BCG modellen og Ansoffs vækstmatrice | Afsætning A

Side 1

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The BCG is based on the product life cycle theory that can be used to decide what priorities should be given in the product portfolio of a business unit. To make sure long term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that make a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product’s market grows the better is it for the company.

I would say that Nike is suitable for this analyzing structure. Because it started up with a question mark then a star, then later it became a cash cow and maybe in future it will be a dog. The company started up making a lot of money. Then came the brown shoe, and the tragedy with the child labor and it became a cash cow.

HHX 1. år

You can place products in the BCG matrix in 4 categories in a portfolio of a company:

1. Stars (=high-growth market share)

- Use large amounts of cash and are leaders in the business so they should make large amounts of cash.

- Regularly about in balance on net cash flow. But if needed any try should be made to hold share, because the rewards will be a cash cow if market share is kept.

2. Cash cows (=low growth, high market share)

- Profits large amounts of cash generation should be high, and because of the low growth, investments needed should be low. Keep profits high.

3. Dogs (=low growth, low market share)

- Avoid and minimize the number of dogs in a company.

- Beware of expensive ‘turn around plans’

4. Question marks (= high growth, low market share)

- Have the worst cash characteristics of all, because high demands and low returns due to low market share

- If nothing is done to change market share, questions will simply soak up great amounts of cash and later, as the growth stops, a dog.

- Either invest heavy or sell off or invest nothing and make whatever cash it can. Increase market share or deliver cash.

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The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and small business leaders a quick and simple way to develop a strategic approach to growth.

Sometimes called the Product/Market Expansion Grid, it shows four growth options for business

created by matching up existing and new products and services with existing and new markets, as shown in Figure. The Matrix basically shows the risk that a particular strategy will picture you to, the idea being that each time you move into a new area, you increase risk.

Side 2

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1. Market Penetration Strategy when the product is in the current market, it can still grow. There are three major approaches to increasing current product's market share:

- Encourage current customers to buy more.

- Attract competitor's customers.

-Convince non-users to use the product.

2. Market-Development Strategy

When the current product is launched in a new market, there are three approaches to develop the market:

- Expand distribution channels.

- Sell in new locations.

- Identify the potential users.

3. Product-Development Strategy

When a new product is launched in the current market, the intensive growth strategies could be to:

- Develop new features.

- Develop different quality levels.

- Improve the technology.

4. Diversification

When a new product is launched in a new market, diversification makes good sense as better opportunities are found outside the present business. The diversification strategies are of three types:

-Concentric Diversification Strategy: Develop new products with the earlier technology for new segments

- Conglomerate Diversification Strategy: Develop new products for new markets.

- Horizontal Diversification Strategy: Develop new products with new technology for old customers.

Based on McDonalds: Market Penetration: Make more sales to current customers without changing its products. They can add new stores in current market areas, improve in advertising and prices.

Market Development: Identify and develop new markets for its current products. By evaluate new demographic or geographic (Asian, European & Australian) markets.

Product Development: Offer modified or new products to current markets. By increasing food offerings, sell burgers in supermarkets.

Diversification: Start up or buy businesses outside current products and markets. Test new restaurant concepts – or branded casual clothing. Sources: Google and the book.