Boston consulting group matrix. Access to the market

It is perhaps difficult to give an example of a more well-known, visual and simple tool portfolio analysis than BCG matrix. A diagram divided into four sectors, with original, memorable names (“Stars”, “Dead Dogs”, “ Problem children" and "Cash Cows") is known today to any marketer, manager, teacher or student.

The matrix, developed by the Boston Consulting Group (USA), quickly gained popularity due to its simplicity and clarity of analysis of products, divisions or companies based on two objective factors: their market share and market growth rate. And today, the BCG matrix is one of those minimum amount knowledge that any economist should master.

BCG Matrix: concept, essence, developers

BCG Matrix– a tool for strategic portfolio analysis of the market position of goods, companies and divisions based on their market growth and market share.

A tool such as the BCG matrix is currently widely used in management, marketing, and other areas of the economy (and not only). The BCG Matrix was developed by experts Boston Consulting Group ("Boston Consulting Group"), engaged in management consulting, in the late 1960s, under the leadership of Bruce Henderson. The matrix owes its name to this company. In addition, the Boston Consulting Group matrix became one of the first portfolio analysis tools.

BCG Matrix. Here the horizontal axis (relative market share) is inverted: large values are located on the left, smaller ones on the right. In my opinion, this is illogical and creates confusion. Therefore, in what follows we will use the direct order of the axis values: from smallest to largest, and not vice versa, as here.

Why do you need a company's BCG matrix? Being simple but effective tool, it allows you to identify the most promising and, on the contrary, the “weakest” products or divisions of the enterprise. By constructing the BCG matrix, a manager or marketer receives a clear picture on the basis of which he can make a decision about which products (divisions, product groups) are worth developing and protecting, and which should be eliminated.

In graphical terms, the BCG matrix consists of two axes and four square sectors enclosed between them. Let's consider the step-by-step construction of the BCG matrix:

1. Collection of initial data.

The first step is to make a list of those products, divisions or companies that will be analyzed using the BCG matrix.
Then they need to collect data on sales volumes and/or profits for a certain period (for example, for last year). In addition, you will need similar sales data for a key competitor (or a number of major competitors).

For convenience, it is advisable to present the data in table form. This will make them easier to process.

The first step is to collect all the source data and group them in the form of a table.

2. Calculation of the market growth rate for the year.

Then, for each product (division) analyzed, the market growth rate is calculated.

3. Calculation of relative market share.

Having calculated the market growth rate for the analyzed products (divisions), it is necessary to calculate the relative market share for them. There are several ways to do this. The classic option is to take the sales volume of the company’s product being analyzed and divide it by the sales volume of a similar product of the main (key, strongest) competitor.

For example, the sales volume of our product is 5 million rubles, and the strongest competitor selling a similar product is 20 million rubles. Then the relative market share of our product will be 0.25 (5 million rubles divided by 20 million rubles).

The next step is to calculate the relative market share (relative to the main competitor).

On the fourth last stage The actual construction of the matrix of the Boston Consulting Group is carried out. From the origin we draw two axes: vertical (market growth rate) and horizontal (relative market share).

Each axis is divided in half into two parts. One part corresponds to low values of indicators (low market growth rate, low relative market share), the other – high values (high market growth rate, high relative market share).

An important question that needs to be resolved here is what values of the market growth rate and relative market share should be taken as the central values dividing the axes of the BCG matrix in half? The standard values are as follows: for market growth rate – 110% , For relative market share – 100% . But in your case, these values may be different; you need to look at the conditions of a specific situation.

And the final action is the construction of the BCG matrix itself, followed by its analysis.

Thus, each axis is divided in half. As a result, four square sectors are formed, each of which has its own name and meaning. We will talk about their analysis later, but for now we should plot the analyzed products (divisions) on the BCG matrix field. To do this, consistently mark the market growth rate and the relative market share of each product on the axes, and draw a circle at the intersection of these values. Ideally, the diameter of each such circle should be proportional to the profit or revenue corresponding to the given product. This way you can make the BCG matrix even more informative.

BCG matrix analysis

Having built the BCG matrix, you will see that your products (divisions, brands) are in different squares. Each of these squares has its own meaning and special name. Let's look at them.

The BCG matrix field is divided into 4 zones, each of which has its own type of product/division, development features, market strategy, etc.

STARS. They have the highest market growth rates and hold the largest market share. They are popular, attractive, promising, developing quickly, but at the same time they require significant investment in themselves. That's why they are "Stars". Sooner or later, the growth of “Stars” begins to slow down and then they turn into “Cash Cows”.

DAIRY COWS(aka “Money Bags”). They are characterized by a large market share, with a low growth rate. “Cash cows” do not require costly investments, while bringing a stable and high income. The company uses this income to finance other products. Hence the name, these products literally “milk.”

WILD CATS(also known as "Dark Horses", "Problem Children", "Problems" or "Question Marks"). It's the other way around for them. The relative market share is small, but the sales growth rate is high. Increasing their market share requires great effort and expense. Therefore, the company must conduct a thorough analysis of the BCG matrix and evaluate whether the “Dark Horses” are capable of becoming “Stars” and whether it is worth investing in them. In general, the picture in their case is very unclear, and the stakes are high, which is why they are “Dark Horses”.

DEAD DOGS(or Lame Ducks, Dead Weight). Everything is bad for them. Low relative market share, low market growth rates. The income they generate and profitability are low. They usually pay for themselves, but nothing more. There are no prospects. “Dead Dogs” should be gotten rid of, or at least their funding should be stopped if they can be avoided (there may be a situation where they are needed for “Stars,” for example).

BCG matrix scenarios (strategies)

Based on the analysis of products according to the matrix of the Boston Consulting Group, we can propose the following main strategies for the BCG matrix:

INCREASING MARKET SHARE. Applicable to "Dark Horses" with the goal of turning them into "Stars" - a popular and well-selling product.

PRESERVATION OF MARKET SHARE. Suitable for “Cash Cows”, since they bring a good stable income and it is desirable to maintain this state of affairs as much as possible.

REDUCTION OF MARKET SHARE. Perhaps in relation to “Dogs”, unpromising “Problem Children” and weak “Cash Cows”.

LIQUIDATION. Sometimes liquidation of this line of business is the only reasonable option for “Dogs” and “Problem Children”, who, most likely, are not destined to become “Stars”.

Conclusions on the BCG matrix

Having constructed and analyzed the matrix of the Boston Consulting Group, a number of conclusions can be drawn from it: 1. Management and commercial decisions should be made in relation to the following groups of the BCG matrix:
a) Stars – maintaining a leading position;
b) Cash cows - obtaining the maximum possible profit for as long as possible long period time;
c) Wild cats – for promising products, investment and development;
d) Dead dogs – termination of their support and/or withdrawal from the market (discontinuation).

BCG Matrix. The orange arrow shows the life cycle of a product that sequentially goes through all stages, from being in the status of “Wild Cats” to becoming “Dead Dogs”. The purple arrows depict typical investment flows.

2. Measures should be taken to create balanced portfolio according to the BCG matrix. Ideally, such a portfolio consists of 2 types of goods:

a) Products that generate income for the company present time. These are "Cash Cows" and "Stars". They are making profits today, right now. The funds received from them (primarily from Cash Cows) can be invested in the development of the company.

b) Goods that the companies will provide future income. These are up-and-coming Wildcats. Currently, they may generate very little income, no income at all, or even be unprofitable (due to investments in their development). But in the future, under favorable conditions, these “Wild Cats” will become “Cash Cows” or “Stars” and will begin to generate good income.

This is what a balanced portfolio should look like according to the BCG matrix!

Advantages and disadvantages of the BCG matrix

The BCG matrix, as a portfolio analysis tool, has its pros and cons. Let's list some of them.

Advantages of the BCG matrix:

well-thought-out theoretical framework ( the vertical axis corresponds to the product life cycle, the horizontal axis corresponds to the effect of production scale);
objectivity of the estimated parameters ( market growth rate, relative market share);
ease of construction;
clarity and clarity;
much attention is paid to cash flows;

Disadvantages of the BCG matrix:

it is difficult to clearly determine market share;
only two factors are assessed, while other equally important factors are overlooked;
not all situations can be described within the 4 study groups;
does not work when analyzing industries with low levels of competition;
the dynamics of indicators and trends are almost not taken into account;
The BCG matrix allows you to develop strategic decisions, but says nothing about the tactical aspects in the implementation of these strategies.

Download ready-made template for the BCG matrix in Excel format

Galyautdinov R.R.

The Boston Consulting Group (BCG) matrix is considered the first successful attempt to apply strategic approach to the analysis and formation of product and competitive strategy enterprises. It was first introduced in the late 1960s by BCG founder Bruce Henderson as a tool for analyzing the position of a company's products in the market. Of the variety of factors characterizing it, only two main ones were selected for constructing the matrix: sales growth (profitability) of the product and its market share relative to its main competitors.

The BCG Matrix (Boston Consulting Group, BCG) is a tool for strategic analysis and planning in marketing.

The emergence of the BCG model (matrix) was the logical conclusion of one research work, was created by the founder of the Boston Consulting Group, Bruce D. Henderson.

The BCG matrix is based on two hypotheses:

The first hypothesis is based on the experience effect and assumes that a significant market share means the presence of a competitive advantage associated with the level of production costs. From this hypothesis it follows that the largest competitor has the highest profitability when selling at market prices and for it the financial flows are maximum.

The second hypothesis is based on the product life cycle model and assumes that presence in a growing market means an increased need for financial resources to update and expand production, conduct intensive advertising, etc. If the market growth rate is low (mature market), then the product does not require significant financing.

The Boston matrix, or growth/market share matrix, is based on a product life cycle model, according to which a product goes through four stages in its development:

1. entering the market (product - “problem”),

2. growth (product - “star”),

3. maturity (product - “cash cow”)

4. recession (product - “dog”).

At the same time, the cash flows and profit of the enterprise also change: negative profit is replaced by its growth and then a gradual decrease.

Rice. 1 BCG Matrix

To construct the BCG matrix, we fix the values of the relative market share along the horizontal axis, and the market growth rates along the vertical axis.

Next, dividing this plane into four parts, we obtain the required matrix. The value of the RMR variable (relative market share), equal to one, separates products - market leaders - from followers. As for the second variable, industry growth rates of 10% or more are generally considered high. Petrov A.N. Strategic management: Textbook for universities (neck). - St. Petersburg: Peter, 2007. - 496 p.

It can be recommended to use the gross growth rate as a baseline separating markets with high and low growth rates. national product in physical terms or a weighted average of the growth rates of various industry market segments in which the company operates.

It is believed that each of the squares of the matrix describes significantly different situations that require a special approach from the point of view of financing and marketing.

1. "Stars" are market leaders who are, as a rule, at the peak of their product cycle. They generate significant profits, but at the same time require significant amounts of resources to finance continued growth, as well as tight management control over these resources. The star strategy is aimed at increasing or maintaining market share. The company's main task is to maintain the distinctive features of its products in the face of growing competition. Markova V.D., Kuznetsova S.A. Strategic management: Course of lectures (GRIF). - M.: INFRA-M, 2006. - 288 p.

You can maintain (increase) market share by:

through price reduction;

through a slight change in product parameters;

through wider distribution.

Companies (business units) with high relative market share in high-growth industries are named stars in the BCG table because they promise the greatest profits and growth prospects. It depends on such companies general state business portfolio of the corporation. Having achieved a dominant position in a fast-growing market, star companies typically require significant investment to expand production capabilities and increase working capital. But they also generate significant cash flow themselves due to low costs through economies of scale and accumulated manufacturing experience. Zinoviev V.N. Management [Text]: Tutorial. - M.: Dashkov and K, 2007. - 376 p.

Star companies vary in their investment needs. Some of them can cover their investment needs through income from their own activities; others require financial support from the parent company in order to keep up with the industry's high growth rate.

Business units that occupy leading positions in industries where growth is beginning to slow cannot survive solely on their own influx of funds, and therefore begin to feed on the resources of the parent company.

Young star companies, however, usually require significant investment beyond what they earn themselves and are thus resource grabbers. Ivanov L.N., Ivanov A.L. Methods of decision making [Text] - M.: Prior-izdat, 2004. - 193 p.

As the pace of development slows down, the “star” turns into a “cash cow”

2. "Cash cows" - occupy a leading position in a market with a low growth rate. Their attractiveness is due to the fact that they do not require large investments and provide significant positive cash flows based on the experienced curve.

Such business units not only pay for themselves, but also provide funds for investment in new projects on which the future growth of the enterprise depends. Markova V.D., Kuznetsova S.A. Strategic management: (GRIF). - M.: INFRA-M, 2006. - 288 p.

In order for the phenomenon of cash cow products to be fully used in the investment policy of an enterprise, competent product management is necessary, especially in the field of marketing. Competition in stagnating industries is very fierce.

Therefore, constant efforts are required to maintain market share and search for new market niches.

Cash cow companies earn money in amounts that exceed their reinvestment needs. There are two reasons why a business falling into this quadrant becomes a cash cow.

Due to the fact that the relative market share of this business unit is large and it occupies a leading position in the industry, sales volumes and good reputation allow him to receive significant income. Meskon, M.H. Fundamentals of management / M.Kh. Meskon. - M. Albert, F. Khedouri. - M., 2001, p. 332

Since the growth rate of the industry is low, the company receives more funds from its current activities than is necessary to maintain its leading position in the market and capital reinvestments. Fatkhutdinov R.A. Strategic management: Textbook. - 7th ed., rev. and additional M,: Delo, 2005. - 448 p.

Many of the cash cows are yesterday's stars, falling into the lower right quadrant of the matrix as industry demand matures. Although cash cows are less attractive in terms of growth prospects, they are very valuable business units.

The additional influx of funds from them can be used to pay dividends, finance acquisitions and provide investment in emerging stars and in problem children who may become future stars. Yurlov F.F., K.B. Galkin T.A., Malova D.A., Kornilov Features and possibilities of using portfolio analysis in strategic planning and management at an enterprise M. 2010 p. 11

All efforts of the corporation should be aimed at maintaining cash cows in a prosperous condition in order to exploit their ability to generate an influx of financial resources for as long as possible. The goal should be to strengthen and protect the market position of dairy cows throughout the period in which they are able to earn money that will be used for the development of other divisions.

However, weakening dairy cows that move to the lower left corner of the dairy cow quadrant may be candidates for harvesting and phasing out if stiff competition or increased investment needs (caused by new technology) will cause the additional cash flow to dry up or, in worst case, will become negative. Markova V.D., Kuznetsova S.A. Strategic management: Course of lectures (GRIF). - M.: INFRA-M, 2006. - 288 p.

The strategy is to protect your position without significant costs.

3. “Dogs” are products that have a low market share and do not have growth opportunities because they are in unattractive industries (in particular, the industry may be attractive due to the high level of competition).

The net cash of such business units is zero or negative. If not special circumstances(for example, this product is complementary to a “cash cow” or “star” product), then these business units should be disposed of.

However, sometimes corporations retain such products in their range if they belong to “mature” industries. Capacious markets of “mature” industries are to a certain extent protected from sharp fluctuations in demand and major innovations that radically change consumer preferences, which makes it possible to maintain the competitiveness of products even in conditions of a small market share (for example, the market for razor blades).

Companies (business units) with low relative market share in slow-growing industries are called dogs because of their weak growth prospects, lagging market position, and the fact that being behind the leaders on the experience curve limits their profit margins.

Weakening dogs (those in the lower left corner of the dog quadrant) are often unable to earn much money over the long term. Shifrin M.B. Strategic management. Short course: Textbook (neck). - St. Petersburg: Peter, 2007. - 240 s.

Sometimes these funds are not enough to even support a rearguard strategy of strengthening and defending, especially if the market is fiercely competitive and profit margins are chronically low.

Therefore, with the exception of special occasions For weakening dogs, the BCG recommends a harvesting, reduction or elimination strategy, depending on which option may provide the greatest benefit.

Since there is often a situation where the “dogs” have fairly high profitability, the reduction strategy is applied to the strategic business units (SEBs) that fall into the lower left triangle of the “dogs” quadrant. For the upper triangle, the “milking” strategy is applied - as for “cash cows”.

5. “Problem” (“Problem children”, “wild cat”) - new products appear more often in growing industries and have the status of a “problem” product. Such products could be very promising. But they need significant financial support from the center. As long as these products are associated with large negative financial flows, there remains a danger that they will not be able to become star products.

The main strategic question, which presents a certain complexity, is when to stop financing these products and exclude them from the corporate portfolio? If you do this too early, you can lose a potential product - a “star”.

Thus, the desired sequence of product development is as follows:

"Problem" - "Star" - "Cash Cow" (and if inevitable) - "Dog".

The implementation of such a sequence depends on efforts aimed at achieving a balanced portfolio, which also involves a decisive rejection of unpromising products. Ideally, a balanced product portfolio of an enterprise should include 2 - 3 products - "cows", 1 - 2 "stars", several "problems" as a foundation for the future, and, possibly, a small number of products - "dogs".

The BCG scheme includes two cases with tragic outcomes for companies:

1) when the position of a star weakens, it becomes difficult child and is turning into a dog as the industry's growth slows.

2) when the cash cow loses its position as a market leader to the point where it becomes a weakening dog.

Other strategic mistakes include the following:

overinvestment in stable cash cows;

underinvesting in question marks, which results in them being relegated to the dogs instead of becoming stars, and spreading resources across all question marks rather than focusing on the most promising ones with the potential to become stars.

A typical unbalanced portfolio has, as a rule, one product - a “cow”, many “dogs”, several “problems”, but does not have “star” products that can take the place of the “dogs”.

An excess of aging goods (“dogs”) indicates the danger of a recession, even if the current performance of the enterprise is relatively good. An oversupply of new products can lead to financial difficulties. http://vell. omsk4u.ru/

An example of using the BCG matrix

As an example, consider a representation using the BCG matrix of the strategic positions of a hypothetical Randy organization in a number of business areas in the tea market.

A study of the organization's business showed that it actually competes in 10 areas of the tea market (see Appendix 1).

The BCG model for the considered business areas of Randy's organization is as follows:

The resulting model suggests that Randy’s organization gives undeserved great importance business area such as "US private label tea".

This area is in the "dog" category, and although the growth rate of this market segment is quite high (12%), Randy has a very powerful competitor in the form of Cheapco, whose share of this market is 1.4 times greater. Therefore, the profit margin in this area will not be high. http: //www.pandia.ru

If in relation to the future of such a business area as “US private label tea”, one can still think about whether to continue making investments here to maintain its market share or not, then in relation to “varietal tea from Europe”, “varietal tea from Canada" and "high-quality tea from the USA" everything turns out to be extremely clear.

We need to get rid of this kind of business as soon as possible. The investment Randy's organization makes in maintaining this business results in neither increased market share nor increased profits. In addition, the market itself for these types of tea shows a clear trend towards fading.

It is obvious that Randy's organization clearly does not notice the prospects associated with the development of the market for "USA fruit tea" and "USA herbal tea." These areas of the business are the clear stars. Investments in developing a share of this market could result in significant returns in the near future. http://maxi-karta.ru

In the May issue of the magazine we will talk about the BCG matrix - a marketing tool used when introducing products and services to the market. We will consider the algorithm for constructing this matrix, draw conclusions from the results of the analysis, and use a practical example to form an optimal portfolio of services provided. autonomous institution additional services.

The BCG Matrix is a tool for strategic analysis and planning in marketing. It was created by the founder of the Boston consulting group, Bruce D. Henderson (the abbreviation comes from the name of the group) and is used to analyze the relevance of a product or service or the stage of the life cycle at which the organization itself is located, based on the dynamics of the development of a particular market and the share occupied by the organization in it .

For an autonomous institution, the BCG matrix will help determine which additional paid services need to be developed and supported, and which services should be abandoned because they do not bring the desired income.

The matrix displays the axes of the market growth rate (vertical axis) and relative market share (horizontal axis). Scores on these indicators allow you to classify a product or service, highlighting its possible roles for the organization.

Basics of matrix construction and interpretation

The BCG matrix (shown below) is divided into four quadrants, each of which contains the products and services of the institutions studied (or the institutions themselves).

The Cash Cows quadrant includes organizations that have a high share of a slow-growing market, as well as those products and services that have a large market share but a low sales growth rate. Such organizations are highly profitable, do not require investments, and such services generate good income, which can be used to develop other quadrants.

"Stars" are leaders in a rapidly growing market. Their profitability is high, but they need investment to maintain their leading position. As the market stabilizes, the “stars” will turn into “cash cows.”

“Question Marks” (otherwise known as “problem children” or “wild cats”) include organizations and services that occupy a small share of a rapidly growing market. They have a weak position, so they have a high need for financing.

The Dogs quadrant contains organizations and services that have a small share of a slow-growing market. They are usually unprofitable and require additional financing to maintain their positions. Thus, “dogs” can be supported by large organizations if the former are connected with the activities of the latter (for example, they carry out warranty repairs of their products).

The BCG matrix implies that organizations and services typically go through a full life cycle. They start out as “question marks”, then if successful they become “stars”, when the market stabilizes they turn into “cash cows”, and end their cycle as “dogs”.

However, an organization's path may change depending on the actions of management and the influence of the competitive environment. In particular, "question marks" may not become "stars", but fail and turn into "dogs". In turn, the “stars”, as a result of certain changes, may return to the position of “question marks”, and not move into the category of “cash cows”. Similar metamorphoses can occur with the “cash cow”, which will become a “star” after modernization. “Dogs” are the least amenable to change - if successful, they can only move into the category of “question marks”.

Thus, based on the analysis using the BCG matrix, the organization can change its strategy. Depending on which quadrant a particular institution falls into, its strategic behavior can be predicted.

The BCG matrix allows you to choose from four strategies:

1. “Stars” are busy searching for additional financing necessary to expand their presence in a particular market (increase in production scale, volume of services provided). That is, the task here is to maintain and increase market share.

2. “Cash cows” are striving with all their might to maintain their market share and are ready to direct excess finance to the development of other areas and conducting scientific research and development.

3. "Question marks" need targeted financial investments to move into the “stars” or maintain the existing market share. IN otherwise the institution will have to reduce this direction.

4. “Dogs” are forced to be liquidated unless there are some special reasons for their preservation.

Construction of the BCG matrix using the example of a medical institution

Currently, most medical institutions have the ability to introduce and provide paid services, and the range of these services often differs. Using the example of a municipal hospital, we will consider the following paid services:

1) dental;

2) paid preventive examinations;

3) X-ray room services;

4) ultrasound examinations;

5) laboratory services (general blood and urine tests, blood sampling from a vein, biochemical blood test);

6) endoscopy (gastroscopy, colonoscopy);

7) physiotherapy (massages);

8) Academy of Nutrition.

Analysis stages

The construction of the BCG matrix takes place in six stages. First - collecting the necessary information(data on sales volumes).

Name of service	Sales volume for 2014, rub.
Dentistry
Preventive examinations

Ultrasound
Laboratory
Endoscopy
Physiotherapy
Academy of Nutrition

At the second stage it is made calculation of sales growth rate.

Name of service	Sales volume, rub.	Profit volume, rub.	Growth rate, %	Change factor	Growth rate in matrix
Name of service				Change factor	Growth rate in matrix
Dentistry
Medical examinations

Ultrasound
Laboratory
Endoscopy
Physiotherapy
Academy of Nutrition

Further market share is calculated occupied by one or another service (third stage). To do this, you need to know the sales volumes of the main competitors of the municipal hospital for each specific service. Suppose, after analyzing the collected data, the institution determined that its services occupy the following market shares:

Name of service	Sales volume, rub.	Market share, %	Market share in matrix
Dentistry
Preventive examinations

Ultrasound
Laboratory
Endoscopy
Physiotherapy
Academy of Nutrition

Fourth stage - construction of the BCG matrix by sales volume. Knowing the relative market share of the service provided and the rate of market growth (sales volumes), an institution can determine the place of each service in the BCG matrix and, accordingly, in its portfolio of offerings. The corresponding quadrant should reflect the name of the service, sales volume and total sales volume per group. By analyzing the data obtained, you can determine how balanced the organization’s portfolio is, correctly prioritize the development of services and highlight key areas for the institution.

	Name	Sales volume, rub.	Name	Sales volume, rub.
	"Question Marks"		"Stars"
Market growth rate			Endoscopy
			Academy of Nutrition

	"Dogs"		"Cash Cows"
	Dentistry		Ultrasound
	Medical examinations		Laboratory
			Physiotherapy


	Market share

Fifth stage - construction of the BCG matrix by profit volume. Analysis based on this indicator makes it possible to judge the possibility of initial financing and further financial support for new services of the institution, and also helps to set priorities in supporting certain types of services.

	Name	Profit volume, rub.	Name	Profit volume, rub.
	"Question Marks"		"Stars"
Market growth rate			Endoscopy
			Academy of Nutrition

	"Dogs"		"Cash Cows"
	Dentistry		Ultrasound
	Medical examinations		Laboratory
			Physiotherapy


	Market share

Finally, in the sixth stage, a final analysis is carried out, conclusions are formulated and the institution’s strategy is developed (adjusted).

	"Question Marks"	"Stars"
Market growth rate	1) starting point for new services; 2) high sales growth rate; 3) requires large investments in support and development; 4) low rate of profit in the short term	1) leader of a growing market; 2) high sales growth rate; 3) high level arrived; 4) further growth requires significant financing
	"Dogs"	"Cash Cows"
	1) low rate of profit (or unprofitability); 2) limited opportunities by sales growth; 3) a new service that has failed, or a service in a declining market;	1) leader of a stagnating market; 2) high level of profit; 3) further growth is practically impossible; 4) the costs of holding positions are lower than the profit received

	Market share

Analysis results

Based on the data obtained when constructing the BCG matrix, the following can be revealed:

1. The “Star” position includes endoscopy and nutrition academy services. This means that they occupy a relatively large share of the supply among paid medical services provided by the hospital, with a fairly high rate of development. The institution must support and strengthen this area, not reduce, but perhaps increase investment in it.

The best resources of the organization (personnel, scientific developments, funds) should be allocated to these areas. Star services are future stable source of funds for the institution.

2. Ultrasound, laboratory tests and physiotherapeutic procedures occupy the position of “cash cows”. That is, these services have a stable position among all the institution’s offerings and are the main profit generators. These areas are represented by a fairly large assortment, but are characterized by a negative growth rate.

There is no need for large investments - just to maintain the current level of sales. The institution may use the proceeds from the sale of such services to develop their promising directions - "stars" or "question marks".

3. The presence of x-ray diagnostics in the “question mark” quadrant indicates that this service is in a transitional stage - it is beginning to lose its relative share among hospital services. Activities falling into this quadrant require big investments in order to grow in line with the market and strengthen its position in it.

If any referral falls into this quadrant, the institution must decide whether Are there currently sufficient resources to develop the service?. If there are funds, they are used to strengthen key advantages services, intensive increase in its market share. If the organization does not have sufficient resources, the service does not develop.

4. Services included in the "dog" position include preventive examinations and dentistry. This quadrant concentrates services with low market share in slow-growing or stagnant markets. These areas usually bring little profit and are unpromising for the organization. However, in our case this is not the case. These services are core business activities and should not be withdrawn from the market. They bring significant income, but their demand is low(at least on a paid basis). Therefore, the management of the institution should think about the current situation and take the necessary measures (for example, reduce the cost of the service).

Thus, an organization’s ideal portfolio of proposals should consist of two groups:

1) services that can provide the institution with free monetary resources for investment in development (“stars” and “cash cows”);

2) services that are at the stage of implementation or growth, require financing and can create the basis for the future stability and sustainability of the organization ("question marks").

In other words, the services of the first group ensure the current functioning of the organization, and the services of the second group ensure its future income.

Main conclusions for medical institutions

The construction of the BCG matrix allows us to draw the following conclusion: in the example under consideration, the portfolio of services is completely balanced. But the institution needs to develop new directions and strengthen the position of new products - “question marks”.

More detailed conclusions are formulated in the table.

	"Question Marks"	"Stars"
Market growth rate	Services have a rather small share in the portfolio of offerings. Since the future stability and sustainability of the organization may depend on them, they need to be supported, financed and developed	The institution has quite a few "stars". However they are so popular types services that provide good profitability, which increases every year. These directions need to be supported. In addition, you need to remember that over time, the services of an X-ray room may move into this group (today’s “question marks”). Otherwise, the possibility of creating new types of services should be considered
	"Dogs"	"Cash Cows"
	First of all, you need to pay attention to dental services that bring good income, but due to their high cost, the number of clients is decreasing. Therefore, here it is necessary to adjust the cost to attract new audience, which will allow the service to move into the group of “cash cows”	The main focus of support is on physiotherapeutic services

	Market share

The BCG Matrix suggests next set further actions institutions on the market:

1. Services located in the “Stars” quadrant should be preserved and their positions strengthened.

2. If possible, expand the range of paid medical services from the “Dogs” quadrant. This will move them into the "Question Marks" or "Cash Cows" categories.

3. Services located in the “Cash Cows” zone must be strictly controlled - monitor changes in their market share and sales growth rates.

The change in the portfolio of services in the example under consideration is mainly associated with the displacement of previous methods of diagnosis and treatment modern methods, applied using high-tech equipment purchased by the institution. Most likely, this policy was formed under the influence of competition, since the list of services for which the municipal hospital has a low growth rate in sales volumes is offered by almost all medical institutions. Therefore, a more thorough study of the needs of hospital clients (through surveys, questionnaires and other methods) is necessary. And the old tactics, when a developed set of services are offered, no longer justifies itself.

The considered portfolio of proposals allows us to conclude that in given time The institution uses a mass undifferentiated marketing strategy. That is, the hospital, ignoring differences in segments target audience, addresses the entire market with the same services. At the same time, the emphasis is not on how the needs differ separate groups consumers, but on what these needs have in common. As a result, the hospital provides services that are perceived positively by the widest possible range of consumers. But if other medical institutions choose a similar strategy, this leads to tougher competition and a decrease in income. Small segments are also lost.

Thus, in order to stably maintain market share and develop paid medical services, the institution needs to adhere to a more thoughtful marketing policy.

A two-dimensional matrix developed by the Boston Advisory Group has been widely used in the practice of strategic choice. Therefore, this matrix is better known as the Boston Consulting Group matrix, or the BCG matrix. This matrix allows a business to categorize products by their market share relative to major competitors and the industry's annual growth rate.

The matrix makes it possible to determine which product of the enterprise occupies a leading position in comparison with competitors, what is the dynamics of its markets, and allows for the preliminary distribution of strategic financial resources between products. The matrix is built on a well-known premise - what more share goods on the market (the larger the production volume), the lower the unit costs per unit of production and the higher the profit as a result of relative economies of production volumes.

The BCG matrix is compiled for the entire portfolio, and for each product the following information should be available:

Sales volume in value terms, it is represented on a matrix with the area of a circle;

The product's market share relative to its largest competitor, which determines the horizontal position of the circle in the matrix;

The growth rate of the market in which the enterprise operates with its products is determined by the vertical component of the circle in the matrix.

From the BCG matrices, if they are performed for different periods of time, it is possible to construct a kind of dynamic series, which will give (a visual representation of the patterns of movement in the market of each product, the directions and rates of promotion of the product on the market. When constructing the BCG matrix, the growth rates of sales volumes of the product are divided into “high” and “low” by a conditional line at the level of 10%. The relative market share is also divided into “high” and “low”, and the border between them is 1.0. The coefficient of 1.0 shows that the company is close to the leader.

The interpretation of the BCG matrix is based on the following provisions:

Firstly, the gross profit and total revenues of the enterprise increase in proportion to the growth of the enterprise's market share;

Secondly, if an enterprise wants to maintain market share, then the need for additional funds grows in proportion to the market growth rate;

Third, since the growth of each market eventually declines as the product approaches maturity in its life cycle, therefore, in order not to lose previously gained market position, the profits generated should be directed or distributed among products that have growth trends.

Based on the above, the matrix offers the following classification of product types in the corresponding strategic zones depending on the characteristics of profit distribution: “stars”, “cash cows”, “wild cats” (or “question mark”), “dogs”. This classification is presented in Fig. 6.2.

"Stars" are products that occupy a leading position in a rapidly growing industry. They generate significant profits, but at the same time require significant amounts of resources to finance continued growth, as well as tight management control over these resources. In other words, they should be protected and strengthened in order to maintain rapid growth.

Rice. 6.2. BCG Matrix

Cash cows are products that occupy a leading position in a relatively stable or declining industry. Since sales are relatively stable without any additional costs, this product generates more profit than is required to maintain its market share. Thus, the production of products of this type is a kind of cash generator for the entire enterprise, that is, to provide financial support for developing products.

Dogs are products with limited sales in an established or declining industry. Over a long period of time on the market, these products failed to win the sympathy of consumers, and they are significantly inferior to competitors in all indicators (market share, size and cost structure, product image, etc.), in other words, they do not produce and do not need significant amounts of financial resources. An organization with such products may attempt to temporarily increase profits by penetrating specialty markets and reducing supporting services or exiting the market.

Problem Children (Question Mark, Wildcats) are products that have low market impact (low market share) in a growing industry. They typically have weak customer support and unclear competitive advantages. Leading position competitors occupy the market. Since low market share usually means small profits and limited revenue, these products, being in high-growth markets, require large amounts of capital to maintain market share and, naturally, even greater capital to further increase that share.

In Fig. 6.2 the dashed line shows that “wild cats” under certain conditions can become “stars”, and “stars” with the advent of inevitable maturity will first turn into “cash cows” and then into “dogs”. The solid line shows the redistribution of resources from cash cows.

Thus, within the framework of the BCG matrix, the following options can be distinguished for choosing strategies:

- growth and increase in market share- turning a “question mark” into a “star”;

- maintaining market share— a strategy for “cash cows” whose income is important for growing types of products and financial innovations;

- "harvesting", i.e., obtaining a short-term share of profit as much as possible, even at the expense of reducing market share- a strategy for weak “cows”, deprived of a future, unlucky “question marks” and “dogs”;

- liquidation of business or abandonment of it and the use of the resulting funds in other industries is a strategy for “dogs” and “question marks” who no longer have the opportunity to invest to improve their positions.

The BCG matrix can be used:

To determine interrelated conclusions about the position of products (or business units) included in the enterprise and their strategic prospects;

To conduct negotiations between senior managers and managers at the business unit level and make decisions on the amount of investment (capital investment) in a particular business unit.

For example, “question marks” operating in fast-growing industries, as a rule, are in dire need of a constant influx of funds to expand their business and strengthen their positions, and “money bags”, limited in growth opportunities, often have excess cash. In other words, using the matrix BKG enterprise forms the composition of its portfolio (i.e., determines combinations of capital investments in various industries, various business units).

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