BCG Growth-Share Matrix and GE/McKinsey Nine Cell Matrix
BCG GROWTH-SHARE & GE/MCKINSEY NINE CELL MATRIX 1
BCG Growth-Share Matrix
Since its introduction in 1970s, the BCG Growth-Share Matrix hashelped companies determine the markets that they should place thehighest investments in for better financial performance. The matrixdefines a market using two variables, market share and market growth,which are used to categorize market segments or products. In thematrix, a product or market is classified as either a ‘star’,‘cash cow’, ‘dog’, or ‘question mark’. Ideally, starshave the highest market share and growth followed by the cash cowsthat have high market share but low growth (Pham, Ma, & Yeo,2016). On the other hand, question marks have high growth but lowmarket share while dogs has low growth and market share.
When it comes to strategy, the management at the healthcare facilityshould first identify the operations that generate most business withhigh profits (stars) such as oncology, orthopedics, and imaging.Second, areas with a large market and potential to draw profitsshould be identified followed by those that have high potential butsmall share such as 3D printing while the dogs follow. Resourcesshould then be allocated depending on the needs of each segment withpriority on those that bring the highest revenue or profits.
In marketing, the management should pay attention on promoting the‘cash cow’ and ‘question mark’ products and services tobecome ‘stars’. The essence of advertisement is to promotebusiness and considering that items in the star category are drawingadequate business, it is only prudent to add more items in thesegment (Del Marmol, 2015). Creating adequate awareness of the‘question mark’ items can boost their market share while theincreasing the profits generated from ‘cash cows’ by enjoying theeconomies of scale. Finally, communication with the audience andservice lines should mainly involve the needs of items depending ontheir position on the matrix.
GE/McKinsey Nine Cell Matrix
The purpose of the GE/McKinsey Nine Cell Matrix is not much differentfrom that of the BCG Growth-Share Matrix. Both work by categorizingthe products, services or markets of a company to identify those thatdemand higher resources for optimal profitability and growth. Theprimary difference is that the GE/McKinsey Matrix utilizes ‘businessunit strength’ and ‘industry attractiveness’ to createcategories. Business unit strength considers variables such as themarket share, growth of the market share, production capacity, andthe competitor’s profit margins. On the other hand, industryattractiveness considers growth rate, demand, profitability, andmarket size as well as the macro-environmental factors (Han, Park,Ock, & Jang, 2014).
The GE/McKinsey Matrix can be considered a better approach to thecreation of business strategies, marketing plans, and communicationwith the audience as it includes a larger scope of considerationsthan the BCG Growth-Share Matrix. The matrix can give more detailabout the items of each cell in the matrix, which improves thechances of success in the development and implementation ofstrategies. Nonetheless, the process of categorization is muchsimilar to that expected in the BCG Growth-Share Matrix. Resourcesshould always be allocated with regard to the degree of business unitstrength and industry attractiveness. In some cases, it may beimportant to disregard some of items lowest in the matrix, if theyare not essential. On the other hand, marketing and communicationshould draw most attention to the items that indicate high potentialof growth as it is the case with the BCG Growth-Share Matrix.
Del Marmol, T. (2015). BCGgrowth-share matrix. Primento Digital.
Han, J., Park, H., Ock, J., & Jang, H. (2014).An international competitiveness evaluation model in the globalconstruction industry. KSCE JournalOf Civil Engineering, 19(3),465-477. http://dx.doi.org/10.1007/s12205-012-0486-z
Pham, T., Ma, H., & Yeo, G. (2016).Improvements in the strategic use of the marketing matrices applyingdynamics parameters based on time: A better analysis ofprospect. European ScientificJournal, 12(10).http://dx.doi.org/10.19044/esj.2016.v12n10p1
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