Questions and Answers
What happens to Stars in the long run when the growth rate slows down?
What is the primary characteristic of Stars in the BCG Growth-Share Matrix?
What is the characteristic of Cash Cows in the BCG Growth-Share Matrix?
What is the main challenge of Question Marks?
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What is the ultimate goal for business organisations with regard to Question Marks?
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Why do Question Marks require heavy investment?
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What can Question Marks become if left unattended?
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What is the main advantage of Stars in the BCG Growth-Share Matrix?
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What is the primary focus of top management in an organization while making strategic decisions?
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What are Grand Strategies also known as?
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According to Michael E. Porter, what is the primary objective of a Focus Differentiation strategy?
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What is the primary purpose of Functional Strategies?
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What is the role of middle management in the strategic decision-making process?
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What are the four generic strategies discussed by William F. Glueck and Lawrence R. Jauch?
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How can strategies be classified?
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What is the primary objective of a Cost Leadership strategy?
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What is the primary purpose of the BCG growth-share matrix?
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What does the vertical axis of the BCG matrix represent?
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What are the primary characteristics of 'Cash Cows' in the BCG matrix?
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What is the purpose of classifying businesses or products using the BCG matrix?
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What is represented by the horizontal axis of the BCG matrix?
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What type of businesses or products are represented by 'Question Marks' in the BCG matrix?
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What is the benefit of using the BCG matrix in portfolio analysis?
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Study Notes
Strategic Management
BCG Growth-Share Matrix
- The BCG Growth-Share Matrix is a tool for portfolio analysis of a company having invested in diverse businesses with varying scope of profits and growth.
- The matrix classifies businesses on a two-dimensional growth share matrix with market share and market growth rate as the two dimensions.
- The vertical axis represents market growth rate, providing a measure of market attractiveness.
- The horizontal axis represents relative market share, serving as a measure of company’s strength in the market.
Types of Products or SBUs
- Stars: Products or SBUs that are growing rapidly, needing heavy investment to maintain their position and finance their rapid growth potential, representing best opportunities for expansion.
- Cash Cows: Low-growth, high market share businesses or products that generate cash and have low costs, established and successful, needing less investment to maintain their market share.
- Question Marks: Low market share businesses in high-growth markets, requiring a lot of cash to hold their share, needing heavy investments with low potential to generate cash.
- Dogs: Low-growth, low market share businesses or products.
Strategic Choice
- Businesses follow different types of strategies to enter the market, stay relevant, and grow in the market.
- Strategies can be classified based on levels of the organisation, stages of business life cycle, and competition.
- Grand Strategies/Directional Strategies include stability, growth, retrenchment, and combination.
- Competitive Strategies include Cost Leadership, Differentiation, Focus Cost Leadership, and Focus Differentiation.
- Functional Strategies are meant for strategic management of distinct functions such as Marketing, Financial, Human Resource, Logistics, and Production.
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Description
This quiz is about the product portfolio matrix in strategic management, which helps organisations identify four types of products or Strategic Business Units (SBUs).