Module 3 Study Guide Essay

Submitted By Linnieleavines1
Words: 1256
Pages: 6
Open Document
Module 3 Learning Objectives
- Be familiar with the BCG Portfolio Model and each quadrant. What objectives might be pursued for SBU's in each quadrant?
The Boston Consulting Group’s (BCG) Portfolio Model is based on the assumption that profitability and cash flow will be closely related to sales volume. There are four special quadrants in this model: Stars, Cash Cows, Dogs and Question Marks.
Stars are Strategic Business Units (SBUs) with a high share of a high-growth market. Because high-growth markets attract competition, such SBUs are usually cash users because they are growing and because the firm needs to protect their market share position.
Cash cows are often market leaders, but the market they in is not growing rapidly. Because these SBUs have a high share of a low-growth market, they are cash generators for the firm. I like to imagine a fat cows, slowly grazing in a stagnant pasture to help me remember.
Dogs are SBUs that have a low share of a low-growth market. If the SBU has a very loyal group of customers, it may be a source of profits and cash. Usually, dogs are not large sources of cash.
Question marks are SBUs with a low share of a high-growth market. They have great potential but require great resources if the firm is to successfully build market share.
Portfolios often incorporate many of these to achieve diversification.

There are different objectives for the SBUs in certain quadrants.
1. Build share. This objective sacrifices immediate earnings to improve market share. It is appropriate for promising question marks whose share HAS to grow if they are ever to become stars.
2. Hold share. This objective seeks to preserve the SBUs market share. It is very appropriate for strong cash cows (large share in low growth market) to ensure that they continue to yield a strong cash flow.
3. Harvest. Here, the objective seeks to increase the product’s short-term cash flow without concern for the long-run impact. It allows market share to decline in order to maximize earnings and cash flow. It is an appropriate objective for weak cash cows, weak question marks, and dogs.
4. Divest. This objective involves selling or divesting the SBU because better investment opportunities exist elsewhere. It is very appropriate for dogs and those question marks the firm cannot afford to finance for growth.

- What are the criticisms of the BCG Model?
There are several major criticisms of the BCG Model, revolving around its focus on market share and market growth as the primary indicators of preference. First, the BCG model assumes market growth is uncontrollable. As a result, managers can be preoccupied with setting market share objectives instead of trying to grow the market. Second, assumptions regarding market share as a critical factor affecting firm performance may not hold true, especially in international markets. Third, the BCG model assumes that the major sources of SBU financing comes from internal means. Fourth, the BCG matrix does not take into account any interdependencies that may exist between SBUs, such as shared distribution (note: similar to cannibalization?) Fifth, the BCG matrix does not take into account any measure of profits and customer satisfaction (Note: you can have a small share of the market but be selling a premium product at a premium price, thus making enough money despite your relatively small share of the market). Sixth, and perhaps the most important, the thrust of the BCG matrix is based on the underlying assumption that corporate strategy begins with an analysis of competitive position. By its very nature, a strategy developed entirely on competitive analysis will always be a reaction one. While the above criticisms are certainly valid ones, managers (especially of large firms) across all industries continue to find the BCG matrix useful in assessing the strategic position of SBUs.

- Be familiar with the General Electric 9 Cell Portfolio Model.

This was developed because
Show More

Related Documents: Module 3 Study Guide Essay

Introduction To Advanced Graduate Studies And Scholarship Detail

Introduction to Advanced Graduate Studies and Scholarship Details This course introduces students to the principal elements of research and scholarly writing. Learners explore approaches to synthesizing literature and the application of the major components of APA form and style, and learn to coordinate literature searches. Furthermore, they learn how to discern principal arguments, analyze research questions, and clearly identify the key scholarly attributes to journal articles and other sources…

Words 6859 - Pages 28

The Requirements Of You And Your Learners For Effective Learning

This guide formalises the requirements of you and your tutors for effective learning to take place during your studies. 1. It details the nature and demands of the module, including: a week-by-week list of topics to be covered by the module; a description of the assessment criteria to be used during the module; a statement of the nature, pattern and timing of the assessment; This guide formalises the requirements of you and your tutors for effective learning to take place during your…

Words 2389 - Pages 10

Essay on Nursing Care Plan and Module

Undergraduate Module Guide Module title: Adult Nursing Practice 1 Module code: NH2309 Module Leader: Marina Kendrick Academic year: 2012/2013 Cohort 111 Welcome The members of the module team would like to welcome you. We hope that you enjoy the learning opportunities and experiences that this module provides. We aim to provide you with support during your study and to guide you to additional support…

Words 6931 - Pages 28

M39MKT Module Guide 1516MAYSEP Essay

Research Methods MODULE GUIDE 2015 This document is designed to supplement information contained in the University’s Web based Module Information Directory http://mid.coventry.ac.uk/midhome.html Students should consult the MID entry for information on: Module summary Teaching Learning and Assessment Module resources Module organisation. 1. Module delivery If you have a disability or medical condition and need an adjustment to allow you to fully participate in this module (e.g. different format…

Words 1276 - Pages 6

Open w1 Essay

effectively and to improve your user experience. If you continue to use this site we will assume that you are happy with this. However, you can change your cookie settings at any time. More Info/Change Settings Continue Sign in Skills for OU Study Menu ↓ Skills Check 0 Preparing assignments Don't be daunted by the prospect of your assignment. There is no single correct way of planning how to write your assignment. However there are some common principles and if you work your way…

Words 637 - Pages 3

Module: International Economics Essay

Student Module Guide | Winter Term2013 | FC006 International Economics | Table of Contents 1. Aims of the Module | P.2 | 2. Learning Outcomes | P.2-3 | 3. Contact and Study Hours | p.3 | 4. Learning and Teaching Methods | p.3 | 5. Key Texts | p.3 | 6. Assessment Overview | p.4-5 | 7. Academic Misconduct | p.4 | 8. Late Submission | p.4 | 9. Attendance and Punctuality | p.5 | 10. In Case of Illness | p.5 | 11. Weekly Schedule…

Words 1389 - Pages 6

Business: Strategic Management and Module Descriptor Module Essay

MODULE DESCRIPTOR MODULE TITLE Strategic Management Module Code Level 6 Credit Points 20 Indicative Assessment Components & Percentage Weightings CWEX100 Pre-Requisite Modules (if applicable) General business education to level 5 Delivered according to Standard Academic Calendar YES Long: 2 semesters YES Short: 1 semester YES Other delivery pattern: Please specify 1 MODULE AIMS The module exists primarily to support students in making sense of…

Words 804 - Pages 4

Perception Of Various Performance Criteria By Stakeholders In The Construction Industry In Hong Kong

construction industry. It shows that there are significant differences between private and government projects, especially with respect to the relationship with contractors and business procurement procedures. The study amalgamates the applicable data from the two sectors in its conclusion. The study shows the underlying differences between private and public approach to construction of projects. It is relevant and objective, which makes it an ideal source for academic research. The authors’ approach to…

Words 696 - Pages 3

Finance and Single Honours Essay

Honours with either Business Studies or Marketing •  pend a year in industry with an optional third year of a four year degree in a full-time, S paid work placement •  ain the internationally recognised Chartered Institute of Securities and Investment G (CISI) Diploma in Investment Advice FACT FILE • Accredited by the Association of Chartered Certified Accountants •  vailable as BSc single honours or A BSc combined honours with Business Studies or Marketing within the Business…

Words 565 - Pages 3

Essay on MN2205 Course Outline

School of Management MN2205 Strategic Management Course Outline and Study Guide MODULE LEADER: Ailson J. De Moraes Room MX107 Ailson.DeMoraes@royalholloway.ac.uk WORKSHOP TUTORS: Ailson J. De Moraes Mahmoud Abdelrahman Gideon Azumah Najib Murad Sumanta Barua Brief Outline and Aims of the Course The course provides the student with an understanding of the principal theories and modules of strategic management and how to set them in the context of key developments in which contemporary…

Words 1330 - Pages 6