Question

Classify the products of samsung company based on the BCG matrix.

Answer 1

Here, I have explained the entire concept but I didn't draw the BCG table as it was causing scale/ruler adjustment problems. I request you to see the explanation & examples to draw the BCG matrix table.

BCG Matrix or Boston Consulting Group (Growth-Share matrix):- In BCG matrix Four categories are attributed to a business unit/product line:- Dogs, Question Marks, Cash Cows & Stars on the basis of the performance of the unit & the industry which further helps in making investment decisions.

BCG Matrix uses 2 variables: the Market Growth Rate and Relative Market Share to make a decision on how to allocate & distribute money across all the business units. Since Samsung is a corporation which consists of multiple strategic business units (SBUs) offering a diverse set of products to the market, it uses BCG Matrix to cope up with the financial setback i.e how & where to allocate extra financial resources & how to divest to minimize the loss in the market. Samsung sells microwaves, micro SD cards, phones, refrigerators, washing machines, TVs, cameras, printers, etc

Question Marks

Question Marks are corporations or new ventures or new products of a company which operates in a high growth market at a low market share.

a) Questions marks do have the potential to convert low market share to high market share & Star.

b) Proper management can gradually lead to their growth & can become the market leader.

c) Samsung Printer is a product which can be placed in this category of the BCG Matrix, the reason behind is the dynamics of the market i.e. High competition & small market share of printers facing competition from HP, etc.

Stars

It includes products or business units having a high market share in the fast-growing businesses. Samsung Mobile phones, TVs, etc.

a) They generate huge cash flows (high relative market share)

b) Needs investments to invent & adapt new technology to face competition.

c) They are good for the image & brand promotion of the company

Cash Cows

a) When market growth starts declining & revenues stagnate then Stars category products are likely to transform into Cash Cows category because of large relative market share in the mature market while profits & cash flows are anticipated to be high.

b) They produce cash in the surplus amounts needed to keep up the business. This ‘surplus amount’ is supposed to be invested or ‘milked’ from the Cash Cow to other business units (Stars and Question Marks).

c) Cash Cows bring steadiness and stability to the product portfolio.

d) Samsung Home appliances like Air conditioners, Refrigerators, Washing Machines & microwave, etc. they are now a household name known for their quality & thus trusted by customers.

Dogs

a) It includes business units with slow-growth or waning market having a little relative market share.

b) Investors are not so interested in these business units or products.

c) They have the potential to grow but failed to create enchantment due to the slow market growth.

d) Dogs are to be expected divested or liquidated. Samsung Smartwatch & Micro Sd cards are facing tough competition.

Taking all the factors into consideration the surplus generated from Cash Cows should be diverted in Question Marks and Stars category. Dogs should be divested or liquidated to ease up cash to use it somewhere else. A balanced portfolio of all four is needed to assure favorable cash flows for the growth of the company.

If you liked the answer please upvote/positive feedback. It will be appreciated. Thank you