Question

Karen is working on classifying all her company's products in terms of whether they have strong or weak market share and whether this share is in a slow or growing market. What type of strategic framework is she using?

Answer 1

Answer:

She is using the Boston Consulting Group Matrix

Explanation:

The BCG Matrix is a coordinate system: it has four quadrants, where products are classified according to two variables: market share, and market share growth rate:

• First Quandrant - Question Marks - These are products that have a high market growth rate, and a low market share. A firm does not know whether the growh rate will be sustainable or not. The product could reach a plateau, or even decline. New technological devices usually fall in this category.
• Second Quadrant - Stars - These products have both high market share, and high market growth. A good example is every operating system that Windows releases. It's market share is giant, and as more people around the world get access to computers, the market share grows more.
• Third Quadrant - Cash Cows - These products have low market growth rate but high market share. For example, Comcast has a grip on internet, tv, and phone services in many regions of the US. The market share is very high, but the growth rate probably isn't, since most people living in those areas are already Comcast users.
• Fourth Quadrant - Dogs - These products have low market share, and low growth. They can still produce profits if they are luxury goods: for example, Ferraris are rare, and not many people buy them every year, but they are so expensive that still produce substantial profits for the manufacturer.