BCG Matrix Analysis of

Reliance

Presented by Nwankwo
Emmanuel
 Main Subsidiaries
• Reliance Telecommunication
Limited (RTL)
• Reliance Globalcom
• Reliance Communications
Infrastructure Limited (RCIL)
• Reliance Big TV Limited
• Reliance Infratel Limited(RITL)
 Why BCG Matrix
Three techniques most widely used and most referenced in the business literature:
BCG-Growth Share Matrix
GE-McKinsey Industry Attractiveness-Business Strength Matrix
Arthur D. Little Life Cycle Approach
The BCG matrix method 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.
 ?
Stars Question Marks

$
Cash Cows Dogs
 4 categories in a portfolio of a
company
1. Stars (=high growth, high market 2. Cash Cows (=low growth, high
share) market share)
• use large amounts of cash and are • profits and cash generation
leaders in the business so they should be high , and because
should also generate large
of the low growth,
amounts of cash.
investments needed should
• frequently roughly in balance on
net cash flow. However if needed be low. Keep profits high.
any attempt should be made to • Foundation of a company.
hold share, because the rewards
will be a cash cow if market
share is kept.
 4 categories in a portfolio of a
company (cont’d)
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.
• divest, but occasionally hold
for possible strategic
repositioning, which can lead
to question mark or cash cow.
4. Question Marks (= high growth, low
market
worstshare)
cash characteristics of all,
•
because high demands and low
returns due to low market
share.
• generate insufficient cash,
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.
 The two dimensional analysis of BCG Matrix
The BCG or Growth-Share matrix imposes a two-dimensional analysis on
management of Strategic Business Units:
a comparative analysis of business strength and an assessment of the
environment.
The business strength measure is the business's Relative Market Share.
The environmental measure is the Market Growth Rate.

Formulas for Relative Market Share and Market Growth Rate:

 Indian mobile mkt 2010
Service Provider Subscriber (Mn) Market Share (%) Relative
Market Share
Bharti Airtel 130.61 21.73 1.243
Reliance Com + RTL 105.15 17.49 0.805
Vodafone Essar 103.75 17.26 0.794
BSNL 70.62 11.75 0.541
Tata Teleservices 67.88 11.29 0.520
IDEA 65.28 10.86 0.500
Aircel 38.46 6.40 0.295
MTNL 5.12 0.85 0.039
Uninor 5.02 0.84 0.039
Sistema Shyam 4.21 0.70 0.032
Loop Mobile 2.89 0.48 0.022
STel 1.11 0.19 0.009
Videocon 0.65 0.11 0.005
HFCL Infotel 0.327 0.06 0.003
Etisalat/Allianz 0.004 0.00 0.000
overall telecom operator market share
 India Wireless Operators Revenue Market Share

•Bharti Airtel  32%

•Vodafone 20.8% [Consistent]
•Idea Cellular 12.7% [Moderate Growth, but commendable]
•Reliance Communications -11.7% [ Losing to competition ]
•BSNL 9.3% [ Losing to competition]
•Tata Tele [ Gaining on the back of DoCoMo’s innovative strategies
•Aircel 4%
India Wireless Connection (2010)
Telecom Market Share Relative
Operator Market
Share
Bharti Airtel 32.0% 2.735
RCOM 11.7% 0.366
Vodafone 20.8% 0.650
BSNL 9.3% 0.291
IDEA Cellular 12.7% 0.397
Tata 8.5% 0.266
Teleservices
Aircel 4.0% 0.125
 Top CDMA operators in India

Telecom Marke Relative

Operator t Market
Share Share
(in %)
MTS (SSTL)1.0% 0.017

RCOM 56.0% 1.514

MTNL 0.0% 0.000
BSNL 6.0% 0.107
HFCL 0.0% 0.000
Tata 37.0% 0.661
Teleservice
s
BCG Analysis for Reliance Communications
20%-

18%-

16%-

14%-

12%-

10%-

8%-

6%-

4%-

2%-

0%-
10x 8x 7x 5x 3x 1x .7x .5x .4x . 3x .2x .1x
Strategy for substantial growth

?
Stars Question Marks

$
Cash Cows Dogs
Cash reinvestment

Stars Question Marks

$
Cash Cows Dogs
 BCG Matrix
(Three Paths to Success)
• Continuously generate cash cows and use the
cash surplus from the cash cows to invest in
the question marks that are not self-
sustaining.

• Reinvest in Stars, as the market matures, stars

will degenerate into cash cows and the
process will be repeated.

• Segment the market for dogs, nurse the dogs

to health or manage for cash.
Three Paths to Success

Stars Question Marks

$
Cash Cows Dogs
 BCG Matrix
(Three Paths to Failure)
• Over invest in cash cows and under
invest in question marks.

• Under invest in the stars.

• Over milk the cash cows.

Three Paths to Failure

Stars Question Marks

$
Cash Cows Dogs
The 4 Portfolio Strategies
 limitations of the BCG Matrix

1. High market share is not the only success factor

2. Market growth is not the only indicator for attractiveness of a market
3. Sometimes Dogs can earn even more cash as Cash Cows
4. How growth and share are measured highly affect the overall analysis.
5. It does not provide sufficient direction for most effective ways to
implement the investment strategies.

Recommendation:

Either these SBUs should receive enough investment funds to

enable them to achieve a real market dominance and become a
cash cow (or star), or otherwise companies are advised to disinvest
and try to get whatever possible cash out of the question marks that
were not selected.
 references
1. http://www.bcg.com/about_bcg/history/history_1968.aspx
2. http://www.rcom.co.in
3. http://www.simonbrandon.com
4. http://www.telecomindiaonline.com/india-telecom-growth-and-subscribers-2010.html
5. http://www.thehindubusinessline.com/2010/05/22/stories/2010052252590700.htm.
6. http://www.businessweek.com/globalbiz
7. http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/740/PRelease28June10
.pdf
8. http://www.ibef.org/industry/telecommunications.aspx.
9. http://en.wikipedia.org/wiki/Reliance_Communications
10. http://economictimes.indiatimes.com/News/News-By-Industry/Telecom/GSM-CDMA-
players-maintain-subscriber-growth-momentum/articleshow/4281903.cms
11. Carl W. Stern, George Stalk - Perspectives on Strategy from The Boston Consulting
Group