BCG MATRIX OF MARUTI SUZUKI - PDF

Zubei Also, the condition if used is a factor. The higher the market growth, the higher is the requirement of cash for capacity-building. It can also show the position of a business unit or product in its life cycle. In he was founded. Maruti Suzuki, the largest passenger car producer in. The market shares segments of the automobile industry.

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They demand high investments to capture some market share, but whether this cash infusion will provide returns will be known only in the future. However, they have the potential for growth. BCG Matrix Question Marks Strategy: Invest in them depending on the prospects, but sell them off if they do not start yielding profits. Applying the matrix principles, all business units start off as question marks, then become stars and cows, and finally end their life cycles as dogs. Tata Housing was placed in the dogs category.

This assumption is often true—when a firm captures a higher relative market share, it goes forward on the experience curve compared with its rivals, and secures a competitive advantage and a cost advantage. The higher the market growth, the higher is the requirement of cash for capacity-building. It is on the basis of these assumptions that the categorisation of business units as stars, cash cows, dogs, and question marks was envisaged.

A corporation can find out the relative positions of all its business units under it from the matrix. Apart from assisting in decision-making on the allocation of funds among different business units, the BCG Matrix can help a corporation decide on earmarking funds for the development of its products. The matrix can also be used to calculate the relative market share and the market growth of a product line.

It can also show the position of a business unit or product in its life cycle. Criticism of the BCG Matrix The BCG Matrix has lost some of its popularity following the development of other models, and drawn criticism for its basic assumption that a business unit with a higher market share will generate more cash.

It has been pointed out that a unit that has a high market share needs to keep investing in itself to sustain this share and, therefore, may absorb cash instead of generating it. A dog, for example, may be helping a question mark or a star with cash. The matrix also seems to use broad definitions of market share and market growth overlooking nuances—a unit that makes moped tyres, for instance, may have a big market share in this niche segment, but only a minuscule share of the overall tyre market.

The matrix has also been criticised for suggesting that all corporations will identify units or products in the four quadrants, and that units or products will travel through all the four quadrants in their life cycles. Finally, market growth rate is only one factor that makes an industry attractive.

Similarly, relative market share is only one factor that gives a unit a competitive advantage. According to critics, the matrix ignores other factors that determine profitability. It says companies need to look at new markets and products to renew their advantage and desist from wasting resources. They need to invest in more question marks to help the promising ones grow into stars.

Responding to the marketplace, they should also cash out stars, retire cows, and maximize the information value of pets.

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