Boston Grup Matrix

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BGC MATRIX 1.0 INTRODUCTION The matrix was invented by Boston Consulting Group (BCG) in the 1970s to help organizations with their portfolio strategy. This framework applies two inputs; market growth and market share to a portfolio of segments, products or businesses, and then draws conclusions about how resources should be allocated across the portfolio. 1.1 Underlying theory and assumption: 1. Stars (high growth and market share) are the first priority for resources. 2. Cash Cows (low growth and high market share) are also attractive businesses, but do not need as much investment. They fund the business. 3. Question mark segment (high market growth and low market share). These are double-or-quit businesses, where a binary choice should be made to invest to become the leader or bow out. 4. Dog segment should be the lowest priority for scarce resources – hard to do because they are usually the neediest of businesses. 1.2 Limitations of this framework The primary danger is that this framework is too simplistic and neat, determining major strategic decisions without considering other factors. This framework should not be used in isolation; the decisions should be made from combination of decision tools. 2.0 DEVELOPING THE BCG MATRIX 2.1 Choose the unit. Due to the availability of information, we are focusing on the first layer of MISC Bhd revenue which is the business segment. To obtain a better result, a further analysis has to be conducted to drilldown the information to the business unit activities. 2.2 Define the market. Defining the market is one of the most important things to do in this analysis. This is because incorrectly defined market may lead to poor classification. We decided to classify AP Moller, a Denmark conglomerate company
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