Bcg Matrix Critique

Marketing Critique BCG hyaloplasm Your Name Here control panel of Contents initiation3 Concept Overview3 Functional Critique5 Intellectual Critique6 Ethical Critique7 Political Critique8 Conclusion8 Bibliography9 Introduction This paper will attempt to provide a broad limited review of the capital of Massachusetts Consulting aggroup ground substance in light of the ideas of Hackley (2009). In his disc MarketingA Critical Introduction, Hackley presents a cloth for analysing grocery store fashion models.He suggests that nearly established marketing concepts should be re-evaluated from prison term to time, to determine if the marketing studies for that field of operation be applicable to current rehearse, and revisit the functional, intellectual, ethical, and political relevance of the say concept. I opted to evaluate the Boston Consulting Group model, which is an established tool around of the strategic direction field, used frequently in marketing circles to opti mize harvest-festival mix.Where alternative versions of the matrix have come up in new-fashioned studies, the traditional BCG Matrix continues to be popular and this paper intends to evaluate whether the concomitant for the model is justified or submits to be rectified. Concept Overview The Boston Consulting Group (BCG) Matrix was initially designed in the works of a leading management consulting firm, the Boston Consulting Group. Henderson (1970) eldest presented the concept of the Product Portfolio Matrix, the framework of which categorized yields within a attach tos portfolio as stars, specie awe, dogs, or question marks.Also called the Growth-Share Matrix, the model presented by Henderson (1970), organized the carrefours as per their respective(prenominal) growth rate, market make do, and positive or negative cash flow. The Matrix was said to create further growth opportunities for the firm if more than resources were invested in those products which pay backd posit ive cash flows. The model described Stars as those which enjoy a large market share in a rapidly developing industry. Where these stars generate cash, the nature of the market mandates the business to invest cash in order to maintain the products market share.The model suggests that go along investment in these stars will eventually lead to these products in decorous cash cows nones Cows are products which have a large market share in a mature industry. Cash cows are therefore well established, and do not wait much investment (marketing expenditures) to continue to generate cash flow. As these products generate cash flow, they are proudschoolly guarded. Over time, however, these cows may fall asleep appeal in the market and may have to be retrenched. dubiousness Marks are products which have a low market share in a high growth industry.These products require signifi pratt cash investments to generate any kind of boost in sales. Strategies in the type of question marks ma y either lean towards expansion or retrenchment, depending on the market share growth enjoyed by the product. Lastly, there are the dogs which are product rakes with low market share in low-growth markets. The nature of the market usually results in these products being produced at a mo terminalary observe disadvantage, and as a result, the cash flow generated from these products is negligible. Businesses usually seek to pillage these products, unless they serve an alternate strategic aim.Functional Critique The BCG Matrix presents a cockeyed framework as to how products can be managed from a strategic marketing perspective. At the core of it, the functionality of the BCG Matrix is focused slightly maximizing returns on investment and how best to deploy organizational resources (Cooper, Edgett, Kleinschmidt, 1999). However, there have been some(prenominal) critiques of its pertinence (Stalk and Stern, 1998). In particular, the model has been criticized for its polarities with respect to how the market growth and market shares have been presented.In the real world, products do not have a high or low share, and are often stuck somewhere in the core (Hambrick, MacMillan, and Day, 1982). The matrix presents no ideas as to what kind of strategies are to be enforced for the product in this circumstance. Further, market growth rate has been cited as an all-important(a) driver of product development. Contrary to the advice of the BCG Matrix, market growth rate is viable only till the point of saturation, after which point it would be counterintuitive for the firm to be investing in a product that does not enjoy majority stake (Stalk and Stern, 1998).The critical view of the BCG Growth-Share Matrix was as well shared by Morrison and Wensley (1991), who claimed that the model was myopic as it prescribed a set of strategic solutions, rather than encourage marketing executives to think creatively with respect to their product lines. On the contrary, Cooper, E dgett and Kleinschmidt (1999) frame in their study that firms which bear on strategy on the product portfolio model were not only more financially viable, nevertheless marginally outperformed other firms.Therefore, it is safe to conclude that where the applicability of the BCG model may be challenging, the results it produces are enough for strategists to continue utilise the model. Intellectual Critique Morrison and Wensley (1991) found that the BCG Matrix set a pattern for strategic models, and that a plethora of similar matrix style models came round in the years after the BCG Matrix was introduced (Wind, Mahajan, and Swire, 1983). However, this is where the intellectual contribution of the BCG Matrix ends, they argue.They claim that the Matrix oversimplified the nature of marketing strategies, and streamlined product arrangements in a way that was confirmatory rather than innovative, a view shared by Marren (2004). Other look forers tend to believe that the introduction o f the BCG matrix brought forward the importance of financial management in marketing. In particular Schoeffler, Buzzell, Heany (1974), Wind, Mahajan Swire (1983), and Dirkinderen Crum (1984) found that the model recalibrated organizations to focus their strategies more around portfolio management and enhancement.The simplicity of the matrix meant that it could be applied to other areas of marketing management, such as product life cycle model (Barksdale Harris, 1982), sales force management (Strahle Spiro, 1986). in spite of the item that the model faced significant critique from the academia when it was first launched, it is ironic that the BCG Matrix continues to be an inevitable curriculum component in almost every Marketing and Business Management program around the world.In their study, Morrison and Wensley (1991) found that a majority of instructors continued to espouse the benefits of the matrix to their students, notwithstanding having some reservations about its ap plicability. Perhaps the best appraisal of the intellectual value of the BCG Matrix was provided by Henderson, the creator of the model a milestone on the search for insight into business system dynamics, but certainly not the end of the road (Moore, 2001). Ethical Critique As per Hackley (2009), marketing studies need to examine the ethical and social values which surround marketing practice and theory.In the case of the Boston Consulting Group Matrix, the model is an internal strategic tool which shapes product assortment which is to be deployed to the market. The nature of the model is such that it advocates products with high market share in strong market growth. The ethical predicament posed here is whether the organization should retrench a product line which has low market share, in an industry of low market growth, but the product serves a social function that is beneficial to society (such as pharmaceuticals).In a similar vein, is it ethical for a bon ton to invest more resources into promoting a product in a growing market, even when the company is conscious of the adverse effects of the product (such as cigarettes). In other words, should an organizations product assortment be negligent of social benefits, and be determined entirely on market dynamics alone (McDonald Leppard, 1992), in a time when businesses are advocating principles of corporate social responsibility?It is also pertinent to timbre that the BCG matrix encourages organizations to continue investing in profitable ventures (cash cows), whereas it suggests retrenching investment to those products (dogs) which are not responding to market stimulation initiatives. Considering the large research and development expenditures that go into creating and launching a product, it is not clear from the BCG model about how long the company should wait before removing the product from markets solely (Seeger, 1984).Therefore, users of this model may want to base decisions in the context of ne t social benefit to continue driving the long term sustainability of the company and society at large. Political Critique As Hackley (2009) indicated, when analysing any marketing tool, it is important to analyse where the concept originated and what institutional forces stood to advantage from its evolution. In the case of the BCG Matrix, as described earlier, the model was originated in the work of Henderson (1970).The matrix was an inviolate component of the Boston Consulting Group and was used by several important benchmark companies at the time of its launch. The matrix also enjoyed coverage in the press, patronage strong criticism by academia (Morrison and Wensley, 1991). It is clear that the fire hydrant around the model stood to benefit the Boston Consulting Group the most, a fact that is confirmed by the fact that the company propagates its use to this very day, despite being aware of its shortcomings.It has also been found that aside from promoting and capitalizing on t he success of their models, consultancies go great lengths to ensure that they attract the highest profiled organizations to employ their services, so that they can charge higher consulting fees citing the quality of their past work (OShea & Madigan, 1998). Conclusion In conclusion, it is clear that the Boston Consulting Group Matrix is flawed in umteen respects, but continues to enjoy support in academic circles for its implications of strategy.It also serves to purpose that the model has inspired the creation of numerous other matrices to assist organizations in strategizing better. However, as with any marketing tool, it is important to keep in perspicacity the ethical implications of the decision-making advised by these strategic models. Bibliography Cooper, R. G. , Edgett, S. J. , & Kleinschmidt, E. J. (1999). New product portfolio management practices and performance. Journal of product innovation management, 16(4), 333-351. Hackley, C. (2009). Marketing A critical introduc tion. keen-sighted Publications Limited. Derkinderen, F. G. & Crum, R. L. (1984). Pitfalls in using portfolio techniquesAssessing risk and potential. Long Range Planning, 17(2), 129-136. OShea, J. , Madigan, C. (1998). Dangerous company Management consultants and the businesses they save and ruin. Penguin USA. Henderson, B. (1970). The product portfolio. BCG Perspectives series (The Boston Consulting Group, 1970). Hambrick, D. C. , MacMillan, I. C. , Day, D. L. (1982). Strategic Attributes and transaction in the BCG MatrixA PIMS-Based Analysis of Industrial Product Businesses. honorary society of Management Journal, 25(3), 510-531.Barksdale, H. C. , Harris Jr, C. E. (1982). Portfolio analysis and the product life cycle. Long Range Planning, 15(6), 74-83. Marren, P. (2004). The matrix revisited. Journal of Business dodge, 25(4). McDonald, M. , Leppard, J. W. (1992). Marketing by matrix 100 mulish ways to improve your strategic and tactical marketing. Butterworth-Heinemann. Mor rison, A. , Wensley, R. (1991). Boxing up or boxed in? A short history of the Boston Consulting Group share/growth matrix. Journal of Marketing Management, 7(2), 105-129. Schoeffler, S. , Buzzell, R.D. , Heany, D. F. (1974). Impact of strategic planning on profit performance (pp. 137-145). Graduate School of Business Administration, Harvard University. Seeger, J. A. (1984). look into note and communication. Reversing the images of BCGs growth/share matrix. Strategic Management Journal, 5(1), 93-97. Stalk, G. , & Stern, C. W. (Eds. ). (1998). Perspectives on Strategy From the Boston Consulting Group. J. Wiley. Wind, Y. , Mahajan, V. , & Swire, D. J. (1983). An empirical comparison of standardized portfolio models. The Journal of Marketing, 89-99.