The BCG matrix, also known as the Boston Consulting Group matrix, is a tool used to evaluate the strategic position of a company's business units or products. It is a framework that helps firms understand where their products or business units fit within the overall market and how they should allocate resources. The BCG matrix is based on the idea that a company's business units can be classified into four categories based on their relative market share and market growth rate.
In the case of ITC, a leading Indian conglomerate with a diverse range of businesses including fast-moving consumer goods, hotels, and tobacco, the BCG matrix can be used to evaluate the strategic position of each of its business units.
First, let's take a look at the two dimensions of the BCG matrix: market growth rate and market share. Market growth rate refers to the rate at which the market for a particular product or service is expanding. Market share, on the other hand, refers to the percentage of total sales in the market that a company's product or business unit captures.
Using these two dimensions, we can classify ITC's business units into the following four categories:
Stars: These are business units with high market share in a rapidly growing market. They generate a lot of cash and require significant investment to maintain their market leadership.
Cash cows: These are business units with high market share in a mature or slow-growing market. They generate a lot of cash and require minimal investment to maintain their market position.
Dogs: These are business units with low market share in a mature or slow-growing market. They do not generate much cash and may be candidates for divestment.
Question marks: These are business units with low market share in a rapidly growing market. They require significant investment to grow and may eventually become stars or cash cows.
Now, let's apply the BCG matrix to ITC's various business units.
Fast-moving consumer goods (FMCG): ITC's FMCG business, which includes products such as food, personal care, and home care products, could be classified as a star. The FMCG market in India is growing rapidly, and ITC has a strong market share in this segment. The company has invested heavily in building its brand and expanding its distribution network, which has helped it maintain its market leadership.
Hotels: ITC's hotel business could be classified as a cash cow. The hotel industry in India is mature and has low growth potential. However, ITC has a strong presence in the luxury hotel segment and has a strong brand recognition, which has helped it maintain a high market share.
Tobacco: ITC's tobacco business could be classified as a dog. The tobacco industry in India is mature and has low growth potential. ITC has a significant market share in this segment, but the business generates low cash flows and is facing increasing regulatory and social pressure.
Overall, the BCG matrix can be a useful tool for evaluating the strategic position of ITC's various business units and determining how to allocate resources. It helps the company understand where each business unit stands in the market and how to maximize its potential.
Strategic analysis techniques of ITC LIMITED.
The hospitality business's growth rate places it in the Star category. This change in trends has led to a decline in the growth rate of the market. With some of its unique techniques and design of the hotel, ITC welcomegroups is now one of the best five star hotels with the true essence of Indian hospitality. So, how does the management make such important decisions? BCG Matrix uses the SBUs present or expected growth and present market share. It operates in a market that shows potential in the future. FMCG- others - Ashirvad Atta, Sunfeast, Candyman, Bingo,Superia, Wills LifeStyle, Fiama Di Wills, Expressions, Classmate, , Kitchens Of India, Mint-o 3. The challenge is to balance the organization's portfolio of SBUs for best long-term performance.
BCG Matrix of ITC in a Simplified Way
Management needs to ensure that its existing consumer base is increasing. Products or business units of the company that are still in the nascent stage of their product lifecycle and can either become a revenue generator by taking the position of a Star or can become a loss-making machine for the company in the future. Exports to about 48 countries. Heavy competition from the likes of Infosys, TCS, Accenture, HCL etc have led to a decrease in the market share of ITC Infotech and made it tough for the organization to survive in such tough market scenario. V Main Sources: ITC Portal www. Decreasing market share due to new entrants to the market and the introduction of new ayurvedic products and their growing demand are the main reasons that these business units have become Question Marks. In the snack category, Frito-Lay has seen regional brands expand and Budweiser 's Eagle brand break out of its niche to become a major competitor.
BCG Matrix
Failure to deliver the expected results makes the product a source of loss for the organization, propelling the management to withdraw future investment in the venture. As the Company's ownership progressively Indianised, the name of the Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I. The overall category is expected to grow at 5% in the next 5 years, which shows that the market growth rate is expected to remain high. The overall category has been declining slowly in the past few years. Since companies experience the highest level of competition in a growing product market, they try to expand their market share and indulge in different marketing, pricing and advancing methods to be the leaders of the market.
BCG Matrix and VRIO Framework for ITC Hotels Designing Responsible Luxury
To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value. They are independent of the other SBUs. Enter your email address: These products have the potential of being positioned as cash cows in the future owing to the industry growth prospects. E in Chemical engineering from the National Institute of Technology NIT , Srinagar. In just over a decade, the Foods business has grown to a significant size under seven distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. ITC initially started off as a cigarette manufacturer and is the market leader in India. These classifications are based on the growth rate of the industry and the market share of the respective businesses which are relative to the largest competitor present, for that reason, BCG Matrix is also called as Growth-Share Matrix Also, Read the BCG Matrix of ITC BCG Matrix of ITC contains the Dogs, Stars, Cash Cows, and the Question Mark.
