OPPapers.com

Mba

The Boston Consulting Group (BCG) Matrix

Autonomous divisions (or profit centers) of an organization make up what is called a business portfolio. When a firm's divisions compete in different industries, a separate strategy often must be developed for each business. The Boston Consulting Group (BCG) Matrix and the Internal External (IE) Matrix are designed specifically to enhance a multidivisional firm's efforts to formulate strategies.
The BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate. The BCG Matrix allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization. Relative market share position is defined as the ratio of a division's own market share in a particular industry to the market share held by the largest rival firm in that industry. For example, in Table 6 4, the relative market share of Ocean Spray premium non-carbonated beverage is 14.7/40.5 = 0.36 and Sony's market share in the music industry is 16/27 = 0.59, and the new Hilton Promus hotel company's market share is 290,000/528,896 = 0.55.

TABLE 6 4 A. Market Share of Premium Non-carbonated Beverages

BRAND MARKET SHARE IN 1999 % CHANGE IN SHARE FROM 1998
Snapple 40.5 % 3.7 96
Ocean Spray 14.7 2.9
Arizona 13.7 2.3
Lipton 10.8 1.3
SoBe 9.3 6.9
Mistic 5.0 3.2
Nestea 4.7 0.9
Nantucket Nectars 1.4 0.1. .

B. Market Share of the World's Largest Music Companies

COMPANY MARKET SHARE IN 1999 MARKET SHARE IN 1998
Universal Music Group 27% 23%
Time Warner Music 17 22
Sony 16 NA
Bertelsmann's BMG 14 12
EMI 10 NA
Independents 17 NA

C. Market Share of the World's Largest Hotel Companies in 1999

COMPANY # OF ROOMS
1. Cendant 528,896
2. Bass 461,434
3. Marriott 328,300
4. Choice 305,171 '
5. Best Western 301,899
6. Accor 291,770
7....