BOSTON CONSULTANCY GROUP

Boston Consulting Group (BCG) Matrix is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates. According to this matrix, business could be classified as high or low according to their industry growth rate and relative market share. Relative Market Share = SBU Sales this year leading competitors sales this year. Market Growth Rate = Industry sales this year - Industry Sales last year.

GRAPHIC REPRESENTATION
1.Stars Represent business units having large market share in a fast growing industry. Generate cash but because of fast growing market require huge investments to maintain their lead. 2.Cash Cows Represents business units having a large market share in a mature, slow growing industry. Require little investment and generate cash that can be utilized for investment in other business units.

GRAPHIC REPRESENTATION(CONT.)
3. Question Marks Represent business units having low relative market share and located in a high growth industry. Require huge amount of cash to maintain or gain market share. 4. Dogs Represent businesses having weak market shares in lowgrowth markets. They neither generate cash nor require huge amount of cash.

LIMITATIONS OF BCG
1. BCG matrix classifies businesses as low and high. 2.Market is not clearly defined in this model. 3. High market share does not always leads to high profits. 4. Growth rate and relative market share are not the only indicators of profitability 5. This four-celled approach is considered as to be too simplistic.

APPLICATION OF BCG IN ITC

The BCG Matrix for ITC Ltd.

Stars Hotels Paperboards/ Packaging. Agri business. Cows FMCG-Cigarettes ? FMCGSafety Matches Incense Sticks Others Dogs

Business wise Sales data

Business/ Year Growth Value (Rs in Crore) % 2012 2010 10002.54 9230.27 563.39 304.16

FMCG-Cigarettes 8.4 FMCG-Others 85.2

Hotels
Agribusiness Paper & pkg. Net revenue

124.1
4.2 24.9 12.99

577.25
1780.07 1565.31

257.53
1708.77 1253.29

13349.58 11815.04

Market share of ITC Ltd.

Outstanding market leader Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. Gaining market share Businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards.

Segment Cigarettes Paper & Packg.

Dominance 70% share Packaging board No. 1 in Asia

Contribution % Revenue PBIT 77.0% 87.7% 7.3% 7.0% 10.7% 3.7%

Agri 1of the largest xporters business from India

Hotels
FMCG (Others)

ITC Group ranks No.2

20% share of greeting cards market, 'Aashirvaad' atta is No.1 in branded segment

4.3%
4.4%

5.4%
-7.5%