Question

Medical device manufacturing is one of the various business units of Johnson and Johnson. A team of experts is doing a portfolio analysis using BCG Matrix to see where this business fits in J&J’s portfolio. They found that medical device manufacturing is a high growth field/market. They also found that the market share J&J has is low currently. However, given J&J’s resources and capabilities, they concluded the following. If additional product lines are added to generate economy of scope and to increase market share significantly, it could be a major player business in the industry. If the expert advices are employed, this business unit COULD BE ………………... in the future.

A. a question mark

B. a star

C. a cash cow

D. None of the above

Answer 1

If the expert advices are employed, this business unit COULD BE …A STAR……………... in the future

Ans- a star

Explanition:-

Currently medical device manufacturing is one of the business of johnson and johnson. if the experts advice is employed they increase there market share and majar business player in medical device manufacturing.

expert doing a portfolio analysis using BCG matrix. BCG matrix is a growth share matrix , it is a corporate business tool uses relatively market share and industry growth rate factor to evaluate the potential of business brand portfolio and suggest further investment strategies.

in bBCG matrix there are four quadrants into which firms product or brand classified

1) Question marks

Question marks are growing rapidly and consume large amount of cash, but because thery have low market share they do not generate much cash . it has potential to gain market share and become a star which would later become cash cow question markes not always succeed and even after large amount of investment they struggle to gain market share and eventully become a star .therefore they require very close consideration to decide if theyare worth investing in or not.

2) Star -

star operates in high growth industry and maintain high market share. star are both cash generater and cash user.star generate large amount of cash because of there strong relative market share but also consume large amount of cash because of there high growth rate . if star can maintain its large amount of share , it will become a cash cow when market growth rate decline .

3) Cash cow -

as leaders in a market cash cow exhibit a return on assects that is greater than market growth rate , and thus generate more cash than they consume . sushed business unit should be milked extracting the profit and investing as little cash as possibe

4) Dogs-

Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. however , dogs are cash traps because of the money tried up in a business that has little potential. such business are candidates for divestiture.

from above BCG matrix we observe that in J & J expert analysis for growth and high market share it is in star categories