Bcg Matrix for Nestle Bangladesh Limited Sbus
Thus it gives an opportunity of self-assessment to the organization to reassess its product positioning and thus come out with alternative solution if the original placement of the products in the market does not meet the desired level of growth. OBJECTIVES The objectives of the present study are, ? To place the various brands of Nestle Bangladesh Limited in the matrix as suggested by the Boston Consultancy Group, as based upon the data empirically collected. ? To analyze the brands so placed and critically compare their placement. SCOPEThis study aims to study the products offered by Nestle in Bangladesh by placing them on the BCG matrix. The placement of the products on the matrix shall be on the basis of the empirical data collection which place Nestle products for sale. Nestle – the world’s largest food ; beverages company in terms of sales as well as product range and geographical presence.
Nestle covers nearly every field of nutrition: infant formula, milk products, chocolate and confectionery, instant coffee, ice cream, culinary products, frozen ready-made meals, mineral water etc.
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Nestle Bangladesh Limited, a wholly owned subsidiary of Nestle S. A. , started its commercial production in 1994 and currently employs 400 people directly in the company and another 1000 people indirectly in the industry. Today Nestle Bangladesh Limited is strongly positioned to grow through its policy of constant innovation and renovation, concentrating on its core competencies and commitment to high quality, with the aim of providing the best quality food to the people of Bangladesh. Riding on the growth of its power brands, Nestle has extended its dominance in food business in Bangladesh as well.However, a number of its brands require a repositioning.
Nestle Bangladesh’s vision is to be recognized as the most successful food and drink Company in Bangladesh, generating sustainable, profitable growth and continuously improving results to the benefit of shareholders and employees Designed to develop business strategy in 1960 by Bruce Henderson, president of the Boston Consulting Group, BCG Matrix places products according to market share and market growth rate in the four-celled matrix.Henderson noted that companies that dominated their markets tended to be more profitable and businesses that were in this category were termed “cash cows. ” It followed logically that if companies could dominate a growing market, they would have both growing profits an assured future. Companies that were in this category of the four-celled quadrant were classified as “stars”. Obviously, strategists should allocate resources to these businesses to enable them to capture and retain shares of a market with a high growth rate. Figure: The Boston Consulting Group’s Growth-Share Matrix ) Stars (high growth, high market share) Stars represent business with high market share position and usually represent the best profit and growth opportunities in the organization’s portfolio. These are the businesses that the organization needs to nurture and groom for the long run.
These products require capital over and above their cash flow to maintain their market share. Nevertheless, there may be some products within this category of stars, which are self-sustaining and thus require investment apart from their cash flows. 2) Cash Cows (low growth, high market share)Cash Cows represent a high market share in a low growth market. These tend to yield substantial cash surplus over and above their investment requirements. Now cash cows are not very attractive for long term investment but they are needed for generating cash to meet the organizational requirements. There is a further classification in them as strong or weak cash cows. Strong cash cows are those who were stars in the near past and generate substantial amount of cash surplus while weak cash cows are those who might have been stars in remote past and whose cash generation capacity is not high.
Such weak cash cows should be considered for divestment. 3) Question Marks (high growth, low market share) Question Marks are those types of businesses, which are characterized by the low market share in a growing market. These products are questionable as to whether profit potential associated with growth can realistically be captured. These question marks have two alternatives (i) either to grow them into stars if additional investment can bring them into such position or (ii) to divest them, if costs of strengthening them are quite high as compared to returns. ) Dogs (low growth, low market share) Dogs represent those businesses, which have a low market share in low growth market. These businesses have a very low competitive position and have very low profit potential as the market itself has a low growth potential. Therefore, they are not attractive from a long-term point of view.
These businesses may be harvested or liquidated, as they do no generate enough cash to maintain their position in the market, especially because of the highly competitive market.