break even, neither
earning nor consuming a great deal of cash. Dogs are generally considered
cash traps because businesses have money tied up in them, even though they
are bringing back basically nothing in return. These business units are prime
candidates for divestiture.

 Question marks: These parts of a business have high growth prospects but a
low market share. They are consuming a lot of cash but are bringing little in
return. In the end, question marks, also known as problem children, lose
money. However, since these business units are growing rapidly, they do have
the potential to turn into stars. Companies are advised to invest in question
marks if the product has potential for growth, or to sell if it does not.

As BCG founder Bruce Henderson wrote in 1968, "all products eventually become
either cash cows or pets [dogs]. The value of a product is completely dependent upon
obtaining a leading share of its market before the growth slows."

Once a company plots out its matrix, it can begin to further analyze its products'
potential.

Das Auto.
The Volkswagen Group with its headquarters in Wolfsburg is one of the
worlds leading automobile manufacturers and the largest carmaker in
Europe. In 2013, the Group increased the number of vehicles delivered to
customers to 9.731 million (2012: 9.276 million), corresponding to a 12.8
percent share of the world passenger car market. In Western Europe,
almost one in four new cars (24.8 percent) is made by the Volkswagen
Group. Group sales revenue in 2013 totaled 197 billion (2012: 193
billion), while profit after tax amounted to 9.3 billion (2012: 21.9
billion). The Group consists of 12 brands from seven European countries:
Volkswagen Passenger Cars, Audi, SEAT, KODA, Bentley, Bugatti,
Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles,
Scania and MAN.
Das Auto or better known as the Volkswagen group is a star because of
several reasons such as:
1. Diversification Of Portfolio: Das Auto has 12 automobile brands
under their name; they cater to every possible income segments
with brands starting from Volkswagen itself leading up to Bugatti.
This very diversification has helped them minimize risk, maximize
growth/profitability and also maximize market share.

2. Growth Rate: Das auto as a group has been growing in terms of

profitability year after year and in the year 2012 the sales revenue
amassed to a massive 194 billion and then 197 billion in the year
2013 all because of its diversification.

3. High Market Share: Das auto has ensured that it is a market leader
in the automobile industry by acquiring twelve brands, which cater
to every possible income segment. Das Auto increased the number
of vehicles delivered to customers to 9.731 million (2012: 9.276
million), corresponding to a 12.8 percent share of the world
passenger car market.

4. High Brand Awareness: High market share implies that Das auto is
a well established and is a well-known group in the automobile
industry.

BCG Matrix of Das Auto.

Stars: Volkswagen, Audi- These two brands are both extremely
popular in both Europe and America. They deliver innovative
products to the market every year, with their new model releases.
These two brands sell the most units of all the Volkswagen brands.

Cash Cows: Bentley, Lamborghini- These two brands are similar in

their appeal to the high-end luxury markets. The markets tend to
stay fairly stagnant with little growth, however these high price
vehicles continue to bring in millions every year.

 Question Marks: Seat (Fiat 500)- With the acquisition of SEAT

and the recent relaunch of the Fiat 500 (in the American market),
we have yet to see where this vehicle will go from here. There
environmental and social factors lead us to believe there is a
growing market for vehicles such as this.

Dogs:

Commercial

Vehicles-

With

so

much

commercial

competition, Volkswagen Commercial Vehicles produces quality

vehicles, but it not the market leader by far.

Conclusion
To conclude, Das Auto is one of the most profitable companies in the world due to
several reasons such as Diversified portfolio, strong brand awareness, strong financial
position, creative marketing campaigns and up to date technology for manufacturing.
The group has the opportunity to now start manufacturing electric cars and they also
have to strive to keep updating their existing models and constantly innovate new
ones.