Boston Consulting Group (BCG) Analysis
The BCG Analysis, developed by the Boston Consulting Group, come across at diverse divisions of a business unit at portfolio basis through the lenses of market development and cash making. BCG shaped a matrix based on understanding of growth development and cash making as defined below in pictorial manner.
As per the matrix, business segments can be segregated as:
Stars: hese are divisions in a business where market is increasingswiftly and company is havinga huge market share. This divisioncreatedgrowing cash for the business with the passage of time. Cera Sanitary ware could be a good example of “star” with large market share, continuous development and noteworthy cash making.
Cash Cows: These are divisions which entail low cash mixture for investment to upholdmarket shares because of low developmentforecast but at the same time progressivelycreate cash for the company from the recognized market share. Navneet Publications, which is into the business of books and notebooks, could be a good example of “cash cow”. The industry grows at anunsurprising and stable rate each year. With strong brand name, well penetrated distribution channel, ready market, and strong balance sheet, all that the company needs to do is change the content every time some syllabus changes and obtain the benefits in the form of steady cash flows. Close up is another example of the cash cow.
Question Marks:Business divisions in a fast mounting market, but having low market share. Theright approach and investments can help the market share of the business grow, but they also run the risk of consuming cash in the course of growing market share and in the end turning out to be not enough cash generating. Tata Nano can be considered as an example of a question mark, which did not succeed; whereas, Bajaj Pulsar may be measured as an example of a question mark product which succeeded.
Dogs:Business divisions, which have slow growth rates and serious competitive dynamicswhich lead to low generation of cash are branded as Dogs.BCG matrix provides attractive sense of the businesses/segments in terms of their attractiveness for the investors.