BCG Matrix Essay

6774 Words Jan 23rd, 2014 28 Pages
1.1 SUMMARY OF THE CASE STUDY OF GASCOYNE GOLD

Tropical Cyclone Steve has dumped so much rain in the northwest, which makes the Gascoyne River has broken its banks and tens of thousands of tons of rich red topsoil has been washed out to the sea. This has made their soil and their crops as well as irrigation lines and the year’s profits have washed away from the growers, which causing them to have huge losses that cost millions of dollars. After that, the growers are back in their business again and then they formed a group named as Gascoyne Gold.

Gascoyne Gold has been formed with 7 shareholders, which they have invested more than $1 million, setting up a state of the art processing and packaging facility. Before they have
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Bruce Henderson usually would tell the clients that the payoff for leadership in market share is definitely very high if it is achieved early and maintained until growth starts to slow down. In addition, if the cash is available in the company, the investment in market share during the growth phase can be very attractive in their business. Growth in the market is compounded and is portrayed by growth in share while increases in share would help to increase the profit margin and thus the return on investment is enormous.

The BCG matrix also can serve as a simple tool for viewing a corporation’s business portfolio at a glance and may serve as a starting point for discussing resource allocation among strategic business units (SBUs). It also is used in order to help the companies to assess the profiles of the products or the businesses, to determine the cash demands of the products, to identify the development cycles of products and the resource allocation and divestment decisions.

Thus, the purpose of using the BCG matrix can turn into some steps which are the company need to identify and divide a company into SBU. Then, they need to access and compare the prospects of each SBU according to two criteria which is SBU’s relative market share and growth rate of the SBU’s industry. The company also needs to make some classifying for the SBU’s on the basis of the BCG matrix. The last steps that they can do after identifying all of the results is to

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