- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- 11
- 12
- 13
- 14
- 15
- 16
- 17
- 18
- 19
- 20
- 21
- 22
- 23
- 24
- 25
- 26
- 27
- 28
- 29
- 30
- 31
- 32
- 33
- 34
- 35
- 36
- 37
- 38
- 39
- 40
BCG Matrix and VRIO Framework for Market Stretch
Posted by Sophia Morgan on Jul-30-2018
BCG Matrix
The BCG matrix is a strategic management tool that was created by the Boston Consulting Group, which helps in analysing the position of a strategic business unit and the potential it has to offer. The matrix consists of 4 classifications that are based on two dimensions. These first of these dimensions is the industry or market growth. The other of these dimensions is the relative market share of the strategic business unit. Strategic business units are placed in one of these 4 classifications. The BCG matrix for Market Stretch will help decide on the strategies that can be implemented for its strategic business units.
Strategic business units with high market growth rate and high relative market share are called stars. Businesses should invest in their stars and can implement vertical integration, market penetration, product development, market development, and horizontal integration strategies. Strategic business units with high market growth rate and low relative market share are called question marks. These strategic business units require close considerations whether the business should continue with them or divest. Strategic business units with low market growth rate but with high relative market share are called cash cows. The business should invest in these to maintain their relative market share. Lastly, the strategic business units with low market growth rate and low relative market share are called dogs. The business should divest these strategic business units.
BCG Matrix of Market Stretch
The BCG Matrix for Market Stretch will help Market Stretch in implementing the business level strategies for its business units. The analysis will first identify where the strategic business units of Market Stretch fall within the BCG Matrix for Market Stretch.
Stars
- The financial services strategic business unit is a star in the BCG matrix of Market Stretch. It operates in a market that shows potential in the future. Market Stretch earns a significant amount of its income from this SBU. Market Stretch should vertically integrate by acquiring other firms in the supply chain. This will help it in earning more profits as this Strategic business unit has potential.
- The Number 1 brand Strategic business unit is a star in the BCG matrix of Market Stretch, and this is also the product that generates the greatest sales amongst its product portfolio. The potential within this market is also high as consumers are demanding this and similar types of products. Market Stretch should undergo a product development strategy for this SBU, where it develops innovative features on this product through research and development. This will help Market Stretch by attracting more customers and increases its sales.
- The Number 2 brand Strategic business unit is a star in the BCG matrix of Market Stretch as Market Stretch has a 20% market share in this category. It also the market leader in this category. 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. Market Stretch should use its current products to penetrate the market. This could be done by improving its distributions that will help in reaching out to untapped areas. This will help increase the sales of Market Stretch.
Cash Cows
- The supplier management service strategic business unit is a cash cow in the BCG matrix of Market Stretch. This has been in operation for over decades and has earned Market Stretch a significant amount in revenue. The market share for Market Stretch is high, but the overall market is declining as companies manage their supplier themselves rather than outsourcing it. The recommended strategy for Market Stretch is to stop further investment in this business and keep operating this strategic business unit as long as its profitable.
- The Number 3 brand strategic business unit is a cash cow in the BCG matrix of Market Stretch. This is an innovative product that has a market share of 25% in its category. Market Stretch is also the market leader in this category. The overall category has been declining slowly in the past few years. Market Stretch has the power to influence the market as well in this category. It should, therefore, invest in research and development so that the brand could be innovated. This will help the category grow and will turn this cash cow into a star. The overall benefit would be an increase in sales of Market Stretch.
- The international food strategic business unit is a cash cow in the BCG matrix for Market Stretch. This business unit has a high market share of 30% within its category, but people are now inclined less towards international food. This change in trends has led to a decline in the growth rate of the market. The recommended strategy for Market Stretch is to invest enough to keep this strategic business unit under operations. If it no longer remains profitable and turns into a dog, then Market Stretch should divest this strategic business unit.
Question Marks
- The local foods strategic business unit is a question mark in the BCG matrix for Market Stretch. The recent trends within the market show that consumers are focusing more towards local foods. Therefore, this market is showing a high market growth rate. However, Market Stretch has a low market share in this segment. The recommended strategy for Market Stretch is to invest in research and development to come up with innovative features. This product development strategy will ensure that this strategic business unit turns into a cash cow and brings profits for the company in the future.
- The Number 4 brand strategic business unit is a question mark in the BCG matrix for Market Stretch. This strategic business unit is a part of a market that is rapidly growing. However, this strategic business unit has been incurring losses in the past few years. It has also failed in the attempts made at innovation by research and development teams. The recommended strategy for Market Stretch is to divest and prevent any future losses from occurring.
- The confectionery strategic business unit is a question mark in the BCG matrix for Market Stretch. The confectionery market is an attractive market that is growing over the years. However, Market Stretch has a low market share in this attractive market. The low sales are as a result of low reach and poor distribution of Market Stretch in this segment. The recommended strategy for Market Stretch is to undergo market penetration, where it pushes to make its product present on more outlets. This will ensure increased sales for Market Stretch and convert this strategic business unit into a cash cow.
Dogs
- The plastic bags strategic business unit is a dog in the BCG matrix of Market Stretch. This strategic business unit has been in the loss for the last 5 years. It also operates in a market that is declining due to greater environmental concerns. The recommended strategy for Market Stretch is to divest this strategic business unit and minimise its losses.
- The Number 5 brand strategic business unit is a dog in the BCG matrix for Market Stretch. This is operating in a market segment that is declining in the past 5 years. The company also has negative profits for this strategic business unit. However, it is expected that the market will grow in the future with environmental changes that are occurring. The recommended strategy for Market Stretch is to invest in the business enough to convert into a cash cow. This will ensure profits for Market Stretch if the market starts growing again in the future.
- The synthetic fibre products strategic business unit is a dog in the BCG matrix of Market Stretch. The market for such products has been declining, and as a result of this decline, Market Stretch has been facing a loss in the past 3 years. The market share for it is also less than 5%. The recommended strategy for Market Stretch is to divest this strategic business unit to minimise any further losses.
- The artificially flavoured products strategic business unit is a dog in the BCG matrix for Market Stretch. These products were launched recently, with the prediction that this segment would grow. However, with increasing health consciousness, people are now refraining from consumption of artificial flavours. The market is shrinking, and Market Stretch has no significant market share. The recommended strategy for Market Stretch is to call back this product.
Some of the strategic business units identified in the BCG matrix for Market Stretch have the potential of changing from their current classification. For example, a dog changing to a cash cow. These have been identified in the BCG matrix of Market Stretch and recommended strategies to ensure such change have also been made.
VRIO Framework
The VRIO Framework or VRIO analysis is a strategic management tool that is used to analyse a firm’s internal strengths and resources. It helps identify which one of its internal strengths and resources can be a source of sustained competitive advantage. The analysis is based on the idea that a firm’s internal resources are a source of sustained competitive advantage if they are valuable, rare, cannot be imitated by competition, and are organised to capture value for the organisation. The VRIO analysis requires looking at a firm's resources based on these 4 factors.
Based on the analysis, each resource can either provide a sustained competitive advantage, has a good competitive advantage, temporary competitive advantage, competitive parity or competitive disadvantage. A sustained competitive advantage exists when a resource is valuable, rare, non-imitable and organised. A good competitive advantage occurs if it is valuable, rare, and non-imitable. A temporary competitive advantage exists if it is valuable and rare. A competitive parity occurs if it is only valuable. Lastly, the resource is a competitive disadvantage if it is neither of the 4. The analysis takes place in this order by first assessing whether a resource is valuable, rare, imitable and organised.
References
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
Barney, J. (2002). Gaining and Sustaining Competitive Advantage, 2nd ed. Prentice Hall, Upper Saddle River, NJ.
Cardeal, N., & Antonio, N. S. (2012). Valuable, rare, inimitable resources and organization (VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to competitive advantage?
Hambrick, D. C., MacMillan, I. C., & Day, D. L. (1982). Strategic attributes and performance in the BCG matrix—A PIMS-based analysis of industrial product businesses. Academy of Management Journal, 25(3), 510-531.
Jurevicius, O. (2013a). VRIO Framework. Retrieved from https://www.strategicmanagementinsight.com/tools/vrio.html
Jurevicius, O. (2013b). BCG growth-share matrix. Retrieved from https://www.strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources? Management Decision, 53(8), 1806-1822.
Seeger, J. A. (1984). Research note and communication. Reversing the images of BCG's growth/share matrix. Strategic Management Journal, 5(1), 93-97.
Smith, M. (2002). Derrick's Ice–Cream Company: applying the BCG matrix in customer profitability analysis. Accounting education, 11(4), 365-375.
Warning! This article is only an example and cannot be used for research or reference purposes. If you need help with something similar, please submit your details here.
Christopher Steven
5.0
Research on Recruiting and Labor Markets got me in the middle of darkness. Honestly, this topic forced me to use these types of harsh words. At last, my cousin suggested this service and I was relaxed. Everything is excellent in the report but you people included the Letter of Transmittal that I hadn’t demanded. Most grateful for this portion because none of my fellows composed the description in this way.
Henry Alexander
5.0
Hi! I’m Henry Alexander and want to say that don’t be perplexed with the dissertation on the grounds here is a perfect solution to your problem. Please communicate with the support team, at least.
Qu Da
5.0
The paper was well explained and these are very punctual people. The writer did whatever I said to him. Thankful!
Emma Aaron
4.0
Great customer service and the paper was completed on time. I’m satisfied. Highly recommended!
Next Articles
- Marsh Supermarkets, Inc. (A): The Marsh Super Study, Spanish Version Bcg Matrix
- Gillette Indonesia, Spanish Version Bcg Matrix
- NFL UK Bcg Matrix
- Event Sponsorship And Ambush Marketing: Lessons From The Beijing Olympics Bcg Matrix
- Li Ning Anything Is Possible Bcg Matrix
- Callaway Golf Co. Bcg Matrix
- Cabo San Viejo: Rewarding Loyalty Bcg Matrix
- L.L. Bean, Inc.: Corporate Strategy Bcg Matrix
- Callaway Golf Canada: The Mobile Performance Team Bcg Matrix
- NASCAR: Leading A Marketing Transformation In A Time Of Crisis Spanish Translation, Spanish Version Bcg Matrix
Previous Articles
- Freemium Pricing At Dropbox, Portuguese Version Bcg Matrix
- Andrew Sullivan And Faraway Ltd (C): Anthony Pierce Of John Lewis Bcg Matrix
- Sony PlayStation2 (A), Spanish Version Bcg Matrix
- Researching And Monitoring Consumer Markets Bcg Matrix
- Retail Expansion Strategies Bcg Matrix
- Overview Of The Japanese Apparel Market Bcg Matrix
- Carter Automotive Group Bcg Matrix
- Private Label Movement Bcg Matrix
- Mauboussin Bcg Matrix
- Milford Industries (C) Bcg Matrix
Be a great writer or hire a greater one!
Academic writing has no room for errors and mistakes. If you have BIG dreams to score BIG, think out of the box and hire Case48 with BIG enough reputation.
Our Guarantees
Interesting Fact
Most recent surveys suggest that around 76 % students try professional academic writing services at least once in their lifetime!