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Matrix and ModelMatrix and Model

BCG MatrixBCG Matrix

GE (nine Cells matrix)GE (nine Cells matrix)

Porter’s five force modelPorter’s five force model

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Strategy RecommendationsStrategy Recommendations

InvestmentInvestmentFurther GrowthFurther Growth

Maintain Market PositionMaintain Market Position

Cash flowCash flowSelf-sustaining: Fund their own growthSelf-sustaining: Fund their own growth

Require funds from other SBUs (Cash Cows)Require funds from other SBUs (Cash Cows)

Assure the future of the companyAssure the future of the companyGrow into Cash CowsGrow into Cash Cows

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Strategy RecommendationsStrategy Recommendations

InvestmentInvestmentMaintain market shareMaintain market share

Maintain capacityMaintain capacity

Cash FlowCash FlowPositive cash flowPositive cash flow

Provides funding to support Stars andProvides funding to support Stars and

“?”“?”

No potential for profit growthNo potential for profit growth

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Strategy RecommendationsStrategy Recommendations

InvestmentInvestmentIncrease market shareIncrease market share

Selectively develop into StarsSelectively develop into Stars

Cash FlowCash FlowRequire funds from other SBUs (CashRequire funds from other SBUs (Cash

Cows)Cows)

Unrealized future opportunitiesUnrealized future opportunities

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Strategy RecommendationsStrategy Recommendations

InvestmentInvestmentDivestiture strategyDivestiture strategy

Reduce capacity to free up resourcesReduce capacity to free up resources

Cash FlowCash FlowGoal of Positive Cash FlowGoal of Positive Cash Flow

Negative Cash Flow = DivestmentNegative Cash Flow = Divestment

No real growth opportunitiesNo real growth opportunities

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GE (nine cell matrix)

Classification

Marke

tA

ttractivene

ss

Strong Medium Weak

Low

Mediu

m

High

Business Strength

5.00 1.002.333.67

5.00

3.67

2.33

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 Annual market growth rateAnnual market growth rate

Overall market sizeOverall market size

Historical profit marginHistorical profit margin

Current size of marketCurrent size of market

Market structureMarket structure Market rivalryMarket rivalry

Demand variabilityDemand variability

Global opportunitiesGlobal opportunities

Market AttractivenessMarket Attractiveness

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 Current market shareCurrent market share

Brand imageBrand image

Brand equityBrand equity

Production capacityProduction capacity

Corporate imageCorporate image Profit margins relative to competitorsProfit margins relative to competitors

R & D performanceR & D performance

Managerial personalManagerial personal

Promotional effectivenessPromotional effectiveness

Business StrengthBusiness Strength

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OverviewOverview

Business Strengths

Mark

et

Attractiven

ess

Low

High

LowHigh

Attractive

Moderate

Attractive

Unattractive

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TATATATA

 TATA

• IT (Information Technology) : TCS

• Consumer Durable : Automobiles,Titan etc.

•Textiles : Tata Fabrics, West Sides etc 

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GE Matrix For TATAGE Matrix For TATA

Business Strengths

MarketA

ttractiven

ess

Low

High

LowHigh

IT

Consumer 

Durables

Textiles

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BCG v/s GEBCG v/s GE

BCGBCG GEGE

Market GrowthMarket Growth

Market shareMarket share

4 cell4 cell

Multi ProductsMulti Products

Primary toolsPrimary tools

Market

Attractiveness

Market strength

9 cell

Multi Business

Units

Secondary tools

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Basis of the BCG PortfolioBasis of the BCG Portfolio

MatrixMatrix

Time

Introductory Phase “?”

Growth Phase “Star”

 S  a l   e  s  V ol   um e 

Mature Phase “Cash

Cow”

Decline Phase “Dog”

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1616

Th t f S b tit tThreats of Substitutes El ti it fElasticity of

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Threats of Substitutes =Threats of Substitutes = Elasticity of Elasticity of Demand Demand 

Buyers propensity to substituteBuyers propensity to substituteBuyers switching costBuyers switching cost

Perceived value of differentiationPerceived value of differentiationEx: FMCG products, Mobile servicesEx: FMCG products, Mobile services

New Entrant =Competitors= PerfectNew Entrant =Competitors= Perfect

CompetitionCompetitionEntry barriers (patents, rights )Entry barriers (patents, rights )Learning CurveLearning CurveBrand EquityBrand Equity

Capital RequirementCapital RequirementGovernment policiesGovernment policiesStandardization & switching costStandardization & switching costExpected retaliation from incumbentExpected retaliation from incumbent

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Industry competition or rivalryIndustry competition or rivalryNo. of competitorsNo. of competitorsIndustry growth rateIndustry growth rate

Economics of scaleEconomics of scaleExit barriersExit barriersSustainable competitive advantage thru improvisationSustainable competitive advantage thru improvisation

Bargaining power of SuppliersBargaining power of SuppliersSwitching costSwitching costDegree of differentiation of inputsDegree of differentiation of inputsPresence of substitute inputsPresence of substitute inputsGroupismGroupism

Forward IntegrationForward Integration

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B i i P f BB i i P f B

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Bargaining Power of BuyersBargaining Power of Buyers

Buyer to firm concentration ratioBuyer to firm concentration ratio

Buyers information availabilityBuyers information availability

Switching costSwitching cost

Prospects of backward integrationProspects of backward integration

Buyer’s purchasing sensitivityBuyer’s purchasing sensitivity

Availability of substitute productsAvailability of substitute products1919