Strategies and Opportunities Lecture Flashcards
BCG Matrix:
(Boston Consulting Group Matrix) Analysts plot a scatter graph to rank the business units (or products) on the basis of their Relative Market Share (on the x axis) and Market Growth % (on the y-axis).
Has four types of units: Stars Questions Marks Cash Cows Dogs
Stars:
Units with high market share in a fast growing industry.
Question Marks:
Growing rapidly and thus consume a large amount of cash, but because they have low market shares they do not generate much cash.
Cash Cows:
Units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. There are what firms want.
Dogs:
Units with low market share in a mature, slow-growing industry. These units typically “break even” generating barely enoughcash to maintain the business’ market shart
Limitations of BCG Matrix:
- Only uses two dimensions
- Single variable dimensions
- Assumption that market share = profit
- For the market definition, cutoff are arbitrary
- Ignores focus/niche strategies
- Not predictive
GE Product Portfolio Matrix:
Helps companies decide what products to add to their product portfolio.
- X-axis has Competitive Position.
- Y-axis has Market Attractiveness.
Summary of all strategies:
- Tend to converge on same dimensions of competition; price and performance
- Systematically pursue value innovation
- Not just projecting a trend (forecasting)
Brand Equity:
Development of distinctive and hard to imitate resources.
Organizational, market driven culture:
- Commitment to serving customers and building brand equity for long term growth and profitability
- Superior ability to understand, attract, and keep most customers
Customer Value:
Functional, monetary, psychological
CLV; customers as assets:
Retention, expansion, acquisition
Customer Centricity:
- Long term metrics
- Organizational culture
