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internal analysis (BCG matrix = a model which helps analyse a firms…
internal analysis
BCG matrix = a model which helps analyse a firms strategic position
dogs
products that have failed
low share of a low growth market
not going anywhere and no real potential
cash cows
high share of low growth market
likely to be in their mature stage of their life cycle
little potential for growth
large positive cashflow
question marks
cash flow usually negative
low share of a fast growing market
product has potential, but the future is not certain
could become either a star or a dog
stars
high share of a rapidly growing market (market leader)
the product is strong and the market is growing
invest to sustain growth
maintain or build market share
repel challenges from competitors
Axes of the boston matrix
relative market share (y)
expresses not as a % but share in relation to competitors
measure the products strength in the market
market growth (X)
% rate of growth of market sales
useful measure of market attractiveness but not the only one
usefulness of this model
useful tool for analyzing product portfolio decisions
shows only a snapshot of the current position
general electric business screen (GE)
strategic tool for portfolio planning, deals with market attractiveness & competitive strength
Market attractiveness factors
market size, expected market growth rate, market profitability trend, competition level
competitive strength factors
total market share, market share growth rate, customer loyalty, trend, brand strength
helps to determine
which SBUs should receive more or less investment
what new products or SBUs are needed in the portfolio
which products or SBUs should be divested
importance