Reference Running head: BCG MATRIX

AMERICAN INTERCONTINENTAL UNIVERSITY UNIT 1 Discussion Board Project Management 5/10/2012

Reference

The Boston Consulting Group (BCG) is a large reputable private consulting firm based out of Boston and recognized in the United States and globally. The BCG is best known for its matrix, which was designed to see how well they formulate strategies. The BCG Matrix and Internal-External (IE) Matrix are tools used by BCG that are designed specifically to enhance a multidivisional firms effort to formulate strategic decisions. It enables companies to monitor the market share and industry growth rate of individual departments within the company. The BCG Matrix consists of four sections: Stars, Question Marks, Cash Cows and Dogs (David 2011). There are many other tools available to assist with making strategic decisions, but this matrix tool is useful and can provide good insight to the decision makers within any company. We were given the BCG Matrix on two divisions of a company - the appliance and the electronic divisions. The electronic division is in the question mark and generates high sales. This division competes in the high growth market, but market share is relatively low. I would recommend some market development, a little more advertisement to focus on brand recognition. This division also needs to bring in more integration strategies. This division needs deeper penetration in the market and more implementing and development of the products with the focus to become a star. Additionally, this division needs to focus on bringing in more successful products (David, 2007). I worked at the Home Depot in the electronics department, and our main focus was to increase the lights sales. Lights are small dollar items, but sell fast. Home

Reference Depots strategy was to put light in the front of the entry walk way so this would be the first thing customers see when entering the store. The second division, which is the appliance division, is a Cash Cow, which is in quadrant 3 of the divisional positioning and has relative high market share, but compete in the low growth industry. The Cash Cows are the most profitable products in the portfolio. The situation is frequently boosted by economies of scale that may be present

with market leader. The Cash Cows may be used to fund the businesses in the other three quadrants. I would recommend being careful milking the Cash Cow. Cash Cows were yesterdays stars and may still become a star if they have an attractive strategy. I would also recommend a little diversification and manages better to stay a star. After reading the BCG Matrix, it thoroughly explains how any division in an organization could achieve a portfolio of star quality if better strategy is applied over time. A business is defined by the strategy, performance, different condition and management. In my conclusion, I have given my recommendation for both divisions by using the BCG Matrix tool. Some matrix tools require correcting a lot more information. Some of the other tools we can use to determine a strategy is Internal-External Matrix, the Grand Strategy Matrix and the Quantitative Strategic Planning Matrix (David, 2007). I prefer the BCG because I find it to be more thorough, a lot easier to follow and simplified.

Reference David, F.D (2011), Strategic Management, concepts and cases (14th ed.), Boston

David, F.(2007). Strategic Management: concept and cases (11th ed) Upper Saddle River, New Jersey: Pearson Prentice-Hall.