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How can the BCG Matrix be applied to a high street retail business?

The Boston Consulting Group Matrix is a business tool which can be used to analyses a company with regard to their particular market share vs their market growth.

 

When a business has:

Low Market Share and Low Market Growth it is considered a 'Dog'

Low Market Share and High Market Growth it is considered a 'Question'

High Market Share and Low Market Growth it is considered a 'Cash Cow'

High Market Share and High Market Growth it is considered a 'Star'

 

With this in mind you can now apply it to a certain case study, in this case a retail business, and draw conclusions based on it. For this example I shall use the clothing retailer Primark.

The matrix is more useful when you are using it for comparison, either for multiple companies or for a single company over a period of time. Therefore in the case of Primark we can look at it's changing position on the matrix over the last 20 years.

At the turn of the century Primark had a relatively small share of the fashion and clothing market however due to its low prices as 'fast fashion' ideology there was huge potential for market growth. Therefore it could be considered a 'Question' on the BCG Matrix.

As a result of the taking over of Littlewoods stores, consderable investment and the UK recession, by 2010 the retailer had massively increased their market share at the expense of their competitors and had managed to turn themselves from a 'Question' into a 'Star'.

Currently they can still be considered a 'Star' since they are still increasing market share, with their first stores opening in the US this year, and enjoying continued market growth, with record profits of £298 million in March 2014, a 26% increase from 2013.

 

That brief description shows how the matrix can directly be applied to a company in order to analyse its position within the market. And is a useful part of any full business analysis.

Ben T. GCSE Business Studies tutor, GCSE Classical Greek tutor, GCSE ...

3 years ago

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