You have been given the BCG matrix on two divisions of your company - the appliance and electronics divisions. It appears that the electronics division can be located in the upper right quadrant of the matrix and the appliance division appears in the lower left quadrant of the matrix. You need to offer a strategic recommendation which includes these four findings:
1. Include an opinion on how much reliance the company should have on these findings. (1 paragraph)
2. What do these findings suggest? (1 paragraph)
3. What recommendations would you make? (1 paragraph)
4. What other measurements should be used to help reinforce or negate these findings? Support your answer. (1 paragraph)© BrainMass Inc. brainmass.com October 2, 2020, 2:50 am ad1c9bdddf
Please find attached the academic inputs for your assignment.
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RESOURCE ALLOCATION TO STRATEGIC BUSINESS UNIT (SBU)
A company has to decide on resource allocation to each and every STRATEGIC BUSINESS UNIT (SBU) and why. The company can take the allocation decision among various SBUs on the basis of BOSTON CONSULTING GROUP (BCG) MATRIX which can be explained with the help of following diagram:
RELATIVE MARKET SHARE
Source: Wheelen & Hunger, 2010: 230
Therefore, it can be concluded that Electronics division is a question mark whereas the appliance division is a cash cow.
The electronics division is in the upper right quadrant of that matrix which means that it is a question mark
? QUESTION MARKS also called as Problem Children or Wildcats are those strategic business units who have low relative market share but the market growth rate is high. It is called as Problem Child because it is an underperformer in the market which is growing (Rowe J., 2008: 42) and it may be a new product introduced in the market (Wheelen & Hunger, 2010: 230).
Strategic Recommendation for the Electronics Division
The question marks may have a great potential but require a lot of investment for development of the SBU (Wheelen & Hunger, 2010: 230). A 'Build' Strategy would be suitable for the question mark where the SBU needs to invest in the following areas
- Technology Development - Research & Development (as is also evident from the fact that how Apple developed a superior value proposition through the 9.1% investment in Research & Development which was higher than their competitors (Yoffie and Slind, 2008: 6).
- Developing a strong distribution network which is required for the company to make the product available to the consumers in far flung urban, semi-urban and rural areas.
- Spending aggressively on Advertising ...
The solution has a situation of a consumer electronics and home appliances company wherein electronics division is classified as question mark and appliances division is classified as a cash cow. In this situation, the solution describes the opinion on reliance the company should have on such findings, the interpretations of the findings in terms of strategy, academic inputs for recommendations and other measurements which could be used for resource allocation