A portfolio of products can be analysed using the boston group consulting matrix. If you work as a productbrand manager in a medium to large scale organization, chances are your company has a number of products in its portfolio. Whilst the ge mckinsey matrix is more complex, it overcomes some of the disadvantages of the bcg matrix, including. In developing the growthshare matrix, the boston consulting group bcg created arguably the most popular management technique ever. The paper concludes by discussing the negative impact of following not. It is the most renowned corporate portfolio analysis tool. Using the matrix requires that each businesses unit owned by a firm be categorized along two dimensions. Strengthening the portfolio analysis syed ferhat anwar1 sharif rayhan siddique2 shakil huda3 abstract. Bcg growthshare matrix see figure 1 happens to be one of many of bcg s strategic concepts the organisation developed in the late 1970s, and is being taught at leading business schools and. Bcg matrix also referred to as growthshare matrix is a portfolio planning model which is based on the observation that a companys business units can be classified into four categories. This is equivalent to 525 percent and more aftertax diffe. Oct 30, 2019 unilever, is a consumer goods producer multinational company. Bcg matrix portfolio management based on market share and market growth. Bcg matrix explained smi strategic management insight.
When the bcg matrix was developed, it met a real market need. A range of portfolio matrices have been developed since peter drucker 1964 first developed the concept of a product portfolio. Because of its flexibility in this area, the bcg matrix is often called a portfolio analysis tool. The extended technique incorporates situation arising out of. The boston consulting groups product portfolio matrix bcg is designed to help with longterm strategic planning. The bcg growthshare matrix is a portfolio planning model developed by bruce henderson of the boston consulting group in the early 1970s. Free bcg matrix templates for word, powerpoint, pdf. Boston matrix bcg matrix at the end of the 1960s, bruce henderson, founder of the boston consulting group, bcg, developed his portfolio matrix. To begin with, bcg is the acronym for boston consulting groupa general management consulting firm highly respected in business strategy consulting. Bcg matrix provides a scheme for classifying a companys business according to their strategic needs. The boston matrix product portfolio management explained learn more about the boston matrix model here on the tutor2u website.
The bcg matrix is a wellknown management model for analyzing a companys product portfolio. The ge mckinsey matrix does not only consider growth, it mainly considers market attractiveness. Bcg matrix boston matrix the bcg matrix growthshare matrix is a method that comes from the consulting company boston consulting group bcg, thus the name bcg matrix or boston matrix. Once the firms business units are positioned on the bcg matrix. The growth share matrix or the product portfolio many businesses require far more cash input than they can ever generate. Excellent portfolio management by unilever will see t2 become the future dove or tipton, before naturally becoming a marmite and subsequently another slimfast, but. Strategic attributes and performance in the bcg matrixa. In a laymans language, the art of managing an individuals investment is called as portfolio management.
What is portfolio and portfolio management definition. This article explains the ge mckinsey matrix in a practical way. The composition of the portfolio can be critical tothe growth and success of the company. Bcg matrix provides a scheme for classifying a companys business according to.
Unilever headquarter, is located in london, united kingdom. Portfolio analysis and its potential application to. Guiding strategic decisions and resource allocations rebecca wells university of dayton charles wells university of dayton the academic program portfolio model appm described in this paper is a product portfolio strategic analysis tool customized for universities. Backgroundthe bcg matrix growthshare matrix was created in the late 1960s by the founder of the boston consulting group, bruce henderson, as a tool to help his clients with efficient allocation of resources among different business units. A bcg matrix helps organizations determine which areas of their business deserve more resources and investment. The divisions or products compromise the organisations business portfolio. May 01, 20 bcg matrix or growthshare matrix is a corporate planning tool, which is used to portray firms brand portfolio or sbus on a quadrant along relative market share axis horizontal axis and speed of market growth vertical axis axis. The bcg matrix is used for the evaluation of a organizations product portfolio in. Boston consulting group matrix bcg this technique is particularly useful for multidivisional or multiproduct companies. The bcg model is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. Businesses differed in their performance and strategic attributes, according to the two dimensions of the bcg matrix product life cycle stage growth rate and market share. This paper empirically explores the performance tendencies and strategic attributes of businesses in the four cells of the boston consulting group product portfolio matrix. Consulting group bcg created arguably the most popular management. The boston matrix product portfolio management explained.
Such products hold a huge market share in quite significant share in a quite growing market oakley, 2014. The bcg growthshare matrix diagram and discussion of cash cows, stars, question marks, and dogs. Based on only a limited amount of input data relative market share and market growth, senior executives gained a clear picture of their business portfolio in an increasingly complex environment. Matrix, designed to consider many of the criticisms aimed at portfolio matrices, yet. Activities of bcg matrix bcg matrix provides simply twodimensional analysis on management strategic business units sbus. Henderson for the boston consulting group in 1970 to help corporations to. Bcg matrix boston matrix strategy training from epm. An analysis on bcg growth sharing matrix munich personal.
Business portfolio analysis matrix strategic management. Over time they will become much larger and also large net generators of cash. However, recent criticisms have been leveled at their inaccuracy and inability to include flexibility. To ensure longterm value creation, a company should have a portfolio of products that contains both highgrowth products in need of cash inputs and lowgrowth products that generate a lot of cash. The procedure for creating the matrix is described and a detailed. A business with a range of products has a portfolio of products. It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position relative market share. Bcg matrix is use to prioritize opportunities and get the best return or company effort. Portfolio management meaning and important concepts. In this study, this managerial tool is applied to the apparel sector and four wellknown italian fashion companies are analyzed. Boston consulting group bcg matrix is a four celled matrix a 2 2 matrix developed by bcg, usa. The boston matrix is a popular tool used in marketing and business strategy.
Portfolio planning and corporatelevel strategy mastering. Bcg matrix bcg boston consulting group is produced by the harvard business school, portfolio management based on market growth. Portfolio management definition, objectives, importance. However, owning a product portfolio poses a problem for. The bcg matrix, otherwise known as the growth share matrix, is a portfolio management framework that helps companies decide how to strategically maanage a portfolio of products or services. Bcg matrix is a framework created by boston consulting group to evaluate the strategic position of the business brand portfolio and its potential. They include brands which are quite much at their market peak. Strategic analysis through the general electricmckinsey. It plots a companys offerings in a four square matrix, where. The growthshare matrix aka the product portfolio matrix, boston box, bcg matrix, boston matrix, boston consulting group analysis, portfolio diagram is a chart that was created by bruce d. The bcg matrix also known as the boston consulting group analysis, the growthshare matrix, the boston box or product portfolio matrix is a tool used in corporate strategy to analyse business units or product lines based on two variables. Using the boston consulting group portfolio matrix to.
How to invest the bcg matrix the boston consulting group matrix is a well known tool for portfolio analysis. Pdf bcg matrix, swot analysis and porter model sidhant. The experience curve is the means of measuring probable competitive cost differentials. The bcg matrix aka boston matrix is a popular tool which can help a business analyze its portfolio. The bcg matrix was developed by the boston consulting group. Download file pdf portfolio analysis and its potential application to. The growth share matrix or boston consulting group. This paper critically assesses the boston consulting group bcg matrix and indicates how the matrix can be improved to solve portfolio problems. The bcg is a private management consulting company which has. Bcg matrix framework for product portfolio management. The boston matrix is introduced and explained in this. After reading you will understand the basics of this powerful marketing strategy and product portfolio analysis tool what is the ge mckinsey matrix. A good value creation strategy depends on a clear portfolio strategy and active portfolio management.
In the early 1970s the boston consulting group developed a model for managing a portfolio of different business units or major product lines. The bcg matrix or the growth share matrix in its essence is a portfolio management framework that enables companies to manage their product lines. 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. Created by the boston consulting group, the bcg matrix also known as the boston or growth share matrix provides a framework for analyzing products according to growth and market share. The premise of the bcg matrix is that all products or brands can be classified as one of the following categories, based on its market share. How to use the bcg matrix smart insights digital marketing. The ge mckinsey matrix bears a strong resemblance to the bcg matrix. Portfolio management in oil and gas building and preserving optionality 1 change is the new constant in an increasingly complex and uncertain environment, oil and gas companies worldwide are facing relentless pressure to improve returns even as they encounter strong headwinds. Pdf bcg matrix portfolio management based on market.
The portfolio is a collection of investment instruments like shares, mutual funds, bonds, fds and other cash equivalents, etc. The bcg matrix was developed by the boston consulting group in 1970 and is a planning tool that graphically represents a companys portfolio of products and services in the hope that the company will decide which products it should keep, sell, or invest in. It is the most famous and simple portfolio planning matrix. A few businesses generate far more cash than they can pro. Noble international journal of business and management research, vol. After the introduction of the bcg growthshare matrix in. Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers. By placing market growth rate on the vertical axis and relative market share on the horizontal axis, a fourblock matrix can be developed, as shown in exhibit 12. The bcg matrix or growth share matrix is a great portfolio management framework. Noble international journal of business and management research 4 figure 1. The paper describes and explains the bcg portfolio matrix model, applying the model to several divisions of a small liberal arts university. The boston matrix is a model which helps businesses analyse their portfolio of businesses and brands.
The concept is based on four quadrants in which a companys strategic business units sbu or productsbrands are classified. However, owning a product portfolio poses a problem for a business. The boston consulting group bcg matrix is the bestknown approach to portfolio planning figure 8. Portfolio management is the art of selecting the right investment tools in the right proportion to generate optimum returns with a balance of risk from the investment made. Strategic analysis of unilever publish your masters. This include the high market share brands with high market growth. Devised as a portfolio planning tool, or corporate planning tool, the bcg growthshare matrix was first conceived by bruce henderson of the boston consulting group back in the 1970s. It helps a company think about its products and services and make decisions about which it should keep, which it should let go and which it should invest in further. Bcg matrix analysis helps the company to allocate resources and is used as an analytical tool in brand marketing, product management, strategic management and portfolio analysis. The m atrix is established in 1970 by bruce d oolin henderson 1915 1992 for the bcg in boston. The unilevers business portfolio management in a bcg matrix oakley, 2014. It has since been used as a portfolio planning and analysis tool for marketing, brand management and strategy. G matrix, method used in the strategic decisional processes to streamline.
The bcg matix contains the following four components. The boston consulting group bcg is a renowned organization. Ford motor companys brand can be measured and valued properly. Edraw can also convert all these templates into powerpoint, pdf or word templates. Portfolio management presents the best investment plan to the individuals as per their income. We are managing our businesses with a laserlike focus on. As such, this working paper proposes the use of the family portfolio. Given the competitive environment for consumer demand, it is important today for organizations to utilize. Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In addition to market share the ge mckinsey matrix also considers the strength of a business unit.
Apr 04, 2016 learn more about the boston matrix model here on the tutor2u website. So, when a business has a portfolio of products it. To answer this question, the boston consulting group bcg matrix also known as the boston matrix is a very useful marketing tool in understanding portfolio management. Bcg matrix of unilever pdf unilever, is a consumer goods producer multinational company. The boston consulting group developed a matrix for assessing the product lines of a company, called the bcg matrix. It is based on the observation that a companys business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name growthshare. Boston matrix product portfolio model business tutor2u. Using the boston consulting group portfolio matrix to analyze.
No business has an infinite supply of money to invest. Pdf bcg matrix portfolio management based on market share. Use our free template to analyze and prioritize your product. Abstract the bcg model is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. G matrix is considered the oldest, the simplest and the most known matrix of analysis of the portfolio of activities. So, when a business has a portfolio of products it must decide how to allocate investment. This article, the fourth in the series, examines the growth share matrix, a portfolio management tool developed by bcg founder. A portfolio simply means the range of products sold by a business. One of the bestknown portfolio tools is the bcg matrix. Using the boston consulting group portfolio matrix to analyze management of a business undergraduate student program at a small. Bcg stands for boston consulting group, a wellknown consultancy company that developed the bcg matrix in the 1970s. The bcg matrix is used for the evaluation of a organizations product portfolio in marketing and sales planning.
Based on qualitative research, this paper aims at identifying the causes of rise and fall of the b. Bcg boston consulting group matrix templates downloads. Reeves martin, senior partner and managing director of the boston consulting group, said that nearly 50. It is considered as the oldest and perhaps most renowned of all the matrices. Bcg growthshare matrix strategic management insight.
Expanding the bcg concept abstract the use of portfolio matrices has been of great popularity since their first outing in the 1960s. Edraw is used as a bcg matrix software coming with readymade bcg matrix templates that make it easy for anyone to create beautiful bcg matrix. The growth share matrix is directly derived from the experience curve. Industry growth rate is in the vertical axis, and relative market share is in the horizontal axis. A difference in market share of 2 to 1 should produce about 20 percent or more differential in pretax cost on value added. Bcg matrix framework for product portfolio management free. Strengthen ing the p ortfolio analysis syed ferhat anwar1 sharif rayhan siddique2 shakil huda3 abstract.
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