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bcg matrix - The Boston Consulting Group(BCG Matrix...

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The Boston Consulting Group (BCG) Matrix Autonomous divisions (or profit centers) of an organization make up what is called a business portfolio. When a firm's divisions compete in different industries, a separate strategy often must be developed for each business. The Boston Consulting Group (BCG) Matrix and the Internal-External (IE) Matrix are designed specifically to enhance a multidivisional firm's efforts to formulate strategies. The BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate. The BCG Matrix allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization. Relative market share position is defined as the ratio of a division's own market share in a particular industry to the market share held by the largest rival firm in that industry. For example, in Table 6-4, the relative market share of Ocean Spray premium non-carbonated beverage is 14.7/40.5 = 0.36 and Sony's market share in the music industry is 16/27 = 0.59, and the new Hilton-Promus hotel company's market share is 290,000/528,896 = 0.55. TABLE 6-4 A. Market Share of Premium Non-carbonated Beverages BRAND MARKET SHARE IN 1999 % CHANGE IN SHARE FROM 1998 Snapple 40.5 % 3.7 96 Ocean Spray 14.7 -2.9 Arizona 13.7 -2.3 Lipton 10.8 -1.3 SoBe 9.3 6.9 Mistic 5.0 - 3.2 Nestea 4.7 -0.9 Nantucket Nectars 1.4 -0.1. . B. Market Share of the World's Largest Music Companies COMPANY MARKET SHARE IN 1999 MARKET SHARE IN 1998 Universal Music Group 27% 23% Time Warner Music 17 22 Sony 16 NA Bertelsmann's BMG 14 12 EMI 10 NA Independents 17 NA C. Market Share of the World's Largest Hotel Companies in 1999 COMPANY # OF ROOMS 1. Cendant 528,896 2. Bass 461,434 3. Marriott 328,300 4. Choice 305,171 ' 5. Best Western 301,899 6. Accor 291,770 7. Hilton-Promus 290,000 Source: Adapted from: Paul Georgis, "Market Share for Premium Non-carbonated Beverages," USA  Today (August 3,1999):  2B. Also, Keith Alexander, "Music Sales Hitting Sour Note," USA Today (August 25, 1999): 2B. Also, Chris Woodyard,  "Hilton to Buy Promus in $3B Deal," USA  Today, (October 12, 1999): p. 2B. s
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Relative market share position is given on the x-axis of the BCG Matrix. The midpoint on the x-axis usually is set at .50, corresponding to a division that has half the market share of the leading firm in the industry. The y-axis represents the industry growth rate in sales, measured in percentage terms. The growth rate percentages on the y-axis could range from -20 to +20 percent, with 0.0 being the midpoint. These numerical ranges on the x- and y- axes often are used, but
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