gaqshare.blogg.se

1. BCG MATRIX OF MICROSOFT COMPANY BACKGROUND FULL
2. BCG MATRIX OF MICROSOFT COMPANY BACKGROUND PROFESSIONAL

Many organisations discontinue dogs, but businesses which have been denied adequate funding for development may find themselves with a high proportion of their products or services in this quadrant. A common belief is that there is no point in developing products or services in this quadrant. DogsĪ dog has a relatively low market share in a mature/low growth market, might well be loss making, and therefore have negative cash flow. This is because there is little likelihood of additional growth being achieved. Activities to support products in this quadrant should be aimed at maintaining and protecting their existing position, together with good cost management, rather than aimed at investment for growth. This somewhat crude metaphor is based on the idea of ‘milking’ the returns from a previous investment that established good distribution and market share for the product. Cash cowsĪ cash cow has a relatively high market share in a mature/low growth market and should generate significant cash flows. It is therefore vital that a company has rising stars developing from its problem children in order to fill the void left by the fallen stars. In circumstances where this potential no longer exists, these products are likely to fall vertically in the matrix into the cash cow quadrant (fallen stars), and their cash generating characteristics will change. These are great products, and worthy of continuing investment for as long as they have the potential to achieve good rates of growth. At the same time, costs per unit are minimised due to high volumes and good economies of scale. Since demand is strong, and market saturation and over-supply is not an issue, the pricing of such products is relatively unhindered, and therefore these products generate very good margins. While a market is strong and still growing, competition is not yet fully established. As a product moves into this category it is commonly known as a rising star. Stars are products which are in the high market share and growing market quadrant. Note: Problem children are also known as question marks. This is evidenced by the fact that many problem children products remain as such, while others become tomorrow’s dogs. As a result, the development of problem children can be loss-making until the product moves into the rising star category, which is by no means assured. Gross profit margins are likely to be high, but overheads are also high, covering the costs of research, development, advertising, market education, and low economies of scale.

BCG MATRIX OF MICROSOFT COMPANY BACKGROUND FULL

In order to realise the full potential of problem children, management needs to develop new business prudently, and apply sound project management principles if it is to avoid costly disasters. Problem children have a relatively low market share in a market that is growing quickly, often due to the fact that these are new products/services, or that they are yet to receive recognition by prospective purchasers.

The other axis on the matrix is the market growth rate – which is either growing quickly or the market is mature where it will grow slowly or may even have stopped growing altogether. This is done by considering the relative market share, which for the company with the largest share (market leader) means comparing to the next biggest player and for smaller players (market followers) it means comparing their share to the leader.

Management must consider each product or service marketed, and then position it on the matrix. It has two axes, namely relative market share (meaning relative to the competition) and market growth. The matrix offers an approach to product portfolio planning. More importantly, the model can also be used to assess the strategic position of strategic business units (SBUs), and in this respect it is particularly useful to those organisations which operate in a number of different markets and offer a number of different products or services. The Boston Consulting Group matrix, which incorporates the concept of the product life cycle, is a useful tool which helps management teams to assess existing and developing products and services in terms of their market potential. There is a fundamental need for management to evaluate existing products and services in terms of their market development potential, and their potential to generate profit.

BCG MATRIX OF MICROSOFT COMPANY BACKGROUND PROFESSIONAL

Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner.