Consider the following information about 3 Business Divisions for a company Busi

Question

Consider the following information about 3 Business Divisions for a company

Business Divisions:                            A                     B                     C____

Sales(million$):                                   200                  50                    150     

Profits(million$):                                 20                    15                    25       

Relative market share:                         0.2                   0.5                   0.8

Industry Growth rate :                       +0.20               +0.10            -0.10      

IFE total weighted Score                    1.8                   3.5                   2.5

EFE total weighted Score                   2.6                   1.5                   3.4

Qn.1 a)            Develop a BCG matrix

1b)       Suggest suitable strategies for the Business Division A

1c)       Suggest suitable strategies for the Business Divisions B

1d)       Suggest suitable strategies for the Business Divisions C

Qn.2 a)               Develop an IE matrix

2b)       Suggest suitable strategies for the Business Division A

2c)       Suggest suitable strategies for the Business Divisions B

2d)       Suggest suitable strategies for the Business Divisions C

Explanation / Answer

The BCG matrix typically looks like this:

We need to fill up the above matrix basis the information given in the question.

Now, looking at the given information, we can populate it like this:

Explanation: C has the highest market share (0.8) but the lowest growth rate out of the 3. A has the lowest market share (0.2) but the highest growth rate out of the three. B, on the other had is doing well on both parameters

Strategies:

Now, let us develop the IE matrix

(Filling up the matrix is simple - I have given you the score ranges for each of the cells.)

Now, for the strategies:

For busniess A, as per the IFE matrix, this is a harvest or divest case. Note how this is similar to what we got in the BCG matrix - which was a dog. The organization can either divest (sell) this business, or decide to make it run for some more time by infusing fresh capital to improve profitability.

For business B, it falls under the Hold and Maintain category. The organization should continue to run this division and should work on furthering the market share of this business. The industry as such as a positive growth rate so it makes sense to continue this division from a long term perspective

For business C, this also partly falls under hold & maintain, and grow & build. What this means is this division is making good money (excellent market share) and has great potential to further improve profit margins. The organization should continue to invest in this business, new product introductions, and other innovative strategies to drive and maintain this business.

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