The BCG Matrix: Case Study Of The Boston Consulting Company

The BCG matrix was created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations to analyze their business units.

On the vertical axis, market growth rate provides a measure of market attractiveness. A higher growth rate leads to higher earing yet also consumes a lot of cash. Thus stands in relation to investments, because they are the ones that stimulate further growth. Therefore, business units that operate in rapid growth industries are worth investing in only when they are expected to grow or maintain market share in the future.

On the horizontal axis, relative market share serves as a measure of company strength in the market. Higher corporate’s market share results in higher cash returns. The selection

Although some of their seasonal products have been reasonably successful, they have not been able to turn any of their question mark products into cash cows or stars. Although it has not been the case until now, further investment in products, and successful marketing could result in a newly launched product to be as successful as their current cash cow, the traditional bar. The highly saturated market, as well as the threat of substitutes makes it increasingly difficult for businesses operating in the chocolate industry to produce products which become cash

Although their traditional chocolate has a high market share, it’s not experiencing significant market growth, therefore making it a cash cow rather than a star. This is mainly due to the fact that Toblerone faces immense competition, and has entered new markets, which have high levels of competition. For instance Toblerone’s “one by one” chocolate directly competes with products of other companies such as Milka and Cadbury, making it increasingly difficult to establish brand superiority. In comparison, Milka and other companies are constantly investing in new products, turning them into rising stars, as is the case with Cadburys chocolate bars

As you can see in appendix 1 the BCG matrix is applied in practice. In this article it talks about Nestle’s different brand and how they are located within the BCG matrix. With this matrix Nestle can make decisions about what strategies to apply to which brands. For example Nestle’s CEO, Paul Baulk, has plans to divest under-performing brands or as they are called in the BCG matrix: the dogs.

One of Nestle’s stars is Nestle Pure Life mineral water. This brand has a high share and a high growth market. It requires a large amount of investment but also has a lot of opportunity. The dog of Nestle is for example Nesquik. This SBU has a low market share and doesn’t create opportunities. Nestle has stopped investing in this