Preparing a comprehensive case analysis, Part 2 Assignment

Preparing a comprehensive case analysis, Part 2 - Assignment Example He further notes that since the inflation and the Gross National product (GNP) have a substantial impact on the market growth, they are included an index. The range is divided between two divisions: high growth depicting industries and firms growing and expanding faster than inflation and the gross domestic products and are shown above the line while low growth depicts those industries and firms growing slower and at a less than inflation rate or GNP rate. Headley (1977) notes that the horizontal axis (x) shows the relative market share. The share is computed relative to the largest competitor in the market. Consequently, both the range and the division are arbitrary. He incorporated the scale of 1.0 to show the line where market leadership will occur. This implied that market leadership would occur where the market share exceeded 1.0 As put forward by David (2011) and Headley (1977), the BCG Growth/share matrix is divided into four quadrants, each representing a particular type of b usiness. The circles represent products. Therefore, the size of the circle reflects the relative significance of the product to group sales. Furthermore, its development reflects the profit contribution to each division and occasionally represents in the pie segments within the circle. The Boston Consulting Group’s Growth Share Matrix Fig 2 (DISASTER SEQUENCE AND SUCCESS IN PRODUCT PORTFOLIO STARS QUESTION MARKS CASH COWS DOGS The disaster sequence moves from the dogs to stars to dogs in that order while the success sequence moves from the dogs to stars. Key Y AXIS – MARKET GROWTH RATE X AXIS – RELATIVE MARKET SHARE Disaster sequence (anticlockwise) The clockwise is the success sequence a) THE QUESTION MARKS These product or businesses compete in high growth markets, but where the markets share of the firm is relatively low. For instance, a new product launched into a high growth market and with an existing market leader is normally considered a question mark. B usiness firms with such products normally align themselves with either of the following intensive or divestment strategic options in order to improve the competitive position, sales volume and reputation of the firm: market penetration, market development and product development (David, 2011; Headley, 1977) b) THE STARS These are successful question marks (David, 2011). However, as Headley notes an investment is still normally required to maintain growth and defend the leadership position of the firm. As noted by Headley (1977), occasionally, they are marginally profitable products. However, as they achieve a more mature status in their life cycle and growth levels, they appear more attractive. He further notes that these products provide a basis for the long-term growth and profitability for the firm. During this business period, the firms normally adopt some strategic options such as market penetration; market and product development, joint ventures and integration. These defensiv e strategies are aimed at defending the market share and the leadership position from its competitors (David, 2011). C) THE CASH COW These are characterised by a relatively high market share in low growth industries. As the market matures, the need for the investment reduces due to a reduction in operating costs. As noted by the David (2011) and Headley (1977), these products are the most profitable products in the business portfolio. In addition, usually the market situation is boosted by the economies of scale