The BCG Matrix

THE BCG MATRIX – USE & APPLICABILITY

By: Rajeev Mahajan

THE BASIC PREMISE OF CORPORATIONS
Corporate Organizations have to: • Manage in uncertainty • Optimize the risk-return profile • Generate stakeholder returns

How do Corporations do it?

To achieve the basic corporate objectives, a portfolio approach to businesses is necessitated. THE RESULT

Corporations are nothing but portfolios of multiple business units.

AND YOU GOT TO MANAGE THE PORTFOLIO FOR OPTIMAL CORPORATE PERFORMANCE

THE BCG MATRIX
• Developed in the early 1970s by Bruce Henderson • Hinges on two variables:
– Market Growth – Proxy for the managerial imperative for growth (logical or illogical?) – Relative Market Share – Proxy for competitive position

STRUCTURE OF THE BCG MATRIX
Hi

STARS
Market Growth

?
DOGS
Lo

CASH COWS
Lo Hi

Relative Market Share

BCG MATRIX AT WORK – THE TATAs – mid-1990s
STARS
Hi TCS Trent Titan Merind

????
Telecom Businesses

TOMCO

Market Growth

ACC

Tata Finance Tata Power TISCO TELCO

Tata Tea Lo Taj Hotels HiTech

Hi

CASH COWS

Relative Market Share

DOGS

Lo

BCG MATRIX AT WORK – THE TATAs – early-2000s
STARS
Hi Trent CMC Telecom Businesses Indica Merind

????

TOMCO

Market Growth
ACC

TCS

Titan TISCO

Tata Finance / Tata TDW

Tata Power Tata Motors CV

Taj Hotels Tata Tea Lo NDPL VSNL CASH COWS

Hi

Relative Market Share

DOGS

HiTech Lo

THANK YOU