Topic— BCG Matrix

Subject— Elements of Strategic Management

Submitted to— Sandipan Sir

Submitted By- Rajat Gandhi Roll No.-22 TY BBA

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BCG MatrixThe BCG growth-share matrix is portfolio model developed by Bruce Henderson of Boston consulting Group in 1970. It is based on the observation that a company’s business units can be classified into categories relative to market share and the growth of the company. The matrix framework categorizes products within a company's portfolio according to each product's growth rate, market share, and positive or negative cash flow.

Each dimension is divided into two degrees-High and Low. In this matrix, the location of each business unit indicates the market growth rate and relative market share. Relative market share is measured on the horizontal axis, refers to the SBU’s market share relative to that of its largest competitors.

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Stars Question Marks

DogsCash Cows

High Low

Low

High

Relative Market Share

Mar

ket

Gro

wth

R

ate

BCG Matrix of Tata group of companies.

The Tata Group is a multinational conglomerate company headquartered in Mumbai, India. In terms of market capitalization and revenues, Tata Group is the largest private corporate group in India and has been recognized as one of the most respected companies in the world. It has interests in steel, automobiles, information technology, communication, power, tea and hospitality. The Tata Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations.

The Tata Group comprises 114 companies and subsidiaries in seven business sectors. Companies which form a major part of the group include Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services, Tata Technologies, Tata Tea, Titan Industries, Tata Power, Tata Communications, Tata Teleservices and the Indian (Taj) Hotels. The chairman of the Tata group is Ratan Tata, who took over from J. R. D. Tata in 1991 And Cyrus Mistry came as a new chairman of tata sons in 2012 who have the 18.5% partnership in Tata Group.

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Tata Steel-

Established in 1907, Tata Steel is among the top ten global steel companies with an annual crude steel capacity of over 27.37 million tonnes per annum. It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries. The total turnover of Tata Steel of FY 2013-14 was 148,614 (In crore). The Tata Group of Companies has always believed₹ strongly in the concept of collaborative growth, and this vision has seen it emerge as one of India's and the world's most respected and successful business conglomerates.

BCG Matrix-

In the Indian market production of finished steel is increased by 4% to 85 MT in FY14. While Tata steel is the market leader of Indian finished Steel Inc. with 8.9% market share as per FY14.Tata Steel’s business in India improved with the company’s net profit growing 67% to

2,267 crore.₹

Here Tata steel is on the Star position in the BCG matrix because steel inc. market growth is high with Tata steel’s highest market share. The main reason behind the market leadership of Tata steel is mainly its standard quality of steel & the low manufacturing cost of steel.

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Reason behind the growth of the steel industry

Growing demand of steel in construction industry. Automotive goods demand increases.

Policy factors- i) 100% FDI in the Steel sector. ii) Encouragement for R&D by government by providing financial assistance from Steel

Development Fund (SDF).iii) Reduced custom duty.

Reasons behind the Growth of Tata Steel Lowest production cost of Steel in the world. Always prefer new technology. Huge expense for R&D.

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Tata Motors-

Tata Motors was established in 1945, It starts exporting in 1961. It has the the market of Passenger and Commercial vehicles in Europe, Africa, Middle East, South Asia, South America, Russia. The one of the biggest milestone of Tata motors is launch India’s first fully indigenous passenger car in 1998 and create the new segment of vehicle by launching Tata Ace in 2005. It acquires Daewoo Commercial Vehicle maker of South Korea in 2004. It is also a leading company in making Machine tools, Heavy vehicles & Defense Vehicles.

BCG Matrix-

As per FY 2014, the growth of automobile industry is so diverse in India. As per the report of IBEF (India Brand Equity Foundation)

Passenger Vehicle- 6.05% of fall Commercial vehicle- 20.2% fall (17.6% in LCV & 25.3% in HCV)

Tata Motors is on the 3rd position in the Passenger vehicle segment with 10% of Market share while Maruti Suzuki is leader with 45% of market share.Tata Motors is the leader in the HCV & LCV (Commercial vehicle) segment with 63% & 59% of market share respectively.-

So we can say that Tata Motors is on the Dog position in the Passenger vehicle segment because the market growth is falling and Tata Motors have only 10% of market share against the competitors.While in the Commercial Vehicle segment it Tata Motors is on the Cash cows position, due to great market leadership with low market growth rate. The main competitor of Tata motors in commercial vehicle segment is Mahindra only with 30% of market share.

Reason behind the fall of Passenger Vehicle segment.

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Continues rise in the price of fuel. Increasing the traffic on the road, people are normally like to use public transport services

like Train or Bus. People are now turning towards the two wheeler more than a car.

Reason behind the growth of HCV of Tata Motors. Increasing the demand of the commercial projects. Unavailability of number of competitors who provide greater quality product and service

then Tata Motors.

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Tata teleservices-

It was firstly incorporated in 1996, It is the first company to start CDMA 1x technology in India. It launches its services under the name Tata Indicom by 2005 and wireless mobile broadband service under Tata Photon by 2008 and signed the joint venture with Docomo co. in 2009 for GSM/2G and CDMA/3G services. It is due to the prestige of the Tata Group in the market that it got the licenses to rolled out GSM service in all 18 circles. The most important 2 milestone of TTL are A) It integrate all its exercise under the brand name TATA DOCOMO in 2011. B) It is the first private player company in India to launch 3G service.

BCG Matrix-

India is currently the second-largest telecommunication market and has the third highest number of internet users in the world. India’s telephone subscriber base reached 933 million in March 2014. So from this statistics provided by IBEF we can say that India is one of the most growing telecommunication market in the world.

In the Wireless communication segment Bharti Airtel is the market leader with 22.7% of market share while, while TTS is on 7th position in the market with only 7% of market share.

The market size of wireless communication is of 933 million subscriptions as per March 2014. Here Tata Telecommunication Service is comes under the Question mark position due to low market share instead of high growth of industry.

Reasons behind the growth of the market- Increasing the usage of Internet. Decreasing the prices of phones and call rates. Easy availability of Smart phone in market.

Reasons behind the low market share- Late entry in the wireless communication market. Huge failure of Tata Indicom teleservice. Entry with the joint venture of Japanese company “DOCOMO” Poor advertising strategy. Poor network coverage.

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Tata Consultancy Services-

Established in 1968, Tata Consultancy Services (TCS) is an Information Technology (IT) services, consulting and business solution company. The company provides end-to-end technology and technology-related services to global enterprises. TCS provides the solutions like Cloud Service, IT infrastructure etc. It provides services in the areas of Banking, Energy, Government; Healthcare. The company’s business is spread across the Americas, Europe, Asia-Pacific, and Middle East and Africa (MEA).

BCG Matrix-

IT-BPM industry is reaching around 118 billion with the growth of 13% in FY14. IT industry is one of the major driver industries for GDP of India. And the most important thing is that Indian IT Inc is growing with 55% share in global sourcing market.

TCS is the market leader, with 10.1% of market share In IT-BPM sector. The main advantage of Tata Consultancy Service is that it has the highest market cap of ₹ 495,930.34 Cr. company in Indian market irrespective of sector or industry. Here Tata consultancy Services is comes on Star position due to the leadership of IT Inc. and growth rate of IT Inc. is also very high that it affects the nation’s GDP.

Reasons behind the growth of market- Cloud computing, social media and data analytics, are offering new avenues of growth for

IT companies. With increasing the business opportunities and expansions of business in the different

sectors requirement of IT increases. Social, Mobility, Analytics and Cloud (SMAC) technology is leading to digitisation of the

entire business model.Reasons behind the growth of TCS- Highest Market cap in the Market. Give more importance to after sale service. Huge worldwide data transmission network. Having some of big projects worldwide like controlling the communication & broadcasting

of F1 race worldwide.

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Indian Hotels Company-

The Indian Hotels Company (IHCL) and its subsidiaries, collectively

known as Taj Group. It is one of Asia's largest and finest group of hotels. Incorporated by Jamsetji Tata, the company opened its first property, the Taj Mahal Palace, in Bombay (Mumbai) in 1903. Today Taj group of companies is like the symbol of Indian Hospitality.

BCG Matrix-

The Hotel industry market is related with the Tourism and hospitality Inc. So the growth of the hotel industry is directly affected by the Tourism sector. After 2000 the tourism sector of India is grew continually. From 2006-14 Tourism sector contribute to GDP CAGR of 10%. And due to the campaigns held by the government of India hotel sector is gradually increases. So due to the Leadership of IHCPL in the Hotel Inc of India and the Hotel industry is continually grew, so it comes on the position of Star in BCG matrix.

Reasons behind the Growth of Hotel Industry- The ministry set up a Hospitality Development and Promotion Board, which will monitor

and facilitate hotel project clearances/approvals. Easy process for startups. Government Campaigns to boost tourism sector push the Hotel Inc. With increasing trend of Online booking agencies the booking of Hotels are faster and

bulky.

Reason behind the Growth of IHCL- The best 5 star quality of service in India. Tie ups with Big firms, Organizations (ICC, BCCI, Film Inc.), Government etc. It give feels of Indian culture with luxurious quality of services to attract foreign customers. Its first Hotel Asset, TAJ (Mumbai) is the brand icon itself for India Hotels Company.

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Referrence-

www.ibef.org

www.crisil.com

www.wps.in

www.nasscom.in

www.moneycontrol.com

www.ndtv-profit.com

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