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BCG GE McKinsey Matrix
BCG GE McKinsey Matrix
BCG GE McKinsey Matrix
1
Boston Consultancy Group
Portfolio Matrix 1970s
Fast
Slow
Strong Weak
Fast
Strong Weak
1. The Matrix draws attention to the cash flow, investment characteristics and
financial needs of an organizations separate businesses .
2. The relative positions of different businesses evolve over time. Dogs become
Question Marks, Question Marks become Stars, Stars become Cash Cows and
Cash Cows become Dogs.
4
Boston Consultancy Group
Portfolio Matrix
1. Question Marks: Products or Divisions in QI have low relative market share position
and yet compete in a high growth industry.
Generally the cash needs of these firms are high cash generation is low.
These businesses are called QUESTION MARKS because the organization must decide
whether to strengthen them by pursuing an intensive strategy or to sell them.
2. Stars: QII businesses, STARS, represent the organizations best long run opportunities for
growth and profitability.
These Divisions with high Relative Market Share and a high Growth Rate should receive
substantial investment to maintain or strengthen their dominant positions.
Integration Strategies and Intensive Strategies are most appropriate for these products.
3. Cash Cows: Products or Divisions in QIII have a high relative market share position but
compete in a low growth industry. These CASH COWS generate cash in excess of their needs.
Many of todays cash cows are yesterdays stars.
Cash Cows should be maintained in their strong position as long as possible.
4. Dogs: QIV products or divisions, are known as DOGS. They have low relative market share
and compete in a no growth segment.
Because of their weak internal and external positioning these businesses are often liquidated
or divested
For a Dog, retrenchment can be the best strategy and many dogs have bounced back after
strenuous asset and cost reductions to become profitable.
Boston Consultancy Group
Portfolio Matrix
Slow
Strong Weak
Hold & Maintain Harvest or Divest
Relative Market Share Position (RMSP)
Portfolio Matrix related Strategy
Hold Strategy
To enjoy continued strong Fast
Build Strategy
Fast Stars Question Marks
To grow the business.
Strong Weak
Harvest Strategy
To develop short term cash Fast
flows irrespective of the
Henri Bendel & Mast Industries 517 5 -188 -18.3 0.20 -10
Draw the
BCG Portfolio Matrix
for Limited Brands Inc.
1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
Fast +20
+15 Stars Question Marks
Business Growth Rate (BG Rate)
0 Express
Cash Cows Dogs
-5
Slow - 20
Strong Weak
Relative Market Share Position (RMSP)
Draw the
Exercise BCG Portfolio Matrix
for Personal Care (Soap) Division of HUL
Competitors Competitors
Revenues Market Product (Highest Market Competitors Market Growth
Products (Rs Crs) Share % Market Share) Share % Size (Rs crs) Rate %
High I II III
3.0 to 4.0
Medium
EFE
IV V VI
2.0 to 2.99
Harvest or Divest
Internal Factor Evaluation Score
IFE
Using the GE Business Screen, decide where this
business should
(i) Invest
(ii) Hold and Maintain
(iii) Harvest or Divest
$ m. % of
Regions Revenue Revenues $ m Profits % Profits EFE IFE
23%
Medium SR
2.0 to 2.99 ER
14%
Low
1.0 to 1.99
C
Winners Winners
A Question
High B Marks
E Average
Businesses
Medium F
Losers
H
Losers
G
Low
Profit Source: Adapted from Strategic
Producers Losers Management in GE, Corporate
Planning and Development,
General Electric Corporation. Used
Strong Average Weak
by permission of General Electric
Business Strength/Competitive Position Company.
General Electrics Business Screen
Axis Axis
Relative Market Share & Industry Business Strength & Industry
Growth Rate Attractiveness
21
END