Data analysis----BGC model (Boston Matrix analysis)

Reference Baidu Encyclopedia

The Boston Matrix, also known as the market growth rate-the relative market share matrix, the four-quadrant analysis, the product line structure management method, is a way to plan the enterprise product portfolio. The crux of the problem is to solve how to make the product variety and its structure fit for the change of market demand, only in this way the production of enterprises is meaningful.

The Boston matrix is presented by BCG, which is used primarily to assist businesses with business portfolios or portfolios. The two variables in the matrix axis are the level of growth and market share of the market where the business unit is located. The enterprises in each quadrant are in a fundamentally different cash flow position and are managed in different ways, thus extending the company's search for its overall business portfolio.

The Boston matrix has different definitions and corresponding strategic countermeasures for the four quadrants of enterprise products. (1)Star Products (stars)。 It refers to the high growth rate, high market share in the quadrant of the product group, such products may become the company's cash cow products, need to increase investment to support its rapid development. The adoption of the development strategy is: to actively expand economic scale and market opportunities, with long-term interests as the goal, improve market share, strengthen the competitive position. The development strategy to the investment star product management and the organization best uses the Business Department form, is responsible for the production technology and the sale two aspects are very knowledgeable operators. (2)Cash Cow products (cash cow) also known as profits products。 It refers to the low growth rate, high market share in the quadrant of the product group, has entered the mature stage. Its financial characteristics are large sales, high product profitability, low debt ratio, can provide funds for enterprises, but also because of low growth, there is no need to increase investment. As a result, companies are recovering funds, supporting other products, especially the backing of the star product investment. For most of the products in this quadrant, the market share decline has become unstoppable, so the receipt strategy can be adopted: that is, the resources invested to achieve the maximum short-term profit limit. ① the equipment investment and other investment as much as possible, ② uses the oil-based method to gain more profits in a short period of time and to fund other products. For products with an increase in sales growth in this quadrant, further market segmentation should be carried out to maintain the existing market growth rate or to slow down its rate of decline. For cash cow products, suitable for Business department system Management, its operators are best marketing-type figures. Now Taurus business refers to low market growth rate, high relative market share of the business, which is a mature market leader, it is the source of corporate cash. As the market has matured, enterprises do not need to invest heavily to expand the market, and as a leader in the market, the business enjoys economies of scale and high marginal profits, thus giving enterprises a lot of financial resources. Businesses often use cash-cow operations to pay their bills and support three of other businesses that require large amounts of cash. The company shown here has only one cash cow business, stating that its financial position is fragile. Because if the market environment changes and the market share of the business declines, the company will have to pull back cash from other business units to maintain the leadership of the cash cow, or the strong cash cow may become weaker or even a thin dog. (3)problem Product (question marks), it is in the high growth rate, low market share in the quadrant of the product group. The former indicates that the market opportunity is big and the prospects are good, while the latter indicates that there are problems in marketing. Its financial characteristics are low profit margins, insufficient funds and high debt ratios. For example, in the product life cycle in the introduction period, for various reasons failed to open up the market situation of new products that belong to this kind of problem products. A selective investment strategy should be adopted for the problem product. The first is to identify the quadrant in which the improvement may become the star of the product to focus on investment, improve market share, to turn it into a "star product", for other future hope to become a star of the products in a period of time to take a supportive response. As a result, the improvement and support programmes for problematic products are generally included in the long-term business plan. For the management organization of the problem product, it is best to take the form of think-tank or project organization, select the planning ability, take the risk, the talented person is responsible. (4)Lean Dog Products (dogs), also known as the declining category of products. It is in the low growth rate, low market share in the quadrant of the product group. Its financial characteristics are low profit margin, capital preservation or loss, high debt ratio, can not bring benefits to the enterprise. A retreat strategy should be adopted for such products: first of all, there should be a reduction in volume, a gradual retreat, and immediate elimination of products with very low sales growth and market share. The second is to transfer the remaining resources to other products. The third is to rectify the product line, it is best to combine lean dog products with other business departments, unified management. The Boston matrix helps provide some explanation of the business portfolios and portfolios of companies, which can have very beneficial effects if used with other analytic methods. The Boston matrix allows you to check the operations of each business unit of the business by squeezing "cash cow" milk to fund "corporate stars", checking for problematic children and determining whether to sell "skinny dogs".

But this matrix is based on the assumption that the experience curve works in the market and that the company with the largest market share will be the lowest-cost producer. This matrix model is too simple and the actual business situation of the enterprise is much more complicated.