Matrix and Model

 BCG Matrix

 GE (nine Cells matrix)

 Porter’s five force model

BCG Matrix (First implementation in 1969 by
Boston Consulting Group)

Relative Market Share

High Low

High

Product
Sales
Growth
Rate
Low
 Strategy Recommendations

 Investment
Further Growth
Maintain Market Position

 Cash flow
Self-sustaining:Fund their own growth
Require funds from other SBUs (Cash Cows)

 Assure the future of the company

 Grow into Cash Cows
 Strategy Recommendations

 Investment
Maintain market share
Maintain capacity

 Cash Flow
Positivecash flow
Provides funding to support Stars and
“?”
 No potential for profit growth
 Strategy Recommendations

 Investment
Increase market share
Selectively develop into Stars

 Cash Flow
Require funds from other SBUs (Cash
Cows)
 Unrealized future opportunities
 Strategy Recommendations

 Investment
Divestiture
strategy
Reduce capacity to free up resources

 Cash Flow
Goalof Positive Cash Flow
Negative Cash Flow = Divestment

 No real growth opportunities

 The BCG Matrix for ITC Ltd.
Stars ?
Hotels FMCG- Others
Paperboards/
Packaging.
Agri business.

Cows Dogs
FMCG-Cigarettes Maybe ITC Infotech.
 GE (nine cell matrix)
Classification
Business Strength
Strong Medium Weak
5.00
High
Market Attractiveness

3.67
Medium

2.33
Low

5.00 3.67 2.33 1.00

 Market Attractiveness

 Annual market growth rate

 Overall market size
 Historical profit margin
 Current size of market
 Market structure
 Market rivalry
 Demand variability
 Global opportunities
 Business Strength

 Current market share

 Brand image
 Brand equity
 Production capacity
 Corporate image
 Profit margins relative to competitors
 R & D performance
 Managerial personal
 Promotional effectiveness
 Overview
High Business Strengths Low

High

Attractive
Market Attractiveness

Moderate
Attractive

Unattractive

Low
 TATA

 TATA

• IT (Information Technology) : TCS

• Consumer Durable : Automobiles,
Titan etc.
•Textiles : Tata Fabrics, West Sides etc
 GE Matrix For TATA
High Business Strengths Low
High
IT
Market Attractiveness

Consumer
Durables

Low Textiles
 BCG v/s GE
BCG GE
Market Growth Market
Attractiveness
Market share
Market strength
4 cell 9 cell
Multi Products Multi Business
Units
Primary tools Secondary tools
 Basis of the BCG Portfolio
Matrix
Mature Phase “Cash
Sales Volume

Cow”

Growth Phase “Star” Decline Phase “Dog”

Introductory Phase “?”

Time
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  Threats of Substitutes = Elasticity of
Demand
 Buyers propensity to substitute
 Buyers switching cost
 Perceived value of differentiation
 Ex: FMCG products, Mobile services

 New Entrant =Competitors= Perfect

Competition
 Entry barriers (patents, rights )
 Learning Curve
 Brand Equity
 Capital Requirement
 Government policies
 Standardization & switching cost
 Expected retaliation from incumbent
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  Industry competition or rivalry
No. of competitors
Industry growth rate
Economics of scale
Exit barriers
Sustainable competitive advantage thru improvisation

 Bargaining power of Suppliers

Switching cost
Degree of differentiation of inputs
Presence of substitute inputs
Groupism
Forward Integration

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  Bargaining Power of Buyers

Buyer to firm concentration ratio

Buyers information availability

Switching cost

Prospects of backward integration

Buyer’s purchasing sensitivity

Availability of substitute products

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