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Boston Matrix Portfolio

Introduction

2.2 Analysis of the main economic indicators of the enterprise "Empire Sumok" LLC

2.3 Conducting a strategic analysis of the brands of Empire Bags LLC using the matrix method of the Boston advisory group

Conclusion

Introduction

The efficiency of organizations, companies, holdings, National economy in general, it largely depends on the study of the control systems being created, their rational construction and the necessary investments. The need for investment when creating modern systems management is always high, and available investment resources are always limited. In this regard, in practice, the management of organizations is always faced with the task of choosing the most effective option for implementing investments in management systems.

Currently, there are many methods for studying control systems.

Developing, analyzing and managing a portfolio strategy is a lengthy process that requires a thorough understanding of market trends and the company's internal processes. Portfolio analysis studies the competitiveness of a product, strengths and weak sides product, market dynamics, changes in consumer behavior and many other factors that affect the long-term attractiveness of the industry.

Portfolio strategies allow the most effective way allocate limited company resources to support and develop a diverse range of products.

In global practice, the following assortment analysis models are used to approve a portfolio strategy: the Boston Advisory Group matrix and the GE / McKinsey matrix.

The BCG matrix helps answer the question "Investments in the development of which goods and services will be the most profitable?" and develop long-term strategies for the development of each unit of the range.

The GE / McKinsey matrix helps to choose the most stable product segment for business, taking into account the competitiveness of the company's product and the potential of the target market.

In this paper, the matrix method of the Boston Advisory Group will be considered.

The relevance of the application of the matrix method of the Boston Advisory Group is that this method will allow you to find ways to solve the problem and develop a strategy to improve the company's activities.

To ensure an optimal and stable level of income generation, the company's management needs to periodically conduct a strategic analysis of the company's assortment portfolio.

On the present stage market economy and with the rapid emergence and development of new markets, the level of competition increases, which, in turn, makes the company's management think about its position in the market. The consumer also keeps up with the times and quickly masters the innovations that have appeared in a particular area. And in this regard, a developing company needs to look for new ways of development, invest free funds in the creation of new products and services in order to maintain or improve its position in the market.

The purpose of this work is to study the theoretical aspects of the matrix method of the Boston Advisory Group in IMS, analyze the activities and develop recommendations for improving the assortment portfolio of the company Bag Empire LLC.

Based on the goal, the following tasks were performed:

Studying the theoretical aspects of the matrix method

Boston Advisory Group at ISU

Conducting an analysis of the main economic indicators of the company "Empire Bags" LLC, as well as a strategic analysis of the brands of LLC "Empire Bags" was carried out using the matrix method of the Boston Advisory Group.

The objects of this study is LLC "Empire Bags".

The subject of the study is the matrix method of the Boston Advisory Group in ISU.

The information base of the study includes publications of domestic authors and the results of calculations in the course of the study.

Chapter 1. Theoretical Aspects of the Matrix Method of the Boston Advisory Group in ISU

1.1 The essence and main indicators of the BCG matrix

Currently, one of the widely used tools for evaluating the economic activity of an organization is portfolio analysis.

An enterprise portfolio is a set of relatively independent business units (strategic business units) owned by one owner.

Portfolio analysis is a tool with which the company's management examines and evaluates its business activities in order to invest in the most profitable or promising areas and reduce / terminate investments in inefficient projects.

At the same time, the relative attractiveness of the markets and the competitiveness of the enterprise in each of these markets are assessed. The company's portfolio is supposed to be balanced, i.e., it must be the right combination of units or products that need capital for growth, with business units that have some excess capital.

The purpose of portfolio analysis techniques is to help managers create a clear picture of how costs and benefits are generated in a diversified company. Portfolio analysis provides managers with a tool to analyze and plan portfolio strategies to determine prudent diversification in a diversified firm.

One of the most important areas of using the results of portfolio analysis is making decisions on the restructuring of the company in order to use the opportunities that are opening up both inside the company and outside it.

Portfolio analysis is designed to solve the following problems:

Coordination of business strategies, or strategies of business units of the enterprise. It is designed to strike a balance between business units with quick returns and directions that prepare the future;

Distribution of human and financial resources between business units;

Portfolio balance analysis;

Establishment of executive tasks;

Carrying out the restructuring of the enterprise (merger, acquisition, liquidation and other actions to change the management structure of the enterprise, expand or reduce the business).

One of the tools of the method of conducting strategic analysis and planning in marketing is the BCG matrix. The BCG matrix was created by the founder of the Boston Consulting Group (Boston Consulting Group - a leading international company specializing in management consulting) Bruce D. Hendersen to analyze the relevance of the company's products, based on their position in the market relative to the growth of the market for these products and the share occupied by the company selected for analysis on the market. The BCG matrix (also called the growth-market share matrix) was developed in the late 1960s and is one of the first models of portfolio analysis.

The BCG matrix is ​​based on two hypotheses: the leading company in the segment has a competitive advantage in production costs, and hence the highest level of profitability in the market; in order to function effectively in fast-growing segments, the company must invest in product development at a high level; conversely, presence in a market with low growth rates allows you to reduce the cost of product development.

The BCG Matrix suggests that, in order to achieve productive, profitable long-term growth, a company must generate and extract cash from successful businesses in mature markets and invest it in fast-growing attractive new segments, strengthening the position of its products and services in them to generate a sustainable level of income in the future.

Rice. 1. BCG table example

Thus, the main task of the BKG model is to determine priorities in the development of the company's assortment units, to identify key areas for future investments. The method helps to answer the question "Investments in the development of which goods and services will be the most profitable?" and develop long-term strategies for the development of each unit of the range.

The following products can be analyzed in the BCG model:

Separate lines of business of the company that are not related to each other.

separate groups of goods sold by the enterprise in one market.

separate units of goods and services within one group of goods.

The construction of the BCG matrix begins with the calculation of three indicators for each product group included in the model: the relative market share of the company's product, the market growth rate, and the volume of sales / profits of the analyzed product groups.

The calculation of the relative market share is calculated by dividing the absolute market share of the company's product in the analyzed segment by the market share of the leading competitor in the analyzed segment. The relative market share is plotted along the horizontal axis of the matrix and is an indicator of the competitiveness of the company's product in the industry.

If the value of the relative market share of the company's product is greater than one, then the company's product has a strong position in the market and has a high relative market share. If the value of the relative market share is less than one, then the company's product has a weaker position in the market compared to the leading competitor and its relative share is considered low.

The calculation of market growth rates is plotted along the vertical axis of the BCG matrix and is an indicator of the maturity, saturation and attractiveness of the market in which the company sells its goods or services. It is calculated as a weighted average among all market segments in which the company operates.

If the market growth rate is more than 10%, the market is fast growing or a market with a high growth rate. If the market growth rate is less than 10% - the market is slowly growing or a market with a low growth rate.

The volume of sales is shown in the matrix through the size of the circle. How larger size the higher the sales volume. The information is collected on the basis of the available internal statistics of the company and visualizes in which markets the main funds of the company are concentrated (Fig. 2).

Rice. 2. An example of filling in the BCG matrix of an enterprise

1.2 Interpretation and analysis of the BCG matrix

As a result of building the BCG matrix, all product groups or individual products of the company are divided into 4 quadrants. The product group development strategy depends on the quadrant in which the product is located. Each quadrant has separate recommendations (Figure 3):

Rice. 3. Description of the four quadrants of the BCG matrix

First quadrant: "question marks" or "difficult children"

In the first quadrant of the BCG matrix are those lines of business of the company that are represented in fast-growing industries or segments, but have a low market share or, in other words, occupy a weak position in the market. These activities require a high level of investment in order to grow in line with the market and strengthen the position of the product in the market.

When a line of business falls into this quadrant of the BCG matrix, the enterprise must decide whether there are now sufficient resources for the development of goods in this market (in this case: investments are directed to the development of knowledge and key benefits goods, into an intensive increase in market share). If a company does not have sufficient resources to develop a product in these markets, the product does not develop.

Second quadrant: "stars"

In the second quadrant of the BCG matrix are the lines of business of the company that are leaders in their rapidly growing industry. The company must support and strengthen this type of business, and therefore not reduce, and possibly increase investment.

Some of the company's best resources (staff, R&D, cash) should be allocated to these lines of business. This type business is the future stable supplier of funds for the company.

Third quadrant: "cash cows"

Represents lines of business with a high relative market share in slow-growing or even stagnant markets. The goods and services of the company presented in this quadrant of the BCG matrix are the main generators of profits and cash.

These products do not require high investments, only to maintain the current level of sales. The company can use the cash flow from the sale of such goods and services to develop its more promising lines of business - "stars" or "question marks".

Fourth quadrant: "dogs"

This quadrant of the BCG matrix concentrates lines of business with a low relative market share in slow-growing or stagnating markets. These lines of business usually bring little profit and are unpromising for the company. Strategy for working with these goods: reduction of all investments, possible closure of the business or its sale.

1.3 Formation of an ideal portfolio according to the BCG model and development of strategic decisions in the analysis of the matrix

An ideal portfolio should consist of 2 product groups:

goods that can provide the company with free cash resources for the possibility of investing in business development (stars and cash cows).

goods that are at the stage of introduction to the market and at the stage of growth, requiring investment and capable of ensuring the future stability and stability of the company (question marks).

In other words, the goods of the first group ensure the current existence of the company, the goods of the second group provide the future income of the company.

Decisions to be made in the analysis:

1. For each product in the BCG matrix, a development strategy must be adopted. The right strategy helps to determine the position of the goods within the matrix:

for "stars" - maintaining leadership

for "dogs" - exit from the market or decrease in activity

for "question marks" -- investment or selective development

for "cash cows" - maximizing profits

2. Goods that fall into the "dogs" group should be excluded from the portfolio as soon as possible. This group is dragging the company down, depriving free cash, eating up resources. An alternative to exclusion from the portfolio may be to update and reposition the product.

3. With a lack of current free funds, programs should be developed to increase the number of "cash cows" or "stars" in the long term, and in the short term, the release of new products should be reduced (since the company is not able to maintain the development of all new products at the required level)

4. With a lack of future funds, it is necessary to introduce more new products into the portfolio that can become "stars" or "cash cows" in the future.

Ideally, a balanced product portfolio of an enterprise should include 2-3 products - "Cows", 1-2 - "Stars", several "Difficult Children" as a reserve for the future and, possibly, a small number of products - "Dogs". An excess of aging goods ("Dogs") indicates the danger of a downturn, even if the current performance of the enterprise is relatively good. An excess of new products can lead to financial hardship.

· t The growth rate of the market cannot speak about the attractiveness of the industry as a whole. There are many factors affecting the attractiveness of the segment - entry barriers, macro and micro economic factors. The growth rate of the market does not say how long the trend will be.

Chapter 2. Practical aspects of the matrix method of the Boston Advisory Group in MIS

2.1 Characteristics of the company LLC "Empire Bags"

The all-Russian chain of stores "Imperia Bags" is the largest retail chain of large specialized stores in Russia, which sells bags. The network is part of the JULY group of companies. Since 1994, "July" has been trading in bags and manufacturing them. The Group owns three own productions in Russia (in St. Petersburg, Samara and Voronezh). They produce a wide range of goods under the trademarks "Mr.Bag", "Navigator", "Passo Avanti". At the same time, the network works with the best Russian and foreign manufacturers.

The company operates in 86 cities of Russia. The network consists of 230 stores. The network of stores was built on a franchising system. Each franchise owner has the right to use the trademark "Empire Bags", special conditions for the supply of goods, exclusive rights to a certain territory (city, region, region). There are five stores operating in Ufa (shop addresses: 113, Oktyabrya Ave.; 2 "O" KEY Hypermarket, 37 Marshal Zhukov St.; 3 "Jun" SEC, 112 Komsomolskaya St.; TC "Central" Tsyurupy St. , 97; 5 avenue of October, 11).

The assortment of the network includes women's, men's, children's, travel, sports, youth bags, children's and youth backpacks, business bags, folders, cases and briefcases, bags on wheels, suitcases, trolleys, bags for video cameras, beach and shopping bags, wallets and waist bags, schoolbags and satchels. The nomenclature consists of more than 10,000 items.

The company sells the following brands: Francesco Molinary, Poshete, Marzia, Grott, Ecotope, Rain Berry, Mr.Bag, Navigator, Passo Avanti, Eminent, Ecotope, Rain Berry, Bolinni, David Jones, Gianni Conti, Giorgio Ferretti, Sergio Belotti, Tri elephant, Unicorn, Valentino Rudy, Wanlima, Askent.

The range includes products made of genuine leather, leather substitutes, as well as a wide range synthetic fabrics. The JULY group itself imports raw materials for its products. All products offered for sale online comply with current quality and safety standards for health.

2.2 Analysis of the main economic indicators of the enterprise "Empire Bags" LLC

Table 1 Main economic indicators of "Empire Sumok" LLC, ths. rub.

Based on the data given in Table 1, it can be seen that 2011 turned out to be a profitable year for the store, since in 2012 and 2013 the store operated at a loss. Net profit also decreased compared to 2011, although revenue in 2013 was higher. This problem is caused by the fact that the store has a growing debt to suppliers. The formation of debt can be explained by a decrease in sales due to inflated prices for leather and leather products and rising inflation. To stimulate sales, the company regularly holds promotions to reduce prices up to 30, 40 and 70% for certain brands or individual product groups.

The company should have studied consumer preferences more carefully and taken into account all sorts of wishes regarding the range, support the most popular brands in the company's portfolio.

2.3 Conducting a strategic analysis of the brands of Empire Bags LLC using the matrix method of the Boston Advisory Group

Using the considered method, portfolio analysis according to the BKG model, it is possible to optimize the assortment portfolio of the Imperia Bags LLC company, which will help increase the store's sales and ensure stable profits in the future.

The studied brands are brands whose products are represented by several product groups. These brands are: Francesco Molinary, Poshete, Marzia, Askent, Passo Avanti.

1. Collection of initial information

It is necessary to collect data on sales and profit analyses. groups into a single table (Table 2):

Table 2 Data on the volume of sales and profits of the studied brands for 01/01/13-07/01/13, thousand rubles.

2. Calculation of the market growth rate

Table 3

According to the data obtained, it can be revealed that for the brands Francesco Molinary, Askent, Passo Avanti the growth rate is low, for the brands Poshete and Passo Avanti it is high.

3. Calculation of the market share of the product

Calculate the relative market share of each brand. In accordance with the data obtained, we determine for each brand what is the relative market share - "low" or "high" (Table 4).

Table 4

The data obtained showed that the brands Francesco Molinary, Poshete, Marzia occupy a low market share, and the Askent, Passo Avanti brands occupy a high market share.

4. Building a BCG matrix by sales volume

Now, knowing the relative market share of the product and the market growth rate, it is possible to determine for each brand in the company's portfolio its place in the BCG matrix. Based on the information obtained, we will build a BCG matrix, reflecting in each cell the brand name, sales volume and total sales volume for the brand (Fig. 4)

Rice. 4. BCG matrix by sales volume

5. Building a BCG matrix by profit

Let's build a similar BCG matrix for profit(Fig. 5.)

Rice. 5. BCG matrix by profit

6. Analysis, conclusions and strategy development

After analyzing the resulting BCG matrices in terms of sales and profits, we can draw conclusions and determine the strategy for the development of the portfolio of Empire Bags LLC.

Portfolio balance: satisfactory. Need to learn new promising directions and to strengthen the position of new products - difficult children in the market.

The portfolio of Imperia Bags LLC has obvious deviations from the ideal portfolio, since it does not contain such brands whose products are not "stars", which in turn could provide high profits for the company.

Conclusion

Research of control systems is aimed at developing and improving management in accordance with constantly changing external and internal conditions. In a dynamic modern production and social structure management must be in a state of continuous development, which today cannot be ensured without exploring the ways and possibilities of this development, without choosing alternative directions.

The essence of a portfolio strategy is to answer the following questions: which of the lines of business is profitable in the long term, which product groups should be developed, and which areas should be closed, as they pull the company down. In other words, portfolio strategies are used in marketing to prioritize the management of multiple brands or product groups within a single brand or enterprise.

When developing a corporate portfolio strategy, it is necessary to keep in mind the main goal: to assess the potential of each line of business and to determine the vector of development of the assortment for each line of business.

The methods used to analyze the activities of the enterprise help to identify a problem that prevents the normal functioning of the enterprise.

Based on the presented economic indicators of Empire Bags LLC, it can be seen that 2011 turned out to be a profitable year for the store, since the store operated at a loss in 2012 and 2013. Net profit also decreased compared to 2011, although revenue in 2013 was higher. This problem is caused by the fact that the store has a growing debt to suppliers. The formation of debt can be explained by a decrease in sales due to inflated prices for leather and leather products and rising inflation. To stimulate sales, the company regularly holds promotions to reduce prices up to 30, 40 and 70% for certain brands or individual product groups.

The company should have studied consumer preferences more carefully and taken into account all kinds of wishes regarding the range, support the most popular brands in the company's portfolio.

The results of the study showed that in the portfolio of Empire Bags LLC there are no representatives of the most significant quadrant in the BCG matrix - "stars" who would be leaders in sales and bring high income to the company, which would make it possible to allocate investments in the development and production of new products .

In the course of the study, it was revealed that the balance of the portfolio of Empire Bags LLC is satisfactory. It is necessary to develop new promising areas and strengthen the position of new products - difficult children in the market.

The balance of the portfolio in terms of investments is good: the profit from "Passo Avanti" will be able to provide support for "Poshete and Marzia". And the share of "illiquid assortment - Francesco Molinary dogs" in the portfolio is not so great. Priority investment: support for Passo Avanti, development of the Marzia brand, creation of new products. Poshete brand - you must first increase the profitability of production, otherwise the investment is inappropriate. Askent brand - minimal support.

The Francesco Molinary brand needs to be updated or repositioned.

For the Passo Avanti brand, programs should be developed to increase production in the long term, and reduce the release of new products in the short term (as the company is not able to maintain the development of all new products at the required level).

With a lack of future funds, it is necessary to introduce more new products under the Poshete and Marzia brands into the portfolio.

The portfolio of Empire Bags LLC has obvious deviations from the ideal portfolio, since it does not contain such brands whose products are not "stars", which in turn could provide high profits for the company.

The BCG matrix has its limitations and disadvantages, and as such are:

· the growth rate of the market cannot speak about the attractiveness of the industry as a whole. There are many factors affecting the attractiveness of the segment - entry barriers, macro and micro economic factors. The growth rate of the market does not say how long the trend will be.

· The rate of market growth does not indicate the profitability of the industry, since with high growth rates and low entry barriers, intense competition and price competition may arise, which will make the industry not promising for the company.

Relative market share cannot speak about the competitiveness of the product. Relative market share is the result of past efforts and does not guarantee future product leadership.

· The BCG matrix offers the right directions for investing, but does not contain tactical guidelines and restrictions in the implementation of the strategy. Investing in product development without clear competitive advantages can be inefficient.

List of used literature

1. Ignatieva A.V., Maksimtsov M.M. Study of control systems. Proc. allowance for universities. - M.: UNITY-DANA, 2000 - 71s.

2. Mylnik V.V., Titarenko B.P. Study of control systems. Proc. allowance for universities. - E. Academic prospectus, 2003. - 176s.

3. The official website of the store "Empire of Bags" http://ufa.imperiasumok.ru/?c

4. Article "Introduction to the development of portfolio strategies" - http://powerbranding.ru/marketing-strategy/assortiment/

5. "Goals and stages of portfolio analysis" -http://www.std72.ru/dir/management/strategicheskij_management_uchebnoe_posobie_babanova_ju_v/glava_8_portfelnyj_analiz/196-1-0-3368

6. http://ru.wikipedia.org/wiki/Boston_Consulting_Group

7. http://matrix-sales.ru/articles/61-matritsa-bkg - BCG matrix ideal

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Bibliographic description:

Nesterov A.K. BCG matrix [Electronic resource] // Educational encyclopedia site

The BCG matrix is ​​a two-dimensional model for analyzing competition, this scheme is used to assess the competitive situation. It was developed by the Boston Consulting Group and is also known as the Growth-Market Share Matrix. This most widely used analysis tool for modern management was created by Bruce Henderson, founder of the Boston Consulting Group.

BCG matrix examples

The BCG matrix is ​​constructed as follows. The horizontal axis shows the relative market share (the ratio of the company's market share to the market share of the leading company). The vertical axis shows indicators of market growth rates, that is, growth in consumer demand, which characterizes the attractiveness of the market.

The quadrants of the BCG matrix are called: cash cows, stars, question marks (also called difficult children and wild cats for this quadrant), and dogs.

BCG matrix example:

And one more example:

Construction of the BCG matrix

BCG matrix consists of four quadrants. Market growth rates vary from 0 to 30%. The dividing horizontal line corresponds to the 15% level. The methodology also allows for alternative growth rates depending on the market.

Relative market share is defined as the ratio of a company's market share to that of its largest competitor. The leftmost value of the relative market share scale corresponds to the case when the sales volume of the leader is 10 times higher than the sales of the second largest competitor.

The dividing vertical line corresponds to the sales volume of the second largest competitor, and the far right point corresponds to the value of the relative market share equal to 0.1 (the company's sales volume is 10% of the leader's sales volume).

BCG matrix divided into four quadrants, each containing a different company.

Dairy cows.

These are companies with a high market share in a slow growing market. They are highly profitable, realizing economies of scale, and do not require investment.

These are leaders in a rapidly growing market. Their profitability is high, but they need investments to maintain their leading positions. When the market stabilizes, they will turn into cash cows.

Question marks / difficult children / wild cats.

These are companies with a low market share in a rapidly growing market. They are in a weak position and have a high need for financial resources.

These are companies with a small share in slow-growing markets. Usually they are unprofitable and need additional investments to maintain their positions. "Dogs" are supported by large firms if they are associated with their activities, for example, carry out warranty repairs of their products.

Using the BCG matrix in the enterprise

BCG matrix implies that, as a rule, companies go through a full cycle. They start as "question marks", then, if successful, become "stars", become "cash cows" when the market stabilizes, and end up as "dogs". This is the basic loop.

Also, the path of the company may change depending on the actions of management and competition. So question marks may not become stars, but fail and turn into dogs. Stars, as a result of certain innovations and changes, can return to the position of question marks, and not go into the category of cash cows, similar metamorphoses can be done with a cash cow that becomes a star after modernization. Dogs are the worst to change, and in the case of successful changes in the company, they can only go into the category of question marks.

Based on the BCG matrix, the strategies of companies can change in accordance with the standard strategies of this model.

Depending on which quadrant a particular firm falls into, the BCG matrix allows you to predict its strategic behavior and choose a specific strategy.

BCG Matrix Strategies:

• the stars are looking for investments to expand production and output, that is, to maintain or increase the share of business in this market;
• cash cows strive by all means to maintain their market share, they are ready to direct the surplus of finances to the development of other business areas and scientific research and developments;
• question marks need targeted investments to move to the stars, or maintain their existing market share, or are forced to reduce this business;
• dogs are forced to be liquidated unless there are some special reasons for their preservation.

Graphically, the strategies of the BCG matrix can be represented as follows:

Strategies in their location correspond to the quadrants of the BCG matrix.

BCG matrix on the example of an enterprise

It should be noted that the BCG matrix at the enterprise is also used in the portfolio analysis of the enterprise. Those. the same matrix and analysis model is used, but applied to internal business lines in a separate analyzed company.

BCG matrix at the enterprise is built on the same principle, but instead of a company, goods manufactured by an enterprise can be analyzed, let's consider this with an example.

Let's build a BCG matrix for the company OOO "Kashtan", which sells electricity household appliances, repair, delivery and installation. At the same time, equipment within the company is divided into electronics: TVs, media centers, DVD players, etc.; and household appliances: stoves, refrigerators, washing machines. The matrix is ​​constructed as follows. The company has been selling electronics for a long time and has most income from this particular group of goods, therefore we put it in the quadrant of dairy cows. The sale of household appliances is actively developing within the enterprise and the profitability of this area is growing - this is a star. The prospects for a new direction - repair of equipment - are not clear, therefore we attribute it to the upper right quadrant of the BCG matrix - this is a wild cat or a question mark. Delivery and installation is a related service and cannot be turned into a serious line of business, but without it, the operation of the enterprise will be difficult. This is a dog - the lower right quadrant of the BCG matrix.

The BCG Matrix is ​​a tool for strategic portfolio analysis of the position on the market of goods, companies and divisions based on their market growth and market share. Such a tool as the BCG matrix is ​​currently widely used in management, marketing, and other areas of the economy (and not only). The BCG matrix was developed by the Boston Consulting Group, a management consulting group, in the late 1960s under the direction of Bruce Henderson. It is to this company that the matrix owes its name. The Boston Consulting Group Matrix was one of the first portfolio analysis tools.

Why do you need a BCG matrix for a company? Being simple but effective tool, it allows you to identify the most promising and, on the contrary, the “weakest” products or divisions of the enterprise. Having built a BCG matrix, a manager or marketer gets a clear picture, on the basis of which he can decide which products (divisions, assortment groups) should be developed and protected, and which should be eliminated.

Construction of the BCG matrix

Graphically, the BCG matrix represents two axes and four square sectors enclosed between them. Consider the phased construction of the BCG matrix:

1. Collection of initial data

The first step is to make a list of those products, divisions or companies that will be analyzed using the BCG matrix. Then for them you need to collect data on sales and / or profits for a certain period (for example, for last year). In addition, you will need similar sales data for a key competitor (or a set of major competitors). For convenience, it is desirable to present the data in the form of a table. This will make them easier to handle.

The first step is to collect all the initial data and group them in the form of a table.

2. Calculation of the market growth rate for the year

At this stage, you need to calculate the annual increase in sales (revenues) or profits. Alternatively, you can calculate both the increase in revenue and the increase in profit for the year, and then calculate the average. In general, our task here is to calculate the growth rate of the market. For example, if 100 units were conditionally sold last year. goods, and this year - 110 units, then the market growth rate will be 110%.

Then, for each analyzed product (division), the market growth rate is calculated.

3. Computing Relative Market Share

Having calculated the market growth rate for the analyzed products (divisions), it is necessary to calculate the relative market share for them. There are several ways to do this. The classic option is to take the sales volume of the company's analyzed product and divide it by the sales volume of a similar product of the main (key, strongest) competitor. For example, the sales volume of our product is 5 million rubles, and the strongest competitor selling a similar product is 20 million rubles. Then the relative market share of our product will be - 0.25 (5 million rubles divided by 20 million rubles).

The next step is to calculate the relative market share (relative to the main competitor).

4. Construction of the BCG matrix

At the fourth last stage, the actual construction of the matrix of the Boston Consulting Group is carried out. From the origin we draw two axes: vertical (market growth rate) and horizontal (relative market share). Each axis is divided in half, into two parts. One part corresponds to low values ​​of indicators (low market growth rate, low relative market share), the other corresponds to high values ​​(high market growth rate, high relative market share). An important question to be solved here is what values ​​of the market growth rate and relative market share should be taken as central values ​​dividing the axes of the BCG matrix in half? The standard values ​​are as follows: for the market growth rate - 110%, for the relative market share - 100%. But in your case, these values ​​\u200b\u200bmay be different, you need to look at the conditions of a particular situation.

And the final action is the construction of the BCG matrix itself, followed by its analysis.

Thus, each axis is divided in half. As a result, four square sectors are formed, each of which has its own name and meaning. We will talk about their analysis later, but for now it is necessary to put the analyzed goods (divisions) on the field of the BCG matrix. To do this, sequentially mark the market growth rate and the relative market share of each product on the axes, and draw a circle at the intersection of these values. Ideally, the diameter of each such circle should be proportional to the profit or revenue corresponding to this product. So you can make the BCG matrix even more informative.

Analysis of the BCG matrix

Having built the BCG matrix, you will see that your products (divisions, brands) ended up in different squares. Each of these squares has eigenvalue and a special name. Let's consider them.

The field of the BCG matrix is ​​divided into 4 zones, each of which has its own type of product/division,
development features, market strategy, etc.

STARS. They have the highest market growth rates and hold the largest market share. They are popular, attractive, promising, rapidly developing, but at the same time require significant investment in themselves. That's why they are "Stars". Sooner or later, the growth of “Stars” begins to slow down and then they turn into “Cash Cows”.

CAIRY COWS(aka “Money Bags”). They are characterized by a large market share, with a low rate of its growth. Cash Cows do not require expensive investments, while bringing a stable and high income. The company uses this income to fund other products. Hence the name, these products literally “milk”. WILD CATS (also known as "Dark Horses", "Problem Children", "Problems" or "Question Marks"). They have it the other way around. The relative market share is small, but the sales growth rate is high. It takes a lot of effort and expense to increase their market share. Therefore, the company must conduct a thorough analysis of the BCG matrix and assess whether the “Dark Horses” are capable of becoming “Stars”, whether it is worth investing in them. In general, the picture in their cases is very unclear, and the stakes are high, which is why they are “Dark Horses”.

DEAD DOGS(or "Lame ducks", "Dead weight"). They are all bad. Low relative market share, low market growth. Their income and profitability are low. They usually pay for themselves, but nothing more. There are no prospects. From " Dead dogs”should be disposed of or at least stopped funding if they can be dispensed with (there may be a situation where they are needed for the Stars, for example).

BCG Matrix Strategies

Based on the analysis of goods according to the matrix of the Boston Consulting Group, the following main strategies of the BCG matrix can be proposed.

INCREASE MARKET SHARE. Applied to "Dark Horses" in order to turn them into "Stars" - a popular and well-selling item.

KEEPING MARKET SHARE. Suitable for "Cash Cows", as they bring a good stable income and it is desirable to maintain this state of affairs as much as possible.

REDUCING MARKET SHARE. Perhaps in relation to “Dogs”, unpromising “Difficult Children” and weak “Cash Cows”.

LIQUIDATION. Sometimes the liquidation of this line of business is the only reasonable option for "Dogs" and "Difficult Children", which, most likely, are not destined to become "Stars".

Conclusions on the BCG matrix

Having built and analyzed the matrix of the Boston Consulting Group, a number of conclusions can be drawn from it.

Advantages and disadvantages of the BCG matrix

The BCG matrix, as a portfolio analysis tool, has its pros and cons.

Let's list some of them.

Advantages of the BCG matrix:

• a well-thought-out theoretical basis (the vertical axis corresponds to the product life cycle, the horizontal axis corresponds to the effect of scale of production);
• objectivity of the estimated parameters (market growth rate, relative market share);
• ease of construction;
• clarity and clarity;
• great attention is paid to cash flows;

Disadvantages of the BCG matrix:

• it is difficult to clearly define the market share;
• only two factors are evaluated, while other equally important ones are overlooked;
• not all situations can be described within the 4 studied groups;
• does not work when analyzing industries with a low level of competition;
• the dynamics of indicators, trends are almost not taken into account;
• the BCG matrix allows you to develop strategic decisions, but says nothing about tactical moments in the implementation of these strategies.

The BCG matrix is ​​a unique matrix that helps to build a diagram based on the initial data and analyze all market segments. The matrix was created by the Boston Consulting Group, from where it got its name.

It makes it possible to correctly analyze the market mathematically and choose necessary measures for further development different products in the future.

It sounds a little confusing, but it's actually a little simpler than it seems at first glance. The matrix strategy assumes that all products belong to only four groups:

· "dogs"- products that represent a small market share in their low growth segment; these products are less promising, so the production of this segment will not be successful;

"difficult kids"- goods that can quickly break into a promising segment, but still occupy a small part of the entire market; goods with good development rates, but requiring financial and investment;

"cash cows"- a segment of the market with a constant, but insignificant income, which does not require any investment; their share is significant, but in a weakly growing market segment;

· "stars"- products with a significant share of the fast-growing market, which have the greatest success; from the first days they bring a good income, and future investments in this segment can only increase profits.

The ratio of the growth rate relative to market segments can be displayed:

The essence of the BCG array is to find a specific segment of the market, which can be attributed to the original group or a single product.

Let's try to implement this procedure in practice through the functionality of Excel:

1. Let's create a table in which we will display the original products with information about the number of sales of the current month and the past, as well as the lowest price of these products from a competitor.

2. We calculate the growth rates of these goods on the market and their relative share. Divide the number of sales for the current period by the number for past period, and, accordingly, the value of sales of the current period for sales from competitors.

3. The next step is to build a chart based on the information received. We use a bubble type chart - "Insert" - "Diagram" - "Others" - "Bubble".

4. Let's choose the necessary introductory ones. Open the functions and point to the "Select data" item.

5. In the data selection window, click on "Change" and begin to fill in the changes to the series of the bubble chart.

6. In the "Name of the series" set the cell "Name". “X values” will be pulled up from the “Relative market share” column, in “Y values” - “Market growth rate”. "Bubble sizes" will be taken from the "Current period" range. On this, we complete the input of values ​​​​and form a diagram.

7. Let's carry out similar actions for all groups and get the final bubble chart. It remains only to correctly adjust the axis.

8. You need to slightly adjust the axis. To begin with, in the horizontal axes, change the “Minimum value” to “0”, “Maximum” to “2”, and “Divisions” to “1”.

9. In the settings for the vertical axes, set the "Minimum" to 0, "Maximum" to "2.18", and divisions to "1.09". These indicators are calculated from the average indicator of the relative market share, which must be multiplied by 2. "Divisions" are also set to "1.09". The last thing we indicate is “Axis value” - “1.09”, respectively.

10. It remains to sign our axes and we can proceed to a direct analysis of the BCG matrix.

The BCG matrix makes it possible to conduct a quick and correct analysis of market segments.

In our case, we see that:

"Product 2" and "Product 5" belong to the group of products "Dogs" - they do not make a profit. They are not popular in the market, so they are no longer of interest to us in the future sales strategies.

“Product 1” is a representative of the “Difficult Children” group, which means that the product, with proper development and financing, can make a profit, but this will not happen in the near future.

"Product 3" and "Product 4" - "Cash Cows" - excellent revenue makes it possible to develop other categories, while not investing in this segment.

“Product 6” is the only one that fully belongs to the “Stars” category - its excellent opportunity to make a profit keeps the entire business, and additional investments in this segment will only help improve the financial situation.

Thus, it is possible to conduct a significant analysis of market segments and obtain the necessary conclusions for each group of goods using the BCG matrix. Building a matrix should not cause any particular difficulties, but it is worth considering that verified initial data and indicators are needed, because they are the basis of the matrix.

Enterprises that produce goods or provide services in a large assortment are forced to conduct a comparative analysis of the firm's business units to make a decision on the allocation of investment resources. The maximum financial investments are received by the priority area of ​​the company's activity, which brings the maximum profit. The tool for managing the product range is the BCG matrix, an example of the construction and analysis of which helps marketers make decisions about the development or liquidation of the company's business units.

The concept and essence of the BCG matrix

The formation of the company's long-term plans, the correct distribution of financial resources between the components of the company's strategic portfolio occurs through the use of a tool created by the Boston Consulting Group. Hence the name of the tool - the BCG matrix. An example of building a system is based on the dependence of the relative market share on its growth rate.

The competitiveness of a product is expressed as an indicator of the relative market share and is plotted along the X axis. An indicator whose value is greater than one is considered high.

The attractiveness and maturity of the market is characterized by the value of its growth rate. Data for this parameter is plotted on the matrix along the Y axis.

After calculating the relative share and growth rate of the market for each good that the firm produces, the data are transferred to a system called the BCG matrix (an example of the system will be discussed below).

Matrix quadrants

When product groups are distributed according to the BCG model, each assortment unit falls into one of the four quadrants of the matrix. Each quadrant has its own name and recommendations for decision making. Below is a table consisting of the same categories as the BCG matrix, an example of the construction and analysis of which cannot be done without knowing the features of each zone.

Objects of analysis

An example of the construction and analysis of the BCG matrix is ​​impossible without the definition of goods that can be considered in the projection of this system.

1. Lines of business that are unrelated. These can be: hairdressing services and the production of electric kettles.
2. Assortment groups of the company sold in one market. For example, selling apartments, renting apartments, selling houses, etc. That is, the real estate market is considered.
3. Goods classified in one group. For example, the production of utensils made of glass, metal or ceramics.

BCG matrix: an example of construction and analysis in Excel

For determining life cycle product and strategic planning marketing activities enterprises will consider an example with fictitious data to understand the topic of the article.

The first step is to collect and tabulate data on the analyzed products. This operation is simple, you need to create a table in Excel and enter data on the enterprise into it.

The second step is the calculation of market indicators: growth rate and relative share. To do this, you will need to enter formulas for automatic calculation in the cells of the created table:

• In cell E3, which will contain the value of the market growth rate, this formula looks like this: \u003d C3 / B3. If you get a lot of decimal places, then you need to reduce the bit depth to two.
• The procedure is the same for each item.
• In cell F9, which is responsible for relative market share, the formula looks like this: = C3 / D3.

The result is a completed table.

The table shows that sales of the first product fell by 37% in 2015, while sales of product 3 increased by 49%. Competitiveness or relative market share for the first category of goods is lower than that of competitors by 47%, but for the third and fourth goods it is higher by 33% and 26%, respectively.

Graphic display

Based on the data in the table, a BCG matrix is ​​constructed, an example of construction in Excel of which is based on the choice of a chart of the “Bubble” type.

After selecting the type of chart, an empty field appears, by clicking the right mouse button on which you need to call up a window for selecting data to fill in the future matrix.

After adding a row, its data is filled in. Each row is a product of the enterprise. For the first item, the data will be as follows:

1. The row name is cell A3.
2. X-axis - cell F3.
3. Y-axis - cell E3.
4. The bubble size is cell C3.

This is how the BCG matrix is ​​created (for all four goods), the example of constructing other goods is similar to the first one.

Change the format of the axes

When all the products are graphically displayed on the diagram, it is necessary to break it into quadrants. This distinction is the X, Y axes. You only need to change automatic settings axes. By clicking on the vertical scale, the “Format” tab is selected and the “Format Selection” window is called up on the left side of the panel.

Changing the vertical axis:

• The maximum value is the average ODR multiplied by 2: (0.53+0.56+1.33+1.26)/4=0.92; 0.92*2=1.84.
• The main and intermediate divisions are the average ODR.
• Intersection with the X-axis - average ODR.

Changing the horizontal axis:

• The minimum value is assumed to be "0".
• The maximum value is taken as "2".
• The remaining parameters are "1".

The resulting diagram is the BCG matrix. An example of the construction and analysis of such a model will give an answer about the priority development of the company's assortment units.

Signatures

To complete the construction of the BCG system, it remains to create labels for the axes and quadrants. It is necessary to select the diagram and go to the "Layout" section of the program. Using the "Inscription" icon, the cursor is moved to the first quadrant and its name is written. This procedure is repeated in the next three zones of the matrix.

To create a chart title, which is located in the center of the BCG model, the pictogram of the same name is selected, following from the "Inscription".

Following from left to right on the Excel 2010 toolbar of the "Layout" section, similarly to the previous labels, axis labels are created. As a result, the BCG matrix, an example of construction in Excel of which was considered, has the following form:

Analysis of assortment units

Building a diagram of the relationship between market share and its growth rate is half the solution to the problem of strategic marketing. The crucial point is the correct interpretation of the position of goods on the market and the choice of further actions (strategies) for their development or liquidation. BCG matrix, analysis example:

Product No. 1, located in the zone of low market growth and relative share. This commodity unit has already passed its life cycle and it does not bring profit to the company. In a real situation, it would be necessary to conduct a detailed analysis of such goods and determine the conditions for their release in the absence of profit from their sale. Theoretically, it is better to exclude this commodity group and direct the freed up resources to the development of promising benefits.

Product #2 is in a growing market but requires investment to increase competitiveness. It is a promising product.

Product #3 is at the peak of its life cycle. This type of assortment unit has high ODR and market growth rates. An increase in investment is required so that in the future the business unit of the company that produces this product brings a stable income.

Product No. 4 is a profit generator. The funds received by the company from the sale of this category of the assortment unit are recommended to be directed to the development of goods No. 2, 3.

Strategies

An example of the construction and analysis of the BCG matrix contributes to the selection of the following four strategies.

1. Increase in market share. Such a development plan is acceptable for products located in the Wild Cats zone, with the aim of moving them into the Stars quadrant.
2. Maintaining market share. For getting stable income from "Cash Cows" it is recommended to apply this strategy.
3. Decreasing market share. Let's apply the plan to weak "Cash Cows", "Dogs" and unpromising "Wild Cats".
4. Liquidation is a strategy for the "Dogs" and unpromising "Wild Cats".

BCG matrix: an example of construction in a Word

The method of building a model in Word is more laborious and not entirely clear. An example will be considered according to the data that was used to build the matrix in Excel.

The column “Market growth rate” appears, the values ​​of which are calculated as follows: (1-growth rate data) * 100%.

A table is built with four rows and columns. The first column is combined into one cell and signed as "Market Growth Rate". In the remaining columns, you need to combine rows in pairs to get two large cells at the top of the table and two rows left at the bottom. As shown.

The lowest line will contain the coordinate “Relative market share”, above it - the values: less or more than 1. Referring to the data of the table (to its last two columns), the definition of goods by quadrants begins. For example, for the first product, ODR = 0.53, which is less than one, it means that its location will be either in the first or in the fourth quadrant. Market growth rate - negative meaning equal to -37%. Since the growth rate in the matrix is ​​divided by a value of 10%, then product number 1 definitely falls into the fourth quadrant. The same distribution occurs with the remaining assortment units. The result should match the Excel chart.

The BCG matrix: an example of construction and analysis determines the strategic positions of the company's assortment units and participates in making decisions about the allocation of enterprise resources.