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PRINCIPLES OF MANAGEMENT (MGT503)

ASSIGNMENT NO. 01

DUE DATE: 1ST FEBRUARY, 2017                           MARKS: 10

 

TOPIC: “BCG MATRIX (BOSTON CONSULTING GROUP)”

The case:

Unilever Pakistan is the world’s leading Fast Moving Consumer Goods Company (FMCG). It has vast portfolio of products that are being sold in almost over 190 countries. Its portfolio ranges from food & beverage to personal and home care products. Unilever Pakistan deals in all kinds of products such as household care, fabric cleaning, skin care, oral care, hair care, personal grooming and tea based beverages. Some famous brands under the umbrella of Unilever Pakistan are Surf Excel, Sunsilk, Lux, Broke Bond Supreme, Knorr Noodles, Fair & Lovely, Energile, Comfort, Rafhan, Vim, Domex, Lifebuoy Shampoo and, Rexona Deodorant.

Like other companies, Unilever Pakistan also strives to make its products more and more profitable and shed those products from its production line that prove to be sheer burden for them. For this reason, Company evaluates their products on continuous basis. Following is the current situation of relative market share and market growth rate of some of the Unilever products:

 

Product name

Relative market growth

Relative market share

KNORR NOODLES

High

High

COMFORT

High

Low

FAIR & LOVELY

High

High

SURF EXCEL

Low

High

SIGNAL TOOTHPASTE

Low

Low

LUX

Low

High

REXONA DEODORANT

Low

Low

 

Required Questions:

Question 01:

You are required to identify the quadrant of “comfort” product by using BCG matrix and suggest appropriate strategies to the company for raising the market share of comfort.  (2+3 marks)

Question # 02:

Discuss which strategy Unilever Pakistan should adopt to handle its products in “Dog” quadrant? (Mention the product names from given table as well)  (2+3 marks)

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assignment 1 solution  

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Jawad Ahmad thanks for sharing 

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Q.NO:1

 

 Product name

Relative market growth

Relative market share

Q.Comforts

Stretegies

KNORR NOODLES

High

High

Stars

they need heavy

investment to finance their rapid growth potential

COMFORT

High

Low

Question marks

they require

a lot of cash to hold their share

FAIR & LOVELY

High

High

Stars

they need heavy

investment to finance their rapid growth potential

SURF EXCEL

Low

High

Cash cows

they are established,

successful, and need less investment to hold share

SIGNAL TOOTHPASTE

Low

Low

Dogs

they may generate enough

cash to maintain themselves, but do not have much future

LUX

Low

High

Cash Cows

they are established,

successful, and need less investment to hold share

REXONA DEODORANT

Low

Low

Dogs

they may generate enough

cash to maintain themselves, but do not have much future

 

Q. No:2

In Dogs quadrant SIGNAL TOOTHPASTE , REXONA DEODORANT

they may generate enough

cash to maintain themselves, but do not have much future

 Question 1
(A)

Product name Relative market growth Relative market share
KNORR NOODLES High High
COMFORT High Low
FAIR & LOVELY High High
SURF EXCEL Low High
SIGNAL TOOTHPASTE Low Low
LUX Low High
REXONA DEODORANT Low Low

STARS
CASH COW
STARS
QUESTION MARKS
DOG
QUESTION MARKS
DOG

(B)

STARS Vertical integration, horizontal integration, market penetration, market development, product development.
QUESTION MARKS Market penetration, market development, product development, divestiture
CASH COW Product development, diversification, divestiture, retrenchment
DOG Retrenchment, divestiture, liquidation.

QUESTION 2



Dogs 1)Signal toothpaste
Dogs 2) Rexona Deodorant

STRATEGY
“Dog” quadrant has a classic investment position or “Harvest/Exit”.  It will not make sense to exit business rapidly in this quadrant because Unilever have low value and will distract management during the sale process. They should be set up to operate with least resource groove on the rest of the portfolio, as the best people and all optional resources are abstracted to more attractive businesses. Over time they will become a diminishing portion of the portfolio.

Question 01:
You are required to identify the quadrant of “comfort” product by using BCG matrix and suggest appropriate strategies to the company for raising the market share of comfort. (2+3 marks)


Answer:


Product name Relative market growth Relative market share SBUs Categories Strategies
KNORR NOODLES High High Stars They need heavy
investment to finance their rapid growth potential
COMFORT High Low Question marks They require
a lot of cash to hold their share
FAIR & LOVELY High High Stars They need heavy investment to finance their rapid growth potential
SURF EXCEL Low High Cash cows They are established, successful, and need less investment to hold share
SIGNAL TOOTHPASTE Low Low Dogs They may generate enough
cash to maintain themselves, but do not have much future
LUX Low High Cash Cows They are established,
successful, and need less investment to hold share
REXONA DEODORANT Low Low Dogs They may generate enough
cash to maintain themselves, but do not have much future

The “COMFORT” quadrant has low market shares in a rapidly growing market which falls in “Question Marks” of BCG growth share matrix quadrant. To increase the market shares they required a lot of cash to hold their shares. Corporate level and coordinating strategies to increase the market shares and as well as market growth.


Question # 02:
Discuss which strategy Unilever Pakistan should adopt to handle its products in “Dog” quadrant? (mention the product names from given table as well) (2+3 marks)

Answer:
The “SIGNAL TOOTHPASTE” and “REXONA DEODORANT “ are falls in “Dogs” quadrant. They may generate enough cash to maintain themselves, but do not have much future.

The BCG growth share matrix compares various in an organization’s portfolio on the basis of relative market shares and market growth rate. Unilever Pakistan should adopt the corporate level strategy. The corporate portfolio matrix approach has been a popular approach to determining corporate level strategy, which further contains two strategies.
a). A Grand strategy and
b). A portfolio strategy.
so “SIGNAL TOOTHPASTE” and “REXONA DEODORANT” need to implement the more integrated approach to increase its market shares and market growth by using the corporate level strategy.

See the attached file please

Attachments:

Q.NO:1



Product name
Relative market growth
Relative market share
Q.Comforts
Stretegies
KNORR NOODLES
High
High
Stars
they need heavy

investment to finance their rapid growth potential
COMFORT
High
Low
Question marks
they require

a lot of cash to hold their share
FAIR & LOVELY
High
High
Stars
they need heavy

investment to finance their rapid growth potential
SURF EXCEL
Low
High
Cash cows
they are established,

successful, and need less investment to hold share
SIGNAL TOOTHPASTE
Low
Low
Dogs
they may generate enough

cash to maintain themselves, but do not have much future
LUX
Low
High
Cash Cows
they are established,

successful, and need less investment to hold share
REXONA DEODORANT
Low
Low
Dogs
they may generate enough

cash to maintain themselves, but do not have much future


Q. No:2

In Dogs quadrant SIGNAL TOOTHPASTE , REXONA DEODORANT

they may generate enough

cash to maintain themselves, but do not have much future

READ THIS PART OF HANDOUT TO SOLVE THE ASSIGNMENT

A portfolio strategy approach is a method of analyzing an organization’s mix of businesses in terms of both individual and collective contributions to strategic goals. Two portfolio approaches are used most frequently. Each uses a two-dimensional matrix, and each may apply to either the existing or to potential strategic business units (SBUs). The portfolio concept is analogous to an individual’s selecting a portfolio of stocks to achieve balance in terms of risk, long-term growth, etc.

1. The Boston Consulting Groups (BCG) growth-share matrix compares various businesses in an organization’s portfolio on the basis of relative market share and market growth rate. The corporate portfolio matrix approach has been a popular approach to determining corporate-level strategy.
The BCG matrix, developed by the Boston Consulting Group, is a strategy tool to guide resource allocation decisions based on market share and growth of SBUs.
a. Relative market share is determined by the ratio of a business’s market share compared to the market share of its largest rival.

b. Market growth rate is the growth in the market during the previous year relative to growth in the economy as a whole.
The matrix defines four business groups. SBUs plotted on the BCG matrix can be categorized:
1) The Star has a high market share in a rapidly growing market.

2) A Question Mark (problem child) has a low market share in a rapidly growing market.
3) The Cash Cow has a high market share in a slowly growing market.
4) A Dog has a low market share in an area of low growth.

c. Strategies are suggested by the SBU’s position on the matrix.

1) Use funds from cash cows to duns stars and possibly question marks.
2) Divest dogs and less desirable question mark.

2. The product/market evolution matrix (sometimes called the life-cycle portfolio matrix) is a 15-cell matrix in which business is plotted according to the business unit’s business strengths or competitive position, and the industry’s stage in the evolutionary product/market life cycle.

a. While the BCG matrix measures market growth rate the product/market evolution matrix shows the industry’s stage in the evolutionary life cycle.

b. The maturity and saturation stage is particularly important because it may last for an extended period of time and is a stage that presents special challenges to preserve market share while facing the prospect of the decline stage.
In assessing these portfolio matrixes remember that each model offers a somewhat different perspective. Portfolio matrices do not provide advice about specific business within the organization-such specifics are derived at the business level.
The BCG matrix (and the portfolio concept) has lost much of its merit because:
a. Not every organization has found that increased market share leads to lower costs.

b. The portfolio concept assumes that an organization’s businesses can be divided into a reasonable number of independent units.

c. Contrary to predictions, many so-called dogs have shown consistently higher levels of profitability than their growing competitors with dominant market shares.
d. Given the rate at which the economy has been growing and the fact that a market can have only one leader, well over half of all businesses by definition fall into the dog category.

e. Strategic implications of the BCG matrix are: “milk” the cash cows; invest resources in the stars; liquidate or sell the dogs; and sell off or invest in the question marks.

[Image: IMG20160723WA0014.jpg?width=721]

ASSIGNMENT NO. 01

PRINCIPLES OF MANAGEMENT (MGT503)
SEMESTER FALL 2016

Attachments:
Thank u so much brother

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