All you need to know about the BCG matrix!

BCG matrix and its examples:

The Boston Consulting Group matrix or the BCG matrix was created by Bruce D. Henderson, the founder of Boston Consulting Group, in 1970. The matrix takes into account two major parameters, namely: market share and market growth of business units or product lines. This then helps a given company analyse its business unit, allocate resources and conduct strategic planning accordingly. Based on the current profitability of an organisation, the matrix provides a map of the organisation's strengths and weaknesses.

The BCG matrix has four cells. While the horizontal axis denotes the market share, the vertical axis denotes market growth rate. Both these measures need to be considered individually for every strategic business unit (SBU).The four cells of the matrix are: stars, question marks, cash cows and dogs. The four cells are explained as follows:

1. Stars:

Stars represent business units that have a large market share as well as great market growth rate. SBUs located in this cell of the matrix are very attractive as they are located in robust industries. These businesses are usually very competitive in nature.

2. Cash Cows:

Cash cows represent business units that have a large market share but are located in a mature and slow growing industry. These SBUs are usually a corporation's core business and require lesser investments compared to businesses in the star category. These businesses usually follow stability strategies.

3. Question Marks:

Question marks represent business units that have smaller market shares but are located in industries with great market growth rates. They require great amounts of investment to maintain or gain market share. These businesses may or may not be viable for corporations.  Most businesses start as question marks in an industry with great market growth, but if ignored can turn to dogs.

4. Dogs:

Dogs represent business units that have low market shares in industries with low market growth rates. These businesses are normally liquidated unless new strategies are implemented to gain market shares. These businesses should be minimised in number for the betterment of a corporation.

Some of the examples to understand the practical use of the BCG matrix are as follows:

1, BCG matrix of Amul:

a) Star: Amul Ice-Cream

The ice-cream industry is booming in India with the Business Wire predicting that the industry will generate a staggering USD 3.4 billion by 2021. Amul is the largest ice-cream producing company in the country and has a 14% market share. Although Amul is facing stiff competition from newer brands such as Lotte ( acquired Havmor ice-creams in 2017), it still remains the leader in the category.

b) Cash Cows: Amul Butter

Amul Butter falls under the category of cash cows owing to the limited chances of industry growth. Amul is in fact the sixth largest butter brand in the world with a market share of 2.1%. Amul has come with many variants to its butter to combat the slow growth of the industry.

c) Question Mark: Amul Lassi

Amul Lassi is a healthy beverage produced by Amul. There is great demand for healthy food items in the market and the beverage industry is growing exponentially. Amul Lassi however, has not managed to gain a significant market share. In 2013, Amul contracted DY Works, a design firm to rebrand and reinvent the look of Amul lassi to attract youngsters but failed to make any real impact.

d) Dog: Amul Chocolates

The heavy competition and the limited innovation that the chocolate industry faces has led to Amul chocolates having very little market share as well as little market growth rate.

2. BCG matrix of Nestle:

a) Star: Nescafe Coffee

Instant coffee industry in India is booming. In 2017, the coffee and tea industry in India stood at 418 billion Indian rupees. Nescafe has an astounding market share of 51% in India and is doing well regardless of competition from brands like Bru.

b) Cash cow: Maggi Noodles

After a brief set back in 2015 owing to the ban on Maggi Noodles by FSSAI, Maggi now has a strong 60% market share in India. however, the instant noodles industry on the whole is declining and the market growth rate has become slow as people are opting for healthier food options.

c) Question Mark: Nestle Milk

The packaged products industry in India is thriving. Amul has seen a growth of 11% in 2017 due to the success of its dairy products. With competition from brands such as Amul and Mother Dairy, Nestle is struggling to gain market shares in this significant industry.

d) Dog: Nestle Chocolates

With companies like Mondelez taking up large market shares in India, Nestle chocolates are struggling to gain market share. From 2017, the chocolate industry in India has witnessed a collective set back because of the health concerns of consumers. Nestle even reduced the amount of sugar in its chocolate Milky Bar to fix this problem.

3. BCG matrix of Sony:

a) Star: Sony Led TVs

At the end of 2021, the TV industry in India is set to cross the $9 billion mark. Sony's Led TVs have a 25% market share in India and this number is said to increase to 35% owing to the new launches in Sony's Bravia series in 2019. Thus Sony's Led TVs belong in the star category.

b) Cash Cow: PlayStation

Sony has a 26.7% market share in the gaming market but the slow growth in the gaming market has led to the playstation ending up in the cash cow category. With changing technological interfaces, the popularity of the playstation is going down.

c) Question Mark: Sony Smartphones

The smartphone market in India today is dominated by Chinese brands such as Xiaomi, Oppo etc. Only a handful of Sony's smartphones are competing with these brands and most of these phones are in the premium category. Thus, although the market is growing, Sony's smartphones have a very limited market share in India.

d) Dog: Walkman

Sony's Walkman is a classic example of what happens when a company fails to keep up with the technological revolution. Sony's music players have no market left in the country and their downfall began when these devices proved to be incompatible with fast-growing 3g formats. Thus, this device falls into the dog category.

4. BCG matrix of Pepsi:

a) Star: Tropicana

Tropicana fruit juices that entered Indian market in 2004, currently holds 41% market share in the country. The beverage industry is thriving in India and even after facing stiff competition from products like Dabur's Real, Tropicana has managed to stay in the star category.

b) Cash Cow: Lays

Pepsi's salty snack, lays, is expected to cross $5 billion by the year 2020. However, due to stiff competition from regional brands like Parle's Bingo and the declining market for junk food in urban India has led Lays to enter the cash cow category.

c) Question Mark: 7up Nimbooz

Pepsi tried go traditional with its beverages and launched 7up Nimbooz, which resembled the traditional lemon water consumed by Indians. This product however, struggled to make a mark for itself regardless of the immense market growth in the beverage industry in India.

d) Dog: Pepsi Max

In 2010, Pepsi launched a zero-calorie version of its drink called Pepsi-Max. This product failed in the market because of the pricing of the product and the fact that there was very minimal market growth in the category of sugar-free carbonated beverages.

5. BCG matrix of Coca-Cola:

a) Star: Thums Up

Thums Up is the most popular cola in India with a market share of 42% in the cola market and a market share of 15% in the carbonated beverage market. Coca-Cola has promoted and advertised Thums Up extensively, in order to compete with Pepsi.

b) Cash Cow: Coke

In 2017, the sales of Coke showed a 11% increase when compared to Pepsi. Regardless of this success, the market growth rate for aerated drinks has lost steam and this is a result of consumers switching to healthier beverages like energy drinks and fruit juices.

c) Question Mark: Minute Maid

Fruit juices are a low-margin business and this business has very great market growth rates with consumers turning to healthier beverages. Coca-Cola's fresh juice ventures like minute maid however, have failed to expand and gain market share in the country and are thus in the question mark category.

d) Dog: Diet Coke:

The diet soda market is a dying beverage breed in India. For the last few years, Diet Coke has been the weakest link in Coca-Cola's beverage line-up in India. Thus, with low market share and low market growth rate, Diet Coke belongs in the dog category. 

The Formal Communication Archive!

What formal communication means and how classroom activities help hone formal communication skills:

Communication is an extension of the innate social behavior of every human being. Communication helps build relationships among people and is very crucial for the existence of human society. It is essentially categorized into two types: formal communication and informal communication. Formal communication refers to the official exchange of thoughts, ideas, emotions and information. The flow of communication is controlled deliberately. This allows the information to reach the desired place without any obstruction and gives way to effective feedback from the receiver. 

  

Formal communication has certain unique features that differentiate it from informal communication.

Some of the important features are as follows:

• Formal communication can be both written and oral in nature.
• Formal communication passes through predefined paths of communication throughout an organisation. 
• Formal communication is mostly documented and thus evidence of the communication is present.
• Formal communication usually takes place in official organisations and there is a timely and systematic flow of information.
• Formal communication follows a hierarchical chain of command that is established by the organisation and sometimes there is distortion of facts due to the long chain of communication.
• the sender and the receiver involved in formal communication usually have some organisational relations.  

Formal communication can be of different types depending on the direction of flow of the communication. Some of the categories of formal communication are:

•  Vertical Communication:

Vertical communication is based on the assumption that people working in the higher levels of an organisation have the authority to pass directions and instructions to the people working under them and the people working on the lower levels can approach their seniors with their problems. This form of communication strengthens the authoritative structure of an organisation. Vertical communication can further be divided into upward and downward communication.

Example: when a teachers gives instructions to the students regarding an assignment, it is an example of vertical formal communication. 

• Horizontal Communication:

Horizontal communication is seen taking place between people working at the same level in an organisation. Employees or functional managers working at the same level engage in horizontal communication. Communication between two students in a college meeting can also be categorised as horizontal communication.

Example: communication between two employees that are working on a presentation together is an example of horizontal communication.

Formal communication comes with a set of advantages that allow communication in any official organisation to flow effectively. Some of the advantages are:

• Maintenance of discipline and authority in an organisation is made easier through systematic formal communication.
• There is an orderly flow of information in the organisation as formal communication takes a definite route in the organisation. 
• It is extremely easy for anybody in the organisation to trace the source of the information. 
• All forms of written formal communication like letters, emails and reports are kept permanently and is helpful for future decision making.   

Apart from the organisational setup, formal communication also takes center stage in an academic organisation like a college. Formal communication takes place between the teacher and the students, between two or more teachers, between management and the teachers and so on. From a student's perspective classroom activities help hone his/her formal communication skills immensely. Classroom activities involve multiple interactions between the students as well as interactions between the student and the teacher. These interactions help build the personality of the student and as personality and body language of a person matter to a great extent in formal communication, these classroom interactions are a boon for the students. Classroom interactions also help students develop a good active vocabulary, without which formal communication would not be effective. Being a student myself, I'm able to develop a better vocabulary and a more confident personality by interacting my fellow students and teachers during classroom activities.

The important aspect about classroom activities is perhaps the art of delivering presentations. Presentations are formal in nature and require the student to put in a lot of efforts. The student is expected to research and put together an interesting presentation. The student is then expected to communicate to the whole formally and deliver the presentation. This process prepares the student for his/her work life and helps develop good formal communication skills. Presenting in class has allowed me personally, to develop confidence and learn to use good vocabulary to ensure that I sound formal during the presentation.

 Classroom activities also involve a lot of writing and since writing is an integral aspect of formal communication, these activities help students gain a better understanding of formal communication. Classroom activities have helped me learn how to write formal letters, emails and resumes. These are extremely crucial skills that are necessary to work in any industry.

Classroom activities involve a lot of interactions between the teacher and the students. These interactions help students understand how formal organisations work and how hierarchy in any given organisation works. Taking instructions and inputs from teachers for assignment purposes has helped me understand how instructions are given in any workplace. Writing formal letters to the dean as well as the teachers seeking permission for leave, communicating with teachers formally via email, writing travelogues in class  are activities that have helped me develop better communication skills.

Classroom activities help students articulate their thoughts, develop a more confident personality, understand the various channels of communication, develop a good vocabulary and develop a positive body language.They are therefore, extremely crucial for the overall development of any student.

Taking the scenic route...

My most memorable recollection of a travel story is probably the first time I traveled alone. I was in seventh grade and the beginning of my summer holidays had me buzzing with excitement. I could not wait to meet all my eleven cousins and goof around. But unlike every year, this time my family did not get together in my house and instead decided to meet in my uncle’s place in Kolar. This was great news to me as I had never visited the place before but the not so great news came to me the very next day when my parents told me that they had to travel to Shivmoga and could not take me to Kolar. But I was one tough cookie and there was no way I was missing out on the get together. And so after three days of dealing with my angry outbursts and tantrums, my parents agreed to let me travel to Kolar, in a train, alone.

         I remember feeling ecstatic and just a little bit nervous while boarding the train but the journey that followed took all my worries away. When you’re alone you pay close attention to every little detail around you. I remember not sleeping a wink on the four-hour train ride. My vision was mostly clouded by a sea of green every time I looked outside the window.  Kolar was indeed a beautiful place. It was a weird concoction of greenery and contrasting barren lands. The train ride was bliss. I vaguely remember my uncle’s driver picking me up from the railway station and I was beaming at the man. I felt accomplished.

     Robertsonpet is a small town in Kolar district and in it you will find a world full of peculiar details. Technically, Kolar is a part of Karnataka and so you would naturally expect the folk to speak Kannada but in reality, it is an extremely difficult task to even hire an auto rickshaw without conversing with the man in Tamil. In the four days that I spent in Kolar,  I realized that my uncle was nothing short of a celebrity in the small town. Being a rich man with a big wine store, he was held high in the community. This fact could also be attributed to the fact that the entire town of Robertsonpet is smaller than HSR Layout. The town had one mall, one small movie theater, one breakfast point, one hospital, a few temples and a few churches. The community here was so closely knit that the entire town visited my uncle’s place on the occasion of his house-warming party. The fact that there exists a world so different, with different people and different cultures in such a small geographic area is mind-boggling.

This little trip gave me so much happiness. It showed me a few different facets of human society and made me feel accomplished and will always be a cherished memory.