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BCG Matrix
Strategic Management
The BCG Matrix: An overview and a hypothetical situation
The Boston Consulting Group (BCG) Matrix is an efficient way to visually represent a company's portfolio of goods and services, and provides a way for organizations to evaluate their strategic possibilities. The BCG Matrix classifies a company according to three primary business interests or units (BCG Matrix, 2012, Net MBA). The Matrix is represented in the form of four quadrants: stars, question marks, dogs, and cash cows.
tars,' which are located in the upper left quadrant of the BCG 'box,' are relatively self-explanatory. They are popular goods and services with a large market share. However, the problem with stars is that they are very demanding, cash-wise and time-wise, for the organization (much like 'stars' in real life, hence the name). The organization profits off the branding and positive buzz that stars generate but the stars generate little real cash (BCG Matrix, 2012, Net MBA). The hope is that through economies of scale, a star can eventually become a 'cash cow.' Dogs, located in the lower right...
They do not divert many resources from the organization, but they are simply not worth the money required to sustain them. Dogs are not costly -- but not very profitable either (BCG Matrix, 2012, Net MBA).
In this scenario, however, the question of how to deal with 'cash cows' and 'question marks' is at issue. The company's electronics division is located in the upper right quadrant of the matrix as a question mark and the appliance division appears in the lower left quadrant of the matrix as a cash cow. Cash cows are the bread and butter of company and create more cash than required to sustain them (BCG Matrix, 2012, Net MBA). Cash cows must be 'milked' or used to generate the maximum amount of cash possible to fund other ventures. A company cannot remain 'sitting still' in the midst of contentious market activity, particularly a technologically-oriented company, and must always keep its eye upon the potential to generate the 'next new thing,' just as Apple is always trying to create…
References
BCG Matrix. (2012). Net MBA. Retrieved:
http://www.netmba.com/strategy/matrix/bcg/
Paschal, Peter. (2012). Half of U.S. households have Apple products. CNN. Retrieved:
http://www.cnn.com/2012/03/29/tech/gaming-gadgets/household-apple-products/index.html
http://www.prlog.org/11820444-us-consumer-electronics-devices-market-projected-to-be-worth-us-2939-billion-by-2016.html
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