Financial Derivative

The BCG growth-share matrix was developed by Boston Consulting Group in 1970. BCG often used to assist managers to develop organizational strategy based on the relative firm’s market share and market growth.

BCG Matrix helps firm to decide how much money to invest in its strategic business units (SBU).There are 2 axis and 4 quadrants in BCG Matrix. X-axis indicates firm’s market share while Y-axis indicates market growth rate. BCG growth-share matrix consists of 4 matrix quadrants: question mark (I), star (II), cash cow (III) and dog (IV).

SBU maybe varies from company to company. In larger organizations, a SBU could be a company division, a single product or certain product lines whereas in smaller organizations, SBU might be the entire company. For this case, we only focus on Samsung Electronics.

According the BCG press release in 2013, the tech and telecom industries continued to take the lead on innovation, earning four of the top five and five of the top ten places on BCG’s list. Many of these companies have demonstrated impressive staying power over the years:

• Apple has been number one every year since 2005.

• Google, which ranked number two from 2006 to 2012, placed third this year.

• Samsung has been rising rapidly since 2008 and ranked number two in 2013, up from number 26 in 2008.

• Microsoft and IBM have been in the top ten nearly every year since 2005.

1. Question Marks (High growth, low market share)

These products are in high growing markets but have low market share. Question marks are common for new products where buyers have yet to discover them. Question marks occur because this SBU has rapid growth which results in high cash needs, while their small market share results in low cash generation. These ‘Question marks’ create uncertain whether management should invest heavily to gain a larger share of the market or eliminate them. If do not increase market share quickly they become dogs.

For example, according to IDC...