Microsoft operates in multiple industries which are as follow, computer hardware, computer software, digital distribution and consumer electronics. The foundation of the company was built on, developing interpreting system for Altair , eventually, company became market leader in computer operating system developing industry. Unfortunately, company has lost its market share to android in operating system industry. Some of the operating systems developed by Microsoft are, Windows 7, Windows 8.
Windows 7 was a big success on the part of Microsoft, in operating system industry. Presently, Apple and Google are the core competitors of Microsoft in operating systems. Moreover, Microsoft Corporation operates in gaming industry, X-box and other complementary product and software related to the product is also the creation of company. Gigantic Corporation like Microsoft is not easy to manage, as mentioned in introduction that, Corporation has multiple operating segment and each segment operates in distinct industry.
For such organization formulation of strategy can be very complicated for top-level management. Therefore, to cope with the problem top-level managers use tools to formulate distinct strategy for each segment according to its needs. BSG Matrix is one of the tool which can be useful for top level manager to cope with dilemmas like, which strategy should be adopted for which segment? This matrix was specially designed for those companies which have multiple profit centers or operates in multiple industries.
Created by the Boston Consulting Group, the BCG matrix — also known as the Boston or growth share matrix — provides a framework for analyzing products according to growth and market share.
The matrix has been used since to help companies gain insights on what products best help them capitalize on market share growth opportunities. Reeves Martin, senior partner and managing director of the Boston Consulting Group, said that nearly 50 years after its inception, the BCG matrix remains a valuable tool for helping companies understand their potential. First, you'll need data on the market share and growth rate of your products or services.
When examining market growth, you need to objectively compare yourself to your largest competitor and think in terms of growth over the next three years. If your market is extremely fragmented, however, you can use absolute market share instead, according to the Strategic Thinker blog.
Next, you can either draw a matrix or find a BCG chart program online. There are several that are free, available for subscription or part of another charting program, such as the free one by Miro. In this four-quadrant chart, market share is shown on the horizontal line low left, high right and growth rate along the vertical line low bottom, high top.
The four quadrants are designated Stars upper left , Question Marks upper right , Cash Cows lower left and Dogs lower right.
Place each of your products in the appropriate box based on where they rank in market share and growth. Where you choose to set the dividing line between each quadrant depends in part on how your company compares to the competition. Here is a breakdown of each quadrant:. Stars: The business units or products that have the best market share and generate the most cash are considered stars.
Monopolies and first-to-market products are frequently termed stars. However, because of their high growth rate, stars consume large amounts of cash. This generally results in the same amount of money coming in that is going out.
Stars can eventually become cash cows if they sustain their success until a time when the market growth rate declines. Companies are advised to invest in stars. Cash Cows: Cash cows are the leaders in the marketplace and generate more cash than they consume. These are business units or products that have a high market share but low growth prospects. According to NetMBA, cash cows provide the cash required to turn question marks into market leaders, cover the administrative costs of the company, fund research and development, service the corporate debt, and pay dividends to shareholders.
Companies are advised to invest in cash cows to maintain the current level of productivity, or to 'milk' the gains passively. Dogs: Dogs, or pets as they are sometimes referred to, are units or products that have both a low market share and a low growth rate.
Also there are many situations in business where the Dogs can out earn the Cash Cows. The BCG grid may provide a the basis for a business development strategy for large business but what about the small business?
It is possible to have a high market share and not have increased profits, or have a low market share and still be profitable. BCG Analysis is a great stepping stone for market research and has great possibilities, but for today's companies it may need to be tweaked just a little.
This business model is a pretty decent model and if used in the right situation it can help a business to increase and monitor its market share and growth. All business big or small should have some type of a business plan or model that they can base their business products on and by keeping an eye on the market and watching what consumers want they can increase their profit.
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