M&M Bcg Matrix.Docx
| GROWTH RATE | TOP COMPANY(Rs crore) | COMPANY SHARE(Rs crore) | RELATIVE MKT SHARE | LOG | IDEA CELLULAR | 11.00 % | 3629.61 | 3629.61 | 1 | 0 | ADITYA BIRLA MONEY | 15% | 2797.13 | 25.51 | 0.1402 | -2.04 | GRASIM INDUSTRIES LTD. | 6.2% | 58288.00 | 964.47 | 0.1898 | -1.78 | HINDALCO | 62.7 | 5178.25 | 5718.25 | 1 | 0 |
Cash Cows
Dogs
Star
Question Mark
BCG matrix has 2 dimensions: market share and market growth while divided in Four categories. Placing products in the BCG matrix results in 4 categories in a portfolio of a company:
1. Stars (=high growth, high market share)
- use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.
- frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept.
2. Cash Cows (=low growth, high market share)
- profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high
- Foundation of a company
3. Dogs (=low growth, low market share)
- avoid and minimize the number of dogs in a company.
- beware of expensive ‘turn around plans’.
- deliver cash, otherwise liquidate
4. Question Marks (= high growth, low market share)
- have the worst cash characteristics of all, because high demands and low returns due to low market share
- if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.
- either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash
Limitations are:
* The assumption that cash flow will be determined by a product’s position on the matrix is weak. Some stars will show a healthy positive cash flow as will some dogs in markets where competitive activity is low. * Treating market growth rate as proxy
Cash Cows
Dogs
Star
Question Mark
BCG matrix has 2 dimensions: market share and market growth while divided in Four categories. Placing products in the BCG matrix results in 4 categories in a portfolio of a company:
1. Stars (=high growth, high market share)
- use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.
- frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept.
2. Cash Cows (=low growth, high market share)
- profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high
- Foundation of a company
3. Dogs (=low growth, low market share)
- avoid and minimize the number of dogs in a company.
- beware of expensive ‘turn around plans’.
- deliver cash, otherwise liquidate
4. Question Marks (= high growth, low market share)
- have the worst cash characteristics of all, because high demands and low returns due to low market share
- if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.
- either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash
Limitations are:
* The assumption that cash flow will be determined by a product’s position on the matrix is weak. Some stars will show a healthy positive cash flow as will some dogs in markets where competitive activity is low. * Treating market growth rate as proxy