The Analysis Of Bcg Matrix Marketing Essay

The depth psychology Of Bcg Matrix Marketing EssayIn line of reasoning, in that location atomic number 18 times when an geological diversityation needs to expand or change the securities industry or field. There argon tons of estimations near things unrivalled could do. However, it is hard to determine which idea will be the best. Therefore, st valuegic securities industrying planning in like mannerls will be important and beneficial, such as BCG ground substance, Ansoff Matrix or Porter 5 forces and so forth, to ser wrong of process unitary to evaluate the options and decide on the one that suits the organization and situation best. As a result, it gives the best return on the considerable investment that an organization will need to make.Strategic grocery storeing guidance involves the process of deciding the foodstuffing strategy to fol little and to ensure it is followed correctly, in assure to fight against its rivals successfully. In an attempt to assist st rategic marketing process, a turn of events of incompatible strategic marketing planning tools fuck off been created. Igor Ansoff, Michael Porter and the capital of Massachusetts Consulting Group have the best known models in the field of business. Strategies atomic number 18 veritable check to the objectives within an organization. The establishment of the objectives will normally vex a difference among what had been achieved and what target needs to be met. The uses of strategies argon to illustrate how this gap is going to be solved, and objectives met. Strategic Management is a systematic approach to the major and increasingly important responsibility of full general management to position and relate the firm to its environment in a way which will assure its continued success and make it obtain from surprises(Ansoff, 1990).This paper, it will condense on the BCG Matrix, which is one of the models like PESTEL, SWOT, Ansoff hyaloplasm, Gap abridgment, GE matrix and Po rter 5 forces. It is often used to assess the pelf of business or resource allocation and divestment decisions by the marketers. The content of this treat will explain and analyse the application of BCG Matrix with some examples. both(prenominal) of the other analytical tools will also be mentioned in this work.Analysis of BCG matrixBCG Matrix is developed by Bruce Henderson of the Boston Consulting Group in the year of 1968 (BCG, 2012). It is one of the Portfolio analyses. It is used to determine high or low per inventers of businesses or mathematical products depending upon their market growth rate and relative market share. The idea behind this Matrix is that the higher the market share or a purify market grows of the product, it is better for the organization. There are four categories in BCG Matrix, which are Stars, Cash cow, incertitude mark and Dogs (Philip.K, et al., 2008). Furthermore, horizontal axis is disposed for relative market share position and vertical axis f or perseverance growth rate (Philip.K, et al., 2008). Planners are to classify their products or businesses into the four categories according to their position on the matrix. It provides a framework for analysis and comparison of products or businesses for international companies with diverse products. The advantages of using BCG Matrix are to have the world power to prioritise a business or product portfolio it is to know what products are doing well and what are non performing. It provides a useful insight into the say-so opportunities and problems associated with a particular product. It is often a convenient graphical form that is easily understood by the staffs who are the decision makers. Taking draw close political party (table 1.0) as an example, prepared dishes and cooking aids, PetCare and confectionery would be classed as Cash cow, beverage products would be a star, whereas pharmaceutical products as Question mark. Water products would or so likely to be classed as a Dog. The BCG matrix is linked to the Product life cycle. Introduction, growth, maturity and crash, it represents Question marks, Stars, Cash cattle and quest laters in the BCG matrix respectively. Referring back to the table 1.0, it shows that PetCare and Confectionery products are at the late maturity period in the Product life cycle. Therefore, approach must come out with refreshed and better ideas, in order to prevent or slow down the product from move on decline in sales, or perhaps becoming a Dog. However, it is expected that different product will have different life cycle. Therefore, some stars with con life cycle will be better to harvest kind of than to commit further investment (Graeme. D and John. E, 2007). In a multinational confederacy, it is essential for its products to have high and low growth rate, such as stars to assure future of the company, money cows that supply money for further growth and converting questions marks into stars, it is be campaig n a balanced product portfolio will tap organisation revenue. As mentioned by Bruce Henderson Only a diversified company with a balanced portfolio stand use its strengths to truly capitalize on growth opportunities(BCG.P, 2010). The benefits of high growth products include high return at the cost of wide ranging resource to market. For low growth rate products, its benefits are customers familiarity with the product, thus, lesser cost for marketing and a constant source of revenue.With the help of BCG matrix, it can be identified how organization cash resources can be used to maximize a companys future growth and profitability. It provides the criteria for determining which products or business one should invest in, hold, harvest or divest. However, the BCG matrix is tho useful to a certain extent, and its limitation makes it increasingly less accurate. The BCG matrix was created in 1970s therefore, it is expected to be less accurate in the true society especially during periodi c recession (Blythe, 2006). The situation in the current business market is much more complicated than before. Abell and Hammond recommended that it should carry two more practical strategies, barricade and Cut into the Matrix (Abell, et al., 1979). Freeze basically stopping all investment and do not plan new ones during a recession or crisis, and cut means that carving services by reducing some activities. The model of BCG matrix disapprove organizations to invest in businesses with a less than 10% growth rate in a year. During the hard time, more companies will not have a growth of 10%.Thus, it is not accurate to rely on BCG matrix during an economic downturn it might create confusion in the companys direction. The connection between market share and profitability is arguable because sometimes low share businesses can be profitable too and vice versa (Babette Craig, 2012). As mention by experts, the markets are difficult to determine with a huge amount of overlaps and comple x segmentation (Macmillan. H, 2000). There are many portfolios in real businesses consist of a high percentage of dog businesses and few star businesses (Macmillan. H, 2000). Thus, portfolio analysis is criticized for offering little help in these circumstances. Growth rate and market share are only one aspect of industry attractiveness and overall war-ridden position respectively. The market definition and measurement are not perfect as there are some problems faced (Wensley. R, 1981). Hence, poor definition of business market might lead to some misclassification, such as dogs, become cash cows. Moreover, the matrix generally focus on the investment in current products of a company, thus, it might neglect alternative investment such as setting new product lines or investing in new technology which could be better than investing in current products or services. The matrix also ignores the potential competitive responses. When an organization tried to realise their market shares a nd support growth, it is likely to get responses from the competitors as retaliation (Blythe, 2006). Furthermore, it is too simplistic and general just to use high and low to form four categories, which lead to a low accuracy analysis. In addition, the matrix is based on cash revenue, whereby profit should be a better phrase to use as it means the financial gain after all the deduction of expense from the revenue. General electric (GE) matrix developed by Mckinsey is a similar matrix that overcomes some of the disadvantage of BCG matrix. It uses market attractiveness instead of market growth rate which included a broader range of factors compare to growth rate. It also knock backd market share into competitive strength which assessed for each one SBU with competitive positioning (Kozami,2002). However, this paper will not go into the details of GE matrix due to the words constraint.With the evident limitations of BCG Matrix, it is not recommended to use the matrix alone. It is an portfolio analysis tools which focus on the home(a) of an organization, thus, it is always best to use with foreign analysis tools such as SWOT. SWOT will look at matters like the strength and weakness of the company, and the opportunities and threats that might occur. It is used to measure the degree of strategic fit between the organization and its environment. As a combination with BCG matrix, BCG matrix will focus on the internal factors and SWOT will be focusing on the external factors, therefore, the O T of SWOT will be mainly suggest to use alongside with BCG matrix. For example, with the O T, the organization can actualise the opportunities and threats in nestle such as an increase in health conscious society (PRweb, 2012) provide a huge opportunity for Nestle to produce more health care products and raw ingredient prices for coffee bean production are increasing will affect the profit gross profit as threat (Christopher, 2011). If only BCG matrix is used, the pla nners will miss the external factors like the society or raw materials pricing which might cause problems to the organization. According to experts, it mentioned that a mixture of two or more analysis tools is recommended for a holistic view of strategic scenario (Wind, et al, 1983). Therefore, it is essential for an organization to set out the internal and external factors to strengthen the company.ConclusionThis paper focused on the analysis of BCG matrix, it evaluated the usefulness and weakness of the model. Recommendations also had been advised for further enhancement of the usefulness of the model. Although BCG Matrix has a number of limitations, it is still one of the most popular portfolio planning tools used by big companies with diverse products. It can measure the growth rate and relative market share of each sector in a table form. The table shows a opened understanding on how an organization is performing. With a simple and clear understanding, the company can develo p strategies to deal with the sectors, and achieve the organizations aimed goals and objectives. It is also useful for low-down businesses to survey the companys market share and growth, in relation to relative market to see how products are performing. Lastly, BCG Matrix is not a tool to replace management decision or vision. It is a tool to help managers or planners to evaluate their strategy alternatives together with other analysis tools, such as SWOT. It is a tool with flaws, but still suffices to be a nice tool for portfolio analysis. ReferencesAbell, Derek, and Hammond John S, 1979. Strategic market planning problems and analytical approaches. maiden ed. New Jersey Englewood Cliffs.Ansoff, Igor, 1990. Implanting Strategic Management. second ed. New York Prentice dorm .Babette, E, 2012. Analysis Without Paralysis 12 Tools to Make Better Strategic Decisions. 2nd ed. New Jersey Financial Times.BCG. 2012. BCG History. 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Available at http//www.sciencedirect.com.libproxy.ncl.ac.uk/science/article/pii/0167811694900361 Accessed 04 November 2012.Wind, Young, Mahajan, Vijay and Donald, Swire., 1983. An Empirical Comparison of standardised Portfolio Models. Journal of Marketing, Online. 47(2), pp89-99. Available at http//web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=247ec63a-e348-45c1-a7b8-e1819fa6169a%40sessionmgr11vid=2hid=21 Accessed 22 November 2012.