Research a company of your choice and determine which of the four quadrants of the BCG Matrix you feel it fits into. Justify your response using information about the company. Your paper should be a minimum of 500 words.
The requirements below must be met for your paper to be accepted and graded:
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- Write between 500 – 750 words (approximately 2 – 3 pages) using Microsoft Word.
- Attempt APA style, see example below.
- Use font size 12 and 1” margins.
- Include cover page and reference page.
- At least 60% of your paper must be original content/writing.
- No more than 40% of your content/information may come from references.
- Reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) must be identified in the paper and listed on a reference page.
Analyzing Market Share / Market Growth Through BCG Matrix
During this lecture, we will discuss market growth and market share through use of BCG Matrix.
The BCG Matrix, also known as the Boston Matrix, provides a useful way for organizations to see the opportunities that are open to it, as well as helping it think where it can best divide its resources so it can maximize its future profits. The BCG Matrix was conceived by the Boston Consulting Group sometime in the early 1970s, and was developed to be a clear and easy way to help organizations decide which areas of their operations they should designate their available resources to such as manpower, cash, and time.
Let’s begin by defining market share. In simple terms, an organization’s market share is the percentage of the overall market that your organization is serving, and is usually measured in terms of cash flow or product volume. Basically, the larger an organizations market share, the larger the segment of the market they control. The matrix presumes that if an organization has a large share of the market they will be making a profit.
Let’s now define market growth. In simple terms, market growth is a measure of a particular market’s appeal. Markets that experience large growth are usually the ones where the overall market is increasing and it is relatively simple for organizations to increase their profits. On the other hand, a low growth market can be a challenge for organizations to increase their market share as well as their profits.
The BCG Matrix was developed with four distinct categories which we will briefly discuss below.
- Dogs – organization has low market share as well as low market growth, which makes it hard to be noticed. They don’t have the cash flow of some of the larger organizations which can make it challenging for them to turn a profit. Because the market growth is low it is going to be a challenge for the organization to become profitable.
- Cash Cows – organization has a high market share but low market growth. The company may be well known which can make it easier to attract attention and pursue new opportunities. The business should only exert a low level of effort to expand due to the fact that the market is not growing and expansion opportunities may be limited.
- Stars – organization has a high market share and high market growth. They are usually very well established and known and are continuously growing. There are always opportunities for growth here and the organization should work to achieve them.
- Question Marks or Problem Child – organization has a low market share and high market growth. They are usually opportunities that no one in the organization knows how to handle. They might not be generating as much cash flow as they’d like right now due to their low market share, however are in high growth markets and have the potential to make a larger profit.