Presented by..
Fedora D'souza Nitin Jadhav
Introduction
Addresses the issue of the potential value of a
particular business for the firm. Used to establish the best mix of businesses in order to maximize the long-term earnings growth of the firm Has two variables: i) the potential for generating attractive earnings levels now ii) the potential for growth for significantly increased earnings levels in the future.
BCG Matrix
Star Question Mark
Cow
Dog
Stars
High Market Share / High Market Growth Leads to large amount of cash consumption and cash
generation. They require heavy investment, to maintain its large market share. Star products represent, probably the best profit opportunity available to a company, It is the future payoff of the star that counts, not the present reported profit. Attempts should be made to hold the market share otherwise the star will become a CASH COW.
Cows
Low growth, High market share They are foundation of the company and often the
stars of yesterday. Generate large cash surpluses Because of the low growth, promotion and placement investments are low. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.
Question Marks
High growth , Low market share Require more cash than they are able to generate on their
own. Absorb great amounts of cash if the market share remains unchanged. Question marks are essentially new products where buyers have yet to discover them. The marketing strategy is to get markets to adopt these products. Need to increase their market share quickly or they become dogs. The best way to handle Question marks is to either invest heavily in them to gain market share or to sell them
Dogs
Low growth , Low market share
Dogs are in low growth markets and have low market
share. Dogs are the cash traps. Dogs should be avoided and minimized. Expensive turn-around plans usually do not help. Business is situated at a declining stage.
Product Portfolio Matrix: Strategic Consequences
Bharti Airtel Limited a leading emerging market telecom services provider with operations in 19 countries across Asia and Africa.
Bharti Infratel Limited is amongst India's leading telecom passive infrastructure service providers.
4 Strategic Sub Units (SBU)
Mobile Services
Prepaid & Postpaid Blackberry Smartphones International Calling Wireless Internet
Enterprise Services
Corporate Carriers
Telemedia Services
Fixed Line Broadband
Digital TV Services
Digital TV Recorder IPTV
Subsidiary
Passive Infrastructure
Bharti Infratel Indus Tower
10
BCG Matrix of Bharti Airtel Ltd
SBU : Enterprise Services
SBU : Passive Infrastructure
SBU : Mobile Services
SBU : Telemedia Services
11
Strategic Business Unit
Market Share (SBU)
Market Share (Largest Competitor)
Relative Market Share
Relative Product Sales Market Growth Share (%age (in BCG change b/w Terms) FY 09-10)
Quadrant in which the SBU lies
Mobile Services
63.32%
Idea Cellular Ltd. - 21.94% Tata Tele services 20.32% Atire Technology 42.6% GTL Infra 28.33%
50.12%
2.28
7%
Cash Cow
Telemedia Services Enterprise Services (Carriers & Corporates) Passive Infra
6.65%
30.57%
1.5
2%
Dog
16.41%
14.50%
0.34
17%
Star
13.62%
6.32%
0.22
38%
Question Mark
12
Justification Star
Enterprise Services have been providing lot of amount as per current base but needs investments in the higher proportion due to high growth rate, hence it needs lot of amount to stand the business
13
Justification for Question Mark
Passive Infrastructure is a very new approach but has been able to hold quick grip in market Good collaborations like Indus Towers could help them increase their market share if funded adequately
14
Justification for Cash Cows
Mobile Services has been legacy of Bharti which has been enjoying a greater market share It generates highest revenues among its other SBUs
15
Justification for Dogs
Telemedia Services have little potential for gaining sufficient share to achieve feasible cost positions also because of other big players already existing in the market
16
BCG Matrix and PLC Curve
Mobile Services
Enterprise Services
Telemedia Services
Passive Infra
17
Characteristics and Strategy Implications of Products in the Strategy Quadrants
Company BAJAJ Gr. Bajaj auto Hero honda Bajaj Finserv Bajaj Holding & investment ltd.
Prdt/ser 2&3 wheelers 2&3 wheelers Insurance & Financial services Insurance & Financial services
Relative Market share 0.74
Growth rate Sales 2010 in % ([Link]) 16.78 12,767.12 17,138.00 985.41 1410.17 1,595.60
0.62
23.39
Mahindra & Mahindra Financial Services Ltd Insurance & Financial services Bajaj Hindustan Sugar Balrampur chini mills Bajaj Electricals I F B Industries Ltd. Whirlpool of India Ltd Bajaj corp ltd. Dabur India Sugar Sugar Domestic Appliances Domestic Appliances 0.28 21
422.17 1,527.46 2,308.02 666.08 2,817.21 334.87 3,466.38
0.82
23.28
Personal Care Personal Care
0.10
18.4
Bajaj Steel ltd. Karur KCP Packkagings Ltd
Packaging Packaging
0.68
8.325
241.13 355.74
19
BCG Matrix BAJAJ Group
25 Bajaj Electricals Bajaj Finserv Bajaj Holding & investment ltd. 20 Bajaj Hindustan Sugar
Bajaj corp ltd. 15 Growth rate in % Bajaj auto
10
Bajaj Steel ltd. 5
0 1.00 0.90 0.80 0.70 0.60 0.50 Relative Market Share 0.40 0.30 0.20 0.10 0.00
20
Company TVS Gr. Sundaram Finance IDFC Reliance Capital Ltd TVS motors Bajaj auto Hero honda TVS electronics Moser baer Redington India Sundaram Clyaton Amtek Auto
Prdt/ser Finance Finance Finance 2&3 wheelers 2&3 wheelers 2&3 wheelers Hardware Hardware Hardware Brakes Brakes
Relative Market Sales 2010 GR Rate in % share ([Link]) 0.50 39.27 2,035.37 4,060.16 2,423.16 4,811.40 12,767.12 17,138.00 200.36 2,370.48 13,982.14 5,729.01 3,395.66
0.38
16.78
0.01
14.93
1.69
9.14
Indian Nippon Electricals Motherson Sumi Minda Industries Ltd TVS Srichakra Ltd Apollo Tyres Ltd MRF Ltd
Electrical Electrical Electrical Tyres Tyres Tyres
0.03
36.28
191.67 7,209.63 503.33 753.61 8,414.04 5,966.55
0.09
23.67
21
BCG Matrix TVS Group
45.00
Sundaram Finance Indian Nippon Electricals
40.00 Growth rate in %
22
35.00 30.00
TVS Srichakra Ltd
25.00 20.00
TVS motors
15.00
TVS electronics
Sundaram Clyaton
10.00 5.00
2.00
1.50
1.00
0.50
0.00 0.00
Relative Market share
23
24
