Corporate Business Portfolio Matrix

The meaning of the company business Combination Matrix One of the most popular ways to develop a corporate strategy is the corporate portfolio matrix. The method was developed by the Boston Consulting Group (Boston CONSULTINGGROUP,BCG) in the early 1970s. The law SBUs each strategic institution (s) in a 2-D matrix, showing which SBUs offers high potential benefits, and which SBUs is the funnel of the Organization's resources, as shown in the diagram of the BCG matrix. The horizontal axis represents the market share; To be more specific, high market share means that the business is the leader in the industry; high market growth is defined as a yearly growth rate of at least 10% per cent (excluding inflation). The BCG Matrix distinguishes 4 business combinations. 1. Cash cattle (Cash cows, which refers to low growth, high market share) in this area produce a large amount of cash, but future growth prospects are limited. 2. Xing (stars, high growth, high market share) the product in this area is in a rapidly growing market and occupies a dominant market share, but may or may not produce positive cash flows, depending on the need for new plants, equipment and product development to invest. 3. The question mark (Questionmarks, which refers to high growth, low market share) is a speculative product in this field, with a greater risk. These products may have a high profit margin but a small share of the market. 4.　　 Thin Dog (Dogs, low growth, low market share) the remaining areas of the product can neither generate large amounts of cash nor require large amounts of cash, and these products do not want to improve their performance. To understand the BCG matrix. It is important to assume that there is a cumulative learning curve (cumu-lativelearnitigcurve) effect. The assumption is that if the company is able to adapt to local production and manage the production process, each significant increase in the cumulative production of the product will lead to an expected reduction in the cost of the unit product. In particular, the Boston Consulting Group asserts that the cost per unit product is typically reduced by 20% to 30% for every turnover. The conclusion is clearly that the business with the largest market share will have the lowest cost.