Portfolio Analysis Explained - The BCG Matrix

hi guys mark here with Walters world and today we're talking about portfolio analysis sometimes called BCG matrix are Boston Consulting Group matrix basically what you do is you look at your portfolio products so if you're Sony you're looking at your computers your laptop's your TV's your Playstations all these things and you start to analyze them but you put them into different groups and you base these groups on two different criteria one is market growth and to you based on market share okay so we have the quadrants here so market growth high market growth low market growth and market share high market share - low market share now the thing is you do this to analyze which products we should put more money in to invest more because things are going well which ones are our cash cows that we use to fund other investments and when we're in bad economic times maybe this is how we decide which products need to be taken out to pasture okay and so that's what we have here now if we look at it we have four different quadrants and we're going to start up here with the question marks now question mark products these are products or services they're in high-growth industry but we are a very small player in it so we don't know is it going to take off we can become somebody big because there's so much room to grow or could it turn out the word not going to make anything for it now sometimes there's lots of success stories for Nokia you know one time they were in the wood products and they had this a little small industry little small part of the tell the mobile phone industry they said what is this going to work or not and they bet on that question market mobile phones and it helped them take off it doesn't always work that way you'll see companies that say hey this is a really growth industry the lone market and Circuit City thought the lone market was a really great industry was a growing so there are a small player it ended up taking them out of business they actually failed okay because one of things with their loans and so we look at these things and say hmm question mark do we go with to make it a star or could it come down become a dog for us now the second one I want to talk about is the star star is a high-growth industry and you're the big-time player so in tablet computers we're looking at the iPad that is a star for Apple tons of people are buying it the market is growing and growing and growing for tablets and Apple is number one with the iPad so that would be a star for them okay these ones you're going to invest more money into it because it's still growing so we're going to have more production before we've got to get it out there because products that are stars don't always stay as stars eventually sometimes they come out and hopefully hopefully turn into cash cows okay because a cash cow this is a product that's in a low growth industry but you're just a big-time market player if you think of coca-cola classic the red can of coke not a big market growth thing there but they make tons of cash on it so they can use the money from their cash cow to invest in their stars to help them make even more money also to invest in their question marks so maybe that extra money can help that question mark become a bigger player okay and then finally you have the dogs now the dogs these are as you can see I'm a marketing professor not an artist okay but as you see with the dogs they have low market growth and low market share so basically you're in a debt industry or not much growth industry you're a small-time player is this something we really want to be in or not and usually is the type of cup products and services that get cut when they're looking to save money and if you're headed into here's a little career advice if you see you're working on a product or in a service department that's dealing with the dog products time to go look for another job okay so just be safe and this is a rough idea of what a portfolio analysis is you take your products all it everyone's out there you start placing them on in this grid based on market growth and market share you see where things are so you know where do I need to invest more which one should i nurture just to get the cash and which ones I should get rid of so I hope that helped you learn a little bit about portfolio analysis if you have any questions please leave a comment below we'll help you have so I hope that you'll like and favorite this video and we hope you subscribe if you want to learn more about marketing and business strategy please check us out our website at wwlp.com bye

Channel: Wolters World

Views: 170,285

Rating: 4.9517884 out of 5

Keywords: boston consulting group, strategy, marketing, business, training, consulting, Consultant (Project Role)

Id: ERWZ9OceGAw

Length: 4min 46sec (286 seconds)

Published: Thu Sep 27 2012