By Mary Hall Updated June 28, — 1:
Large corporations usually face problems in allocating resources amongst various units and product lines.
It is based on two factors which are: The growth rate of the product-market. Market share held by the company in the respective market, in comparison to its competitors.
BCG Matrix helps the corporation in analyzing the product lines or business units, for prioritizing them and allocating resources.
The model aims at identifying the problem of resource deployment, among different business segments. In this approach, various businesses of a company are classified on a two-dimensional grid. BCG — Growth Share matrix The vertical axis shows market growth rate, which is a measure of how attractive the market is?
With the help of this matrix, the company can ascertain four kind of strategic business unit or products as follows: It represents those products which are growing at a faster rate and requires the huge investment to maintain their position in the market.
The products whose growth is low but holds high market share. They reap a lot of cash for the company and do not require finance for expansion.
It indicates those products which possess a low market share in a high-growth market and so need heavy investment to hold their share in the market, but do not generate cash in the same proportion.
The growth–share matrix (BCG Matrix) was created by Bruce D. Henderson for the Boston Consulting Group in to help corporations to analyze their business units and to . Mar 24, · Difference Between BCG and GE Matrices BCG matrix is a matrix used by large corporations to decide the ratio in which resources are allocated among various business segments. Similar to this, GE matrix also helps firms decide their strategy with respect to different product lines, i.e. the product they should add in the range of . Porter s Five Forces and BCG. Download. Porter s Five Forces and BCG. Porter's model emphasises an outside analysis of the organisation's environment over an internal focus. Cons: The model assumes a given state of affairs, and does not apply well to industries in turmoil. BCG matrix was formulated by Boston consulting group to.
Dogs represents those products, which neither have a high growth rate nor high market share. Such products generate enough cash to maintain themselves but will not survive in the long term. The model is inspired by traffic lights which are used to manage traffic at crossings, wherein green light says go, yellow says caution and Red say stop.
The matrix comprises of nine cells, with two major dimensions, i. Business strength is influenced by market share, brand image, profit margins, customer loyalty, technological capability and so on. On the other hand, industry attractiveness is influenced by drivers such as pricing trends, economies of scale, market size, market growth rate, segmentation, distribution structure, etc.
GE — Portfolio matrix When various product lines or business units are drawn on the matrix, strategic choices can be made, on the basis of their position in the matrix. Product falling into green section reflects the business is in the good position, but product lying into yellow section needs the managerial decision for making choices and the product in the red zone, are dangerous as they will lead the company to losses.
BCG matrix can be understood as the growth-share model, that reflects a growth of business and the market share possessed by the firm. On the other hand, GE matrix is also termed as multifactor portfolio matrix, which businesses use in making strategic choices for product lines or business units based on their position in the grid.
BCG matrix is simpler in comparison to GE matrix, as the former is easy to draw and consist of only four cells, while the latter consist of nine cells. The two dimensions on which BCG matrix is based are market growth and market share.
Conversely, industry attractiveness and business strengths are two factors of GE matrix. BCG matrix is used by the companies to deploy their resources among various business units. On the contrary, firms use GE matrix to prioritize investment among various business units.
BCG matrix represents two degrees of market growth and market share, i. In contrast, in GE matrix there are three degrees of business strength, i. Conclusion To sum up, we can say that the two models are similar, but have some differences that cannot be ignored.
While BCG matrix is simpler to plot and easier to understand, GE matrix is a bit difficult to draw and interpret.
However, it is free from certain limitations of BCG matrix.SWOT and Michael Porter's Five Forces analysis model are both useful tools in strategic planning. While they both help in assessing your company's strengths and weaknesses relative to industry. Mar 24, · Difference Between BCG and GE Matrices BCG matrix is a matrix used by large corporations to decide the ratio in which resources are allocated among various business segments.
Similar to this, GE matrix also helps firms decide their strategy with respect to different product lines, i.e. the product they should add in the range of . The growth–share matrix (BCG Matrix) was created by Bruce D. Henderson for the Boston Consulting Group in to help corporations to analyze their business units and to .
A: Porter's Five Forces and SWOT analysis are both tools commonly used by companies to conduct analyses and make strategic decisions. Each of the models seeks to define the company's position in. BCG Matrix, SWOT Analysis and Porter Model BCG Matrix Introduction: The Boston Consulting Group (BCG) Matrix is an uncomplicated tool to evaluate a company’s position in terms of its product range.
It facilitates a company think about its products and services and makes decisions about which it. Difference Between BCG and GE Matrices March 21, By Surbhi S 1 Comment BCG matrix is a matrix used by large corporations to decide the ratio in which resources are allocated among various business segments.