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Basic Explanation Of Strategies At Each Stage/Quadrant Of The Bolton Consulting Group(BCG) Matrix (Part2)

In part 1,we noted that the BCG modeling enable one to plan for strategies at each stage at which an individual product-market is perceived  be in terms of market growth and the firm’s relative strength (market share),the matrix indicates the particular strategy that should be adopted:

Below tabulate the usual strategies adapted at each stage of the BCG matrix:

Question Mark:

  • Either to invest heavily in the product in order to gain the advantages of a STAR position of high market share combined with growth or
  • To DIVEST from the market altogether to avoid eventually finding oneself in the doubly disadvantageous position of low market share and low growth (DOG) from which one would also ultimately to divest.
Star

  • At this stage,profitability is likely to be high,but at the same time cash flow requirements will also be great because of the high market growth rate.
  • The strategy for products in this sector is continue to invest to retain market leadership in order to benefit from the subsequent stage in the normal development of the product market.
Cash Cow

  • At this stage,profitability continue and because of the relative absence of new investment requirements cash flow should be strongly positive.The firm should resist the temptation to over-invest in such markets through proliferation of brands,etc,although in order to retain market leadership some investment in promotion and technology may be necessary.
Dog

  • At this stage,the firm normally suffers from the disadvantages of operating at a low level of output hence a cost disadvantage in comparison with the market leader,combined with minimal growth in the market. The firm should follow on the contraction strategies like shrinking or divestment.
November 24th,2009 | Tags:BCG matrix,BUSINESS STRATEGY,corporate strategy | Category:BUSINESS STRATEGY

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