Strategic Analysis and Choice

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Strategic Analysis and Choice

Introduction

This aims to critically examine the BCG growth / share matrix for the company Hutchison Whampoa Limited (company website HYPERLINK "http /www .hutchison-whampoa .com " www .hutchison-whampoa .com . The addresses the specific questions of what the benefits and limitations of companies using this matrix as a competitive tool , in terms of potential effects on their competitive position and the reaction of competitors , using examples from the organization to demonstrate the benefits and advantages of using this approach

Discussion

p What is the BCG growth share matrix

The growth-share matrix is a chart that was created by the HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname bost on-consulting-group sbid lc12a " \t "_top " Boston Consulting Group in 1970 to help HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname corp oration sbid lc12a " \t "_top " corporations analyze their HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname busi ness sbid lc12a " \t "_top " business units or HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname prod uct-lining sbid lc12a " \t "_top " product lines , and decide where to allocate cash . It was popular for two decades , and is still used as an analytical tool Cash generated by "cash cows " should be allocated to "stars , and possibly to "question marks (Answers .com 2006

The Chart

To make use of the chart , corporate analysts would plot a HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname scat terplot sbid lc12a " \t "_top " scatter graph of their business units ranking their relative HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname mark et-share sbid lc12a " \t "_top " market shares and the growth rates of their respective industries . This led to a categorization of four different types of businesses , namely

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 . They are regarded as staid and boring in a "mature " market , and every corporation would be thrilled to own as many as possible . They are to be "milked " continuously with as little investment as possible , since such investment would be wasted in an industry with low growth

Dogs , or more charitably called pets , units with low market share in a mature , slow-growing industry . These units typically "break even generating barely enough cash to maintain the business 's market share Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units , from an accounting point of view such a unit is worthless , not generating cash for the company . They depress a profitable company 's HYPERLINK "http /www .answers .com /main /ntquery jsessionid 219p0xvkvlmqw ?tname retu rn-on-assets sbid lc12a " \t "_top " return on assets ratio , used by many investors to judge how well a company is being managed . Dogs , it is thought , should be sold off

Question marks , units with low market share in a...