How to bcg matrix analysis by bank

Summary of the BCG Model. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. It has 2 dimensions:

How to bcg matrix analysis by bank

How to bcg matrix analysis by bank

The BCG matrix was designed as an analysis tool to help you determine the role of products on your future profit margin so you can decide where to invest. The BCG matrix has been used since to help companies gain insights on what products best help them capitalize on market-share growth opportunities.

Understanding the tool

Reeves Martin, senior partner and managing director of the Boston Consulting Group, said that nearly 50 years after its inception, the BCG matrix remains a valuable tool for helping companies understand their potential.

When examining market growth, you need to objectively compare yourself to your largest competitor and think in terms of growth over the next three years. If your market is extremely fragmented, however, you can use absolute market share instead, according to the Strategic Thinker blog.

Next, you can either draw a matrix or find a BCG chart program online. There are several that are free, available for subscription or part of another charting program. In this four-quadrant chart, market share is shown on the horizontal line low left, high right and growth rate along the vertical line low bottom, high top.

The four quadrants are designated "stars" upper left"question marks" upper right"cash cows" lower left and "dogs" lower right. Where you choose to set the dividing line between each quadrant depends in part on how your company compares to the competition.

Here is a breakdown of each quadrant: The business units or products that have the best market share and generate the most cash are considered stars.

Monopolies and first-to-market products are frequently termed stars. However, because of their high growth rate, stars also consume large amounts of cash. This generally results in the same amount of money coming in that is going out.

Stars can eventually become cash cows if they sustain their success until a time when the market growth rate declines. Companies are advised to invest in stars. Cash cows are the leaders in the marketplace and generate more cash than they consume.

These are business units or products that have a high market share but low growth prospects. Companies are advised to invest in cash cows to maintain the current level of productivity, or to "milk" the gains passively.

Also known as pets, dogs are units or products that have both a low market share and a low growth rate. They frequently break even, neither earning nor consuming a great deal of cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they are bringing back basically nothing in return.

These business units are prime candidates for divestiture. These parts of a business have high growth prospects but a low market share. They consume a lot of cash but bring little in return.

In the end, question marks, also known as problem children, lose money.

BCG Matrix explained | SMI

However, since these business units are growing rapidly, they do have the potential to turn into stars. Companies are advised to invest in question marks if the product has potential for growth, or to sell if it does not.

Using the matrix to strategize Now that you know where each business unit or product stands, you can evaluate them objectively. The article in Strategic Thinker notes that you want a balance.

How to bcg matrix analysis by bank

You need products in every quadrant in order to keep a healthy cash flow and have products that can secure your future. The role of cash flow in the matrix Understanding cash flow is key to making the most of the BCG matrix.

Margins and cash generated are a function of market share. High margins and high market share go together. To grow, you need to invest in your assets.

The added cash required to hold share is a function of growth rates. High market share must be earned or bought. Buying market share requires an additional increment or investment. No product market can grow indefinitely.

You need to get your payoff from growth when the growth slows; you lose your opportunity if you hesitate.BCG ANALYSIS OF PUBLIC BANK The Boston Consulting Group (BCG) matrix is a tool that used to evaluate strategic business units.

It is organizes business by two dimension, the business growth rate and market share. A BCG matrix helps organizations figure out which The BCG matrix was designed as an analysis tool to help you determine the role of products on your future profit margin so you can decide.

BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis.

BCG Matrix of HDFC BANK.

Related posts It is the most renowned corporate portfolio analysis tool. In other words, it is a comparative analysis of business potential and the evaluation of environment.
BCG Matrix - Meaning and its Limitations Henderson for the Boston Consulting Group in

Bcg-Matrix. Diversification. Fundamental Analysis of Banking Industry in India BANKING INDUSTRY ANALYSIS WITH HDFC BANK ltd. Presented to- GOPALKRISHNAN SBI's consolidated pre-tax profit is $ billion against Citigroup's $29 billion, Bank of America's $25 billion and HSBC's $21 billion • The one 1/5(1).

Create my BCG Matrix If you are working with a product portfolio, BCG growth-share matrix can give you a quick overview of how the products are doing and build a basis for further analysis.

To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates. Created by the Boston Consulting Group, the BCG matrix – also known as the Boston or growth share matrix – provides a framework for analyzing products according to growth and market share.


BCG Matrix explained | SMI