bcg limitations
DESCRIPTION
The growth share matrix is a very well known matrix for resources alocation, In spite of its popularity, The BCG Matrix is more a theory, that pretents to explain how to allocate resources, but its methodolgy is very poor in the real business worldTRANSCRIPT
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The Boston Consulting Group MatrixGrowth-share matrix
The purpose of this presentation is to demonstrate:
1.- Why the Growth-share matrix, is a very limited management tool in the real business world.
2.- What are the disadvantages in its application .
3.- Why this management tool does not represent a real support in the process of resource allocation .
4.- Why The Grow - share matrix is not helpful in the strategic management process
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INTRODUCTION
1)Correlation between the Growth-share matrix and the product life cycle theory.
2)¿ Do you think that companies introduce products in markets with High Market grow rate?
3)¿What is low and high Market growht rate?
4)¿ What, If there is a market contraction, what about with the 4 categories ?
5)Correlation between cash generation and profits with the 4 growth share matrix categories
6)¿ Shoud I set my strategies acording with the leader?
7)¿Does the Growth-share matrix applicable for any business ?
8)Conclusions
The Boston Consulting Group MatrixGrowth-share matrix
Agenda
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o The BCG Matrix model is a very well known management tool in the process of resources alocation, use to categorized the product portafolio in 4 business types Stars, Cash Cows, Question Marks and Dogs; determine what investment priorities should be given in the product portfolio or SBU ( Strategic business unit) in a company.
o Given its importance in the business world is being taught at leading business schools and executive business management programmes around the world. It is also and important tool for management consultants in the strategic planning procces in the strategic marketing area.
o Every year are written hundreds of articles about the Growth-share matrix and published on the web.
o What makes this management tool so attractive? ……… Its theory.
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o Most of the articles just are the repetition from the same theory, with few examples. Nothing more, nothing less.
o The Growth-share matrix contains a very well structured theorycal model.
o If companies around the world applied this theory, most of the problems in the making decisition process of allocation resources whoud have dissapear
o Nevertheless, to many inconsistencies make this model very limited in its application.
o In fact, many companies use this model not for making decitions in process of allocation resourses , It is use, just to explain positions in the market against the competition.
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1.- The correlation between the Growth-share matrix and the product life cycle theory.
The Growth-share matrix has a correlation with the product life cycle theory.
• Box 1) Question mark, The correlation with Introduction phase.
• Box 2) Stars, The correlation with the growht phase.
• Box 3) Cash cow, the correlation with the maturity phase.
• Box 4) Dog, The correlation with the decline phase .
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o Then you have the conection between both theories.
o So, If you want to undertand the undrline concept of the Growth-share matrix, go to the product life cycle theory.
o Is in the moment when the BCG Matrix takes the concepts form the product life cycle theory that makes the theory look strong enough to make it applicable in the business world.
o As this is a model, does not applies in all the cases, in companies just less than 15 % of the products are considered as stars.
o But the Growth share matrix theory begin with a main inconsistency, wich invalidate the model.
1.- The correlation between the Growth-share matrix and the product life cycle theory.
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