400 crore to acquire around 10 per cent stake in DB Realty and another Rs 300 crore to set up a joint platform for undertaking slum redevelopment projects. Recently in February 2022, real estate firm Godrej Properties which is one of SBUs of Godrej Group of Companies declared its plan of investing Rs. For example an organization can push a Question mark into a Star and finally a cash cow. Organization increase investments in SBUs which have promising products and attractive market share a thrust is laid on such products which have potential to grow.
There are four strategies based on BCG Matrix: Build, Hold, Harvest and Divest. The key theory underlying this fact is existence of an experience curve and that market share is achieved due to overall cost leadership. The dimension of business based on strength and relative market share will measure comparative advantage indicated by market dominance. The analysis requires that both measures be calculated for each SBU. Relative market share shows SBU Sales this year leading competitor’s sales this year and market growth share shows industry sales this year minus industry Sales last year.
This matrix helps in doing a comparative analysis of business potential and the evaluation of business environment. BCG Matrix is a four celled matrix (a 2 X 2 matrix) developed by Bruce Henderson for the Boston Consulting Group in 1970 in USA. The general purpose of the analysis is to help understand in which SBU brands the firm should invest in and which ones should be divested. Question mark SBUs represent business units having relatively low market share in a high growth industry and Dog SBU represents businesses having weak market shares and they operate in low-growth markets.
Cash cow SBU requires little investment but they generate steady cash that can be utilized for investment in other business units. Cash Cow SBU represents business units having a large market share in a mature yet slow growing industry. Star SBU represents business units having large market share in a fast growing industry. These two dimensions reveal health of the strategic business units (SBU) in terms of financial support needed from the point of view of sustenance. The matrix classifies business portfolio into four categories based on two dimensions industry attractiveness (growth rate of that industry) and relative market share.
Boston Consulting Group’s Matrix is a business analysis tool to evaluate the strategic position of a business unit in terms of its brand portfolio and its future prospects.
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