Boston Consulting Group (BCG) Matrix is a Iour celled matrix (a 2 * 2 matrix) developed

by BCG, USA. It is the most renowned corporate portIolio analysis tool. It provides a graphic
representation Ior an organization to examine diIIerent businesses in it`s portIolio on the
basis oI their related market share and industry growth rates. It is a two dimensional analysis
on management oI SBU`s (Strategic Business Units). In other words, it is a comparative
analysis oI business potential and the evaluation oI environment.
According to this matrix, business could be classiIied as high or low according to their
industry growth rate and relative market share.
Relative Market Share SBU Sales this year leading competitors sales this year.

Market Growth Rate Industry sales this year - Industry Sales last year.
The analysis requires that both measures be calculated Ior each SBU. The dimension oI
business strength, relative market share, will measure comparative advantage indicated by
market dominance. The key theory underlying this is existence oI an experience curve and
that market share is achieved due to overall cost leadership.
BCG matrix has Iour cells, with the horizontal axis representing relative market share and the
vertical axis denoting market growth rate. The mid-point oI relative market share is set at 1.0.
iI all the SBU`s are in same industry, the average growth rate oI the industry is used. While,
iI all the SBU`s are located in diIIerent industries, then the mid-point is set at the growth rate
Ior the economy.
Resources are allocated to the business units according to their situation on the grid. The Iour
cells oI this matrix have been called as stars, cash cows, question marks and dogs. Each oI
these cells represents a particular type oI business.

10 x 1 x 0.1 x
Figure: BCG Matrix
1. Stars- Stars represent business units having large market share in a Iast growing
industry. They may generate cash but because oI Iast growing market, stars require
huge investments to maintain their lead. Net cash Ilow is usually modest. SBU`s
located in this cell are attractive as they are located in a robust industry and these
business units are highly competitive in the industry. II successIul, a star will become
a cash cow when the industry matures.
2. Cash Cows- Cash Cows represents business units having a large market share in a
mature, slow growing industry. Cash cows require little investment and generate cash
that can be utilized Ior investment in other business units. These SBU`s are the
corporation`s key source oI cash, and are speciIically the core business. They are the
base oI an organization. These businesses usually Iollow stability strategies. When
cash cows loose their appeal and move towards deterioration, then a retrenchment
policy may be pursued.
3. "uestion Marks- Question marks represent business units having low relative market
share and located in a high growth industry. They require huge amount oI cash to
maintain or gain market share. They require attention to determine iI the venture can
be viable. Question marks are generally new goods and services which have a good
commercial prospective. There is no speciIic strategy which can be adopted. II the
Iirm thinks it has dominant market share, then it can adopt expansion strategy, else
retrenchment strategy can be adopted. Most businesses start as question marks as the
company tries to enter a high growth market in which there is already a market-share.
II ignored, then question marks may become dogs, while iI huge investment is made,
then they have potential oI becoming stars.
4. ogs- Dogs represent businesses having weak market shares in low-growth markets.
They neither generate cash nor require huge amount oI cash. Due to low market share,
these business units Iace cost disadvantages. Generally retrenchment strategies are
adopted because these Iirms can gain market share only at the expense oI
competitor`s/rival Iirms. These business Iirms have weak market share because oI
high costs, poor quality, ineIIective marketing, etc. Unless a dog has some other
strategic aim, it should be liquidated iI there is Iewer prospects Ior it to gain market
share. Number oI dogs should be avoided and minimized in an organization.
Problem with quwstion marks:
Question marks are businesses or products with low market share but which operate in higher
growth markets. This suggests that they have potential, but may require substantial
investment in order to grow market share at the expense oI more powerIul competitors.
Management have to think hard about "question marks" - which ones should they invest in?
Which ones should they allow to Iail or shrink?
SWOT Analysis

A scan of the internal and external environment is an important part of the strategic
planning process. Environmental factors internal to the firm usually can be classified
as strengths (S) or weaknesses (W), and those external to the firm can be classified
as opportunities (O) or threats (T). Such an analysis of the strategic environment is
referred to as a SWOT anaIysis.
The SWOT analysis provides information that is helpful in matching the firm's
resources and capabilities to the competitive environment in which it operates. As
such, it is instrumental in strategy formulation and selection. The following diagram
shows how a SWOT analysis fits into an environmental scan:

SWOT AnaIysis Framework
Environmental Scan
/ \
Internal Analysis External Analysis
/ \ / \
Strengths Weaknesses Opportunities Threats
,
SWOT Matrix


Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for
developing a competitive advantage. Examples of such strengths include:
O patents
O strong brand names
O good reputation among customers
O cost advantages from proprietary know-how
O exclusive access to high grade natural resources
O favorable access to distribution networks

Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each
of the following may be considered weaknesses:
O lack of patent protection
O a weak brand name
O poor reputation among customers
O high cost structure
O lack of access to the best natural resources
O lack of access to key distribution channels
n some cases, a weakness may be the flip side of a strength. Take the case in
which a firm has a large amount of manufacturing capacity. While this capacity may
be considered a strength that competitors do not share, it also may be a considered
a weakness if the large investment in manufacturing capacity prevents the firm from
reacting quickly to changes in the strategic environment.

Opportunities
The external environmental analysis may reveal certain new opportunities for profit
and growth. Some examples of such opportunities include:
O an unfulfilled customer need
O arrival of new technologies
O loosening of regulations
O removal of international trade barriers

Threats
Changes in the external environmental also may present threats to the firm. Some
examples of such threats include:
O shifts in consumer tastes away from the firm's products
O emergence of substitute products
O new regulations
O increased trade barriers

The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may
have a better chance at developing a competitive advantage by identifying a fit
between the firm's strengths and upcoming opportunities. n some cases, the firm
can overcome a weakness in order to prepare itself to pursue a compelling
opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these
factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is
shown below:
SWOT / TOWS Matrix
Strengths Weaknesses

Opportunities S-O strategies W-O strategies

Threats S-T strategies W-T strategies

O S-O strategies pursue opportunities that are a good fit to the company's
strengths.
O W-O strategies overcome weaknesses to pursue opportunities.
O S-T strategies identify ways that the firm can use its strengths to reduce its
vulnerability to external threats.
O W-T strategies establish a defensive plan to prevent the firm's weaknesses
from making it highly susceptible to external threats.
1 SWC1 Ana|ys|s
We lnLend Lo enLer a hlghly lucraLlve markeL ln a rapldly growlng economy We foresee our
sLrengLhs as Lhe ablllLy Lo respond Llmeously Lo Lhe markeL dlcLaLes and Lo provlde cusLom
deslgned Lravel excurslons Lo Lravelers Cur key personnel wlll have a wlde and Lhorough
knowledge of Lhe areas we lnLend Lo Lake Lravelers whlch wlll go a long way Lowards
peneLraLlng Lhe markeL 8elow are Lhe summarlzed sLrengLhs weaknesses opporLunlLles
and LhreaLs
11 Strengths
O |vers|f|ed c||ent base 1hls wlll reduce our dependency on one parLlcular markeL
O b|nat|n f sk|||s |n e|yees 1he dlrecLors lnLend Lo engage wellquallfled
and experlenced employees Lo [olnLly develop buslness sLraLegy and longLerm
plans so as Lo aLLaln company ob[ecLlves
O tens|ve advert|s|ng and arket|ng 1he company wlll underLake exLenslve
adverLlslng and markeLlng promoLlng boLh lLs name as well as servlce/producL
awareness Pence an aggresslve and focused markeLlng campalgn wlLh clear goals
and sLraLegles shall be one of our malnsLays
1 Weaknesses
O ack of a repuLaLlon ln comparlson Lo our compeLlLors 1hls ls due Lo Lhe facL LhaL we
are sLlll new on Lhe markeL Powever Lhls shall be addressed as shown ln Lhe
markeLlng secLlon of Lhls plan
O 1he lnLroducLlon of new organlzaLlonal pracLlces and personnel who have noL
prevlously worked LogeLher presenLs a challenge Lo Lhe organlzaLlon
O llmlLed flnanclal base compared Lo Lhe ma[or players ln Lhe lndusLry
O ack of clear sLraLeglc allles
1 Crtun|t|es
O urrenL drlve by governmenL Lowards encouraglng Lhe parLlclpaLlon of lndlgenous
enLrepreneurs ln Lourlsm presenLs an opporLunlLy whlch we may fully uLlllze
O urrenL growLh raLe of Lourlsm presenLs an opporLunlLy for ourselves whlch we may
Lake advanLage of 1hls ls furLher supporLed by Lhe currenL markeLlng campalgns by
boLh Lhe governmenL and reglonal Lourlsm body Lhe 8eglonal 1ourlsm CrganlzaLlon
of SouLhern frlca 8L1CS almed aL promoLlng Lourlsm lnLo Lhe reglon
O 9resenLly Lhere ls no rellable publlc LransporLaLlon company Lo Lake LourlsLs Lo areas
of lnLeresL
O nLernaLlonal Lourlsm Lrends lndlcaLe LhaL Lodays Lraveler wanLs a more enrlchlng
experlence Lhan LhaL provlded by convenLlonal sun and sea vacaLlons
1 1hreats
1he presenL growLh ln Lhe Lourlsm secLor may resulL ln an lncreaslng number of flrms
enLerlng Lhe markeL 1hls may led Lo lncreased compeLlLlon emerglng from a varleLy of glven
sources lncludlng
O LsLabllshed Lravel agencles hoLels and lodges may look aL Lhe developmenL of new
llnes and verLlcally lnLegraLe LransporLaLlon so as Lo provlde addlLlonal servlces Lo
cllenLs
O -ew markeLlng sLraLegles and LacLlcs by esLabllshed companles almed aL provldlng
excurslons of our lnLended naLure
O LxlsLlng compeLlLlon
O CLher sLarLup Lravel companles generaLed by healLhy naLlonwlde economlc and
Lourlsm growLh