0:02 hello and welcome to our channel in
0:04 today's video we're going to dive deep
0:06 into a classic yet powerful strategic
0:08 tool that has helped countless companies
0:10 manage their product portfolios
0:13 effectively the BCG Matrix developed by
0:16 the Boston Consulting Group in the 1970s
0:19 the BCG Matrix also known as the growth
0:22 share Matrix is still widely used today
0:25 but what exactly is the BCG Matrix how
0:27 can it help businesses make strategic
0:29 decisions and what does it look like in
0:30 real world scenario
0:32 we'll answer all these questions and
0:35 more so stick around till the end first
0:38 what is the BCG Matrix in a competitive
0:40 business environment companies often
0:42 have a wide range of products each at
0:44 different stages of their life cycle
0:46 some products are growing rapidly others
0:49 are stable and some are in Decline the
0:51 BCG Matrix helps companies figure out
0:53 where to invest their resources which
0:56 products to develop and which ones to
0:58 phase out before we dive into the
1:00 details let's take a quick look at the
1:01 the origin and assumptions behind the
1:04 BCG Matrix as we mentioned earlier the
1:06 BCG Matrix was created by Bruce
1:08 Henderson the founder of the Boston
1:11 Consulting Group in 1970 it was designed
1:14 to provide a simple visual framework for
1:15 companies to evaluate their business
1:18 units and products allowing them to
1:21 allocate resources more effectively The
1:23 Matrix is built on a few key assumptions
1:26 market share equals profitability it
1:28 assumes that products with a higher
1:30 market share generate more profit due to
1:32 economies of scale market growth
1:35 indicates investment needs high growth
1:36 markets require more investment to
1:38 maintain or grow market share while low
1:41 growth markets require less investment
1:43 life cycle stage The Matrix is based on
1:46 the product life cycle concept where
1:47 products move through stages of
1:51 introduction growth maturity and decline
1:54 strategic Focus the tool assumes that
1:56 companies should focus on products that
1:58 offer the highest returns or have the
2:00 potential to do so second
2:03 four quadrants of the BCG Matrix now
2:05 let's Dive Into the Heart of the BCG
2:08 Matrix the four quadrants The Matrix is
2:10 designed to help businesses prioritize
2:13 their Investments by categorizing their
2:14 products or business units into four
2:17 distinct groups based on two factors
2:19 market growth rate and relative market
2:23 share market growth rate this refers to
2:24 the rate at which the market for a
2:27 product is expanding a high market
2:29 growth rate indicates a rapidly growing
2:31 Market while a low market growth rate
2:34 suggests a mature or declining Market
2:36 relative market share this is a measure
2:38 of a product's market share relative to
2:41 its largest competitor a high relative
2:43 market share means the product is a
2:45 market leader while a low share
2:47 indicates it's a smaller player by
2:50 analyzing these two Dimensions the BCG
2:52 Matrix helps companies determine where
2:54 to invest which products to develop and
2:57 which to phase out the four categories
3:00 or quadrants of the BCG Matrix are are
3:03 stars cash cows question marks and dogs
3:05 each representing a different type of
3:09 product or business unit first Stars
3:11 High market growth High market share
3:13 stars are leaders in rapidly growing
3:15 markets they require significant
3:17 investment to maintain or increase their
3:20 market share although they may not
3:22 generate substantial profits immediately
3:24 they have the potential to become cash
3:27 Cows as the market matures strategy
3:29 invest to maintain or grow Market position
3:30 position
3:33 focus on maximizing market share for
3:35 example a leading smartphone in a
3:38 rapidly growing Market segment second
3:41 cash cows low market growth rate high
3:44 relative market share cash cows are
3:46 wellestablished in profitable products
3:48 or units in a mature Market they
3:50 generate consistent cash flow with
3:52 little need for investment making them
3:54 crucial for funding other parts of the
3:57 business such as stars or question marks
3:59 strategy Harvest profits and invest
4:02 minimal resources use the cash generated
4:05 to support other business areas for
4:07 example a well-established beverage like
4:10 Coca-Cola in the soft drink Market third
4:14 question marks or problem children High
4:16 market growth rate low relative market
4:19 share question marks operate in high
4:21 growth markets but have a small market
4:23 share they require significant
4:26 investment to increase market share but
4:27 the outcome is uncertain they could
4:30 either become stars or fail and turn
4:34 into dogs strategy invest selectively
4:36 assess whether it is worth investing to
4:38 increase market share or consider
4:41 divesting if the prospects are poor for
4:43 example a new tech Gadget in a fast
4:45 growing Market but with low initial
4:49 Market penetration fourth dogs low
4:51 market growth rate low relative market
4:54 share dogs have weak positions in low
4:56 growth markets they generate little
4:59 profit and may even drain resources
5:01 unless they serve a strategic purpose
5:04 they are often candidates for divestment
5:07 strategy divest or discontinue unless
5:08 they support other aspects of the
5:11 business for example an outdated
5:13 software product in a declining Market
5:17 Third how to use the BCG Matrix now that
5:18 we've covered the four quadrants of the
5:21 BCG Matrix let's talk about how
5:23 businesses can use this tool to make
5:26 strategic decisions step one assess the
5:28 portfolio the first step is to assess
5:31 your entire product portfolio list all
5:33 the products or business units within
5:35 your company and gather data on each
5:36 product's market growth rate and
5:40 relative market share step two plot your
5:42 products on The Matrix next plot each
5:44 product or business unit on the BCG
5:46 Matrix based on its market growth rate
5:48 and relative market share this will help
5:50 you visualize which category each
5:54 product falls into step three analyze
5:55 the Matrix once your products are
5:58 plotted analyze their positions Stars
6:01 will require Contin Ed investment cash
6:03 cows should be harvested for cash
6:06 question marks need careful evaluation
6:08 and dogs might need to be divested step
6:12 four make strategic decisions based on
6:15 your analysis decide where to allocate
6:18 resources invest in stars and promising
6:21 question marks milk cash cows for profit
6:24 and consider divesting or phasing out
6:27 dogs step five regularly review your
6:30 portfolio the market is constantly
6:32 changing so it's essential to regularly
6:34 review your portfolio and update the BCG
6:37 Matrix this will help you stay agile and
6:39 make informed decisions as market
6:42 conditions evolve fourth Real World
6:44 applications and case studies let's take
6:46 a closer look at some real world
6:48 applications of the BCG Matrix and how
6:51 companies have used it to shape their
6:53 strategies one let's consider apple
6:56 incor or Stars the iPhone which
6:58 dominates the high growth smartphone
7:01 market cash cows the MacBook which has a
7:03 significant market share in the mature
7:07 laptop Market question marks Apple TV
7:09 plus which is in a high growth streaming
7:11 Market but has a smaller share compared
7:12 to giants like
7:15 Netflix dogs the iPod which is in a
7:18 declining Market with very low sales and
7:21 market share the BCG Matrix helps Apple
7:24 decide where to invest develop or divest
7:27 contributing to its overall strategy two
7:30 Google alphabet Inc
7:31 Google's Core Business search
7:34 advertising is a cash cow generating the
7:36 majority of the company's Revenue in a
7:38 mature Market however Google has
7:40 invested in several question marks like
7:43 its self-driving car project whmo the
7:45 autonomous vehicle Market is expected to
7:48 grow rapidly but Google currently has a
7:50 small share compared to competitors
7:53 whether weo becomes a star or remains a
7:55 questionmark will depend on Google's
7:57 ability to scale the technology and
8:00 capture market share fifth profitability
8:03 losses and strategic needs so which
8:05 products are profitable which are making
8:08 losses and which ones need more work
8:11 according to the BCG Matrix profitable
8:13 products cash cows are the most
8:15 profitable products in a company's
8:17 portfolio these products are essential
8:20 for funding other areas of the business
8:22 especially stars and question marks loss
8:25 making products dogs are typically the
8:27 least profitable products often making
8:30 losses or generating minimal cash flow
8:33 products needing work question marks are
8:34 products that need careful evaluation
8:37 and Strategic investment while they have
8:40 the potential to become Stars they also
8:42 carry the risk of becoming dogs if not
8:44 managed properly long-term investment
8:46 stars are not always immediately
8:48 profitable but are critical for
8:51 long-term growth and there you have it a
8:53 comprehensive answers of all the
8:55 questions of the BCG matrix it's a
8:57 Timeless tool that has helped businesses
8:59 across the globe manage manage their
9:02 product portfolio strategically by
9:04 categorizing products into Stars cash
9:07 cows question marks and dogs companies
9:10 can allocate resources effectively
9:13 maximize profitability and ensure long-term
9:15 long-term
9:18 success if you found this video helpful
9:20 don't forget to give it a thumbs up
9:22 share it with your network And subscribe
9:24 to our channel for more business and
9:27 marketing insights let us know in the
9:29 comments which product in your portfolio
9:31 you think is a star or a cash cow thanks
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