The boston consulting group bcg growthshare matrix is the best known approach for product portfolio analysis. Strategy formulation introduction strategy formulation is the process by which an organization chooses the most appropriate courses of action to achieve its defined goals. Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage also called as portfolio strategy 0912 23. Ife matrix, efe matrix, and qspm matrix are business strategy tools that can be used to identify the threat, opportunity, weakness, strength as internal, external business factors. Space matrix strategic position and action evaluation 3. The bcg matrix is a matrix designed by the boston consulting group back in 1970s.
Understanding the boston consulting group bcg matrix. Bcg growthshare matrix see figure 1 happens to be one of many of bcg s strategic concepts the organisation developed in the late 1970s, and is being taught at leading business schools and. The m atrix is established in 1970 by bruce d oolin henderson 1915 1992 for the bcg in boston. It provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates. Strategy formulation for performance improvement of indian corrugated industry. Strategic attributes and performance in the bcg matrixa. The competitive profile matrix cpm outline l strategy formulation l develop vision l develop mission lwhy mission statement lexternal assessment linternal assessment l establish long term objectives. This process is essential to an organizations success, because it provides a framework for the actions that will lead to the anticipated results.
A internal factor evaluation matrix b quantitative strategic planning matrix c boston consulting group matrix d grand strategy matrix e strategic position and action evaluation matrix. Paper open access analysis of ife, efe and qspm matrix. Strategy formulation free download as powerpoint presentation. The overhead shows a range of 0 to 20% with division between low and high growth at 10% the original work by b headley strategy. Stage 3 which strategy formulation technique reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies. The horizontal axis of the bcg matrix represents the amount of market share of a product and its strength in the particular market.
Bcg matrix a concept developed by the boston consulting group that evaluates sbus with respect to the dimension of business growth rate and market share. This paper deals with the explicit design of the strategy formulations to make the best strategic choices from a conventional matrix form. Strategic planning is a three step process including formulation. Strategy formulation outline l tasks of strategic management lstrategy analysis and choice linput stage lmatching stage lswot, space, bcg, ie, gsm ldecision stage lqspm.
In this research, space matrix which is an important and applicable tool for strategy formulation has. Which stage of the strategy formulation framework involves the quantitative strategic planning matrix. Boston consulting group is an equal opportunity employer. Boston consulting group ii a business portfolio analysis matrix. By using relative market share, it helps measure a companys competitiveness. Strategy formulation 1720 words 7 pages introduction in this project i am going to describe the strategic and marketing plan of apple inc, which is the biggest consumer electronics provider in the world. The bcg matrix grand strategies in steatergic management. Mgt603 strategic management solved mcq and subjective. Bcg matrix strategy formulation linkedin slideshare. The bcg matrix is based on the classification of sbus into question marks, stars cash. Rulebased bcg matrix for product portfolio analysis. Swot approach strategy formulation concerned with developing a corporations mission, objectives, strategies and policies itbegins with situation analysis. Strategy formulation strategic management swot analysis. Growth rate %relative market sharelowhighlowhighstarcash cows dogsquestion mark.
Strategic management is a key and top management activity, where all management functions meet it is one of the key pillars of management and it forms the skeleton of the overall management of each organization. It formulates operating rules, priorities and direction in the long term, including the direction the organization wants to go. The bcg matrix, developed by the boston consulting group, a leading management consulting firm, is the best known of these methods. Strategy portfolio strategy the bcg matrix formulating businesslevel strategy porters competitive forces and strategies partnership strategies formulating functionallevel strategy strategy implementation and control leadership structural design information and control systems human resources implementing global strategies 8 strategy. Bcg ii matrix or competitive advantage matrix rue and. The bcg method can help understand a frequently made strategy mistake. Introdu ction your strategy needs a strategy how to select and execute the right approach to strategy strategy is a means to an end. Also known as the boston box or grid, bcg charts are divided into four types of scenarios, stars, cash cows, dogs and question marks. It is a strategic tool for identifying products strategic market positions and formulating resources allocation strategies. Turkish airlines on domestic air transportation, applies davids strategy formulation framework to its operations, recommends most appropriate strategys for the company, and lastly points up the limitations of the framework on the basis of this observation. Boston consulting group ii a business portfolio analysis. The bcg matrix considers two variables, namely x market growth rate x relative market share the market growth rate is shown on the vertical y axis and is expressed as a %. Using the boston consulting group portfolio matrix to. Situation analysis and business strategy situational analysis.
Bcg ii matrix or competitive advantage matrix rue and holland, 1986. Strategic position and the action evaluation of space matrix answer page 100 the strategic position and action evaluation space matrix is another important. An application of swot analysis and qspm matrix mahima gupta the northcap university mahima. Stage 3 which strategyformulation technique reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies. Space matrix which stands for strategic position and action evaluation is one of these tools which have gained high reliability for considering macroeconomic, microeconomic. Situation analysis theprocess of finding a strategic fit between external opportunities and internal strengths while working around external and.
Assessment and analysis strategies according to space. However, this is where the intellectual contribution of the bcg matrix ends, they argue. Businesses differed in their performance and strategic attributes, according to the two dimensions of the bcg matrix product life cycle stage growth rate and market share. Which matrix is included in the decision stage of the strategy formulation framework. The explicit strategy formulation is a new mathematical.
Chapter 6 strategy analysis and choice 165 the nature of strategy analysis and choice 166 the process of generating and selecting strategies 166 general electric ge company. Bcg matrix, strategy, strategy formulation, strategic management, swot matrix. Strategic analysis through the general electricmckinsey. Swot analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Strategy formulation 1720 words 7 pages introduction in this project i am going to describe the strategic and marketing plan of apple inc, which is. May 01, 20 bcg matrix is a framework created by boston consulting group to evaluate the strategic position of the business brand portfolio and its potential. The boston consulting group bcg is a renowned organization. Target market the group or groups of individuals that a. It is a matrix which helps in decision making and investments.
Bcg matrix explained smi strategic management insight. Strategy marketing plan the analysis of meeting target markets needs written documentation concerning implementation and control. Space matrix excel template the business tools store. In 1968, bcg founder bruce henderson noted that four rules are responsible for product. Situation analysis theprocess of finding a strategic fit between external opportunities and internal strengths while working around external and internal. The space matrix can be used as a basis for other analyses, such as the swot analysis, bcg matrix model, industry analysis, or assessing strategic alternatives. Different tools for formulation step have been introduced yet. It is the most renowned corporate portfolio analysis tool. When we think about strategy, we tend to think about planning. The bcg model is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. The boston consulting group matrix provides the recommendations for the development of strategic resource allocation and strategy development in the typical multibusiness company.
It divides a market on the basis of its relative growth rate and market share and comes up with 4 quadrants cash cow, stars, question marks and dogs. All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories. Strategy formulation for performance improvement of indian. Bcg growthshare matrix see figure 1 happens to be one of many of bcgs strategic concepts the organisation developed in the late 1970s, and is being taught at leading business schools and. Planning, implementing, and controlling marketing strategies. Depending on the company, bcg matrix can be easy to construct e. How to use the bcg matrix smart insights digital marketing. Bcg matrix is a framework created by boston consulting group to evaluate the strategic position of the business brand portfolio and its potential.
Intellectual critique morrison and wensley 1991 found that the bcg matrix set a standard for strategic models, and that a plethora of similar matrix style models came about in the years after the bcg matrix was introduced wind, mahajan, and swire, 1983. The competitive profile matrix cpm outline l strategy formulation l develop. Understanding cash flow is key to making the most of the bcg matrix. Growth rate %relative market sharelowhighlowhighstarcash cows dogsquestion mark 4. However, traditional bcg matrix is a static historic analysis, which different time frames are not considered. This model, in the marketing and management literature, also is known as. Businesses differed in their performance and strategic attributes, according to the two dimensions of the bcg matrixproduct life cycle stage growth rate and market share. Explain briefly with the help of two examples of each strengths are attributes of the organization that are helpful to the. The boston consulting group, perspectives on strategy. Jun 24, 2015 martin reeves is a senior partner and managing director in the san francisco office of bcg and chairman of the bcg henderson institute, bcgs think tank on management and strategy. The bcg matrix is a business method that was created by the boston consulting group in the 1970s.
The decision stage quantitative strategic planning matrix qspm grand strategy matrix gsm internalexternal ie matrix boston consulting group bcg matrix strategic position and action evaluation space matrix swot matrix stage 1. Boston matrix bcg matrix at the end of the 1960s, bruce henderson, founder of the boston consulting group, bcg, developed his portfolio matrix. Which stage of the strategyformulation framework involves the quantitative strategic planning matrix. Pdf explicit design for strategy formulation frameworks. This business method bases its theory on the life cycle of products. Strategy formulation university of debrecen faculty of ag.
Boston consulting group bcg matrix strategic position and action evaluation space matrix swot matrix. Martin reeves is a senior partner and managing director in the san francisco office of bcg and chairman of the bcg henderson institute, bcgs think tank on. Functional human resources accounting manufacturing marketing. To ensure longterm value creation, a company should have a portfolio of products that contains both highgrowth products in need of cash inputs and lowgrowth products that generate a lot of cash. Strategy formulation strategic management marketing. Perspectives on strategy contains bruce hendersons original writings on the bcg growthshare matrix. Strategic attributes and performance in the bcg matrixa pims. Boston consulting group bcg matrix is a four celled matrix a 2 2 matrix developed by bcg, usa. Internalexternal matrix, qspm, bcg matrixes and so on are related to science part of strategic management. If you dont find specific data, broaden the search, or use existing information and make an educated estimate. Perspective paradigm by including positioning school, entrepreneur school, cognitive.
Swot analysis definition, advantages and limitations. It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position relative market share. This paper empirically explores the performance tendencies and strategic attributes of businesses in the four cells of the boston consulting group product portfolio matrix. Grand strategy global strategy purpose of strategy levels of strategy the strategic management process strategy formulation versus implementation situation analysis formulating corporatelevel strategy portfolio strategy the bcg matrix formulating businesslevel strategy porters competitive forces and strategies partnership strategies. To begin with, bcg is the acronym for boston consulting groupa general management consulting firm highly respected in business strategy consulting. The qspm fits into the first stage, strategy formulation, and is an excellent tool for deciding among feasible alternative strategies. It is argued that relative competitive position and growth are the two fundamental parameters which must be considered in. The goal of dantis deli bakery is to provide pastry product and distribute to other food and beverage outlet all around jakarta. The product portfolio introduces the growthshare matrix and its dynamics, including the success sequence and the disaster sequence.