Production capacity Profit margins relative to competitors The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness. Plotting the Information Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows: Market size is represented by the size of the circle. Market share is shown by using the circle as a pie chart.
The company has a lead over its nearest competitors including Barista and other emerging competitors. Indeed, Starbucks is so well known throughout the western hemisphere that it has become a household name for coffee.
The company is the largest coffeehouse in the world and because of its size and high volumes; it can afford to price its products in the premium as well as the middle tier range to attract more consumers. The company is known for its pioneering people management in an industry where people skills and soft skills make the difference between success and failure.
In other words, Starbucks has actualized a positive and welcoming workplace for its employees, which translates into happier associates serving customers in a superior way leading to all round benefits for the company. Weaknesses The company is heavily dependent on its main and key input, which is the coffee beans and hence, is acutely dependent on the price of coffee beans as a determinant of its profitability.
Marketing Theories – Boston Consulting Group Matrix. Visit our Marketing Theories Page to see more of our marketing buzzword busting blogs. Dogs (low share, low growth) Product classified as dogs always have a weak market share in a low growth market. These products are very likely making a loss or a very low profit at best. Market growth-- "growth rate" refers to the growth of the market (e.g., bottled water or juice), i.e., the % change of revenue/sales/market size from year to year. It can be positive (growth) or negative (decline). Market share-- "market share" refers to share of the specific product/brand (e.g., Depending on the company, BCG Matrix can. The BCG matrix has further identified those business units that have become a source of continuous loss for the organization. Moreover, these business units or products are not likely to offer any significant growth to the organization in terms of sales or market share.
This means that Starbucks is overly price sensitive to the fluctuations in the price of coffee beans and hence, must diversify its product range to reduce the risk associated with such dependence.
The company has come under fire in recent times for its procurement practices with many social and environmental activists pointing to the unethical procurement practices of coffee beans from impoverished third world farmers.
Opportunities The company has an opportunity to expand its supplier network and expand the range of suppliers from whom it sources in order to diversify its sources of inputs and not be at the mercy of whimsical suppliers.
Further, this would also help the company in becoming less sensitive to the prices of coffee beans and make it resilient against supply chain risks.
The company has a huge opportunity waiting for it as far as its expansion into the emerging markets is concerned. With a billion consumers likely to join the pool of those who want instant coffee and breakfast in China and India, the company can expand into these countries and other emerging markets, which represents a lucrative opportunity for the taking.
The company can significantly expand its network of retail stores in the United States as part of its push towards greater market share and more consumer segments. This opportunity ties in with the other opportunities described above related to the expansion into newer markets, diversifying into newer consumer segments, and increasing its footprint across the US and globally.
Threats The company faces threats from the rising prices of coffee beans and is subject to supply chain risks related to fluctuations in the prices of this key input. Further, the increase in the prices of dairy products impacts the company adversely leading to another threat to its profitability.
The company is beset with trademark and copyright infringements from lesser-known rivals who wish to piggyback on its success. As with other multinational retailers in the emerging markets, Starbucks has fought litigation against those misusing its brand and famous logo.
The company faces intense competition from local coffeehouses and specialty stores that give the company a run for its money as far as niche consumer segments are concerned. In other words, the company faces a tough challenge from local stores that are patronized by a loyal clientele, which is not enamored of big brands.
Starbucks has to expand into emerging markets as a necessity as the developed markets that it has traditionally relied on are saturated and given the fact that the ongoing recession has made the going tough for many retailers, it faces significant threats from this aspect.
Finally, as mentioned earlier, Starbucks faces significant challenges because of its global supply chain and is subject to disruptions in the supply chain because of any reason related to either global or local conditions.The Boston Consulting Group Matrix (BCG Matrix) can be used to analyze the different products being sold by the company in terms of their market share, sales generated on an annual basis and the potential for growth.
The BCG Matrix for Coca-Cola is as follows: Cash Cows. Diagram of the BCG Growth-Share Matrix with a discussion of the four categories of Dogs, Question Marks, Stars, and Cash Cows, and some of the framework's limitations.
Scenario Planning An introduction to scenario planning, including its benefits and an overview of the scenario planning process. The general electric Matrix was developed by GE with the assistance of the consulting firm McKinsey & Company. The model identifies the market position and profitability of different business units based on their market attractiveness and business unit strength.
The BCG Matrix method is the most popular portfolio management tool. It's used to determine what priorities should be given in the product portfolio of a business unit. In the following mini-case study, you are required to categorize the corporation’s business portfolio into the four boxes of the BCG (Boston Consulting Group) barnweddingvt.com then need to decide how the management should allocate $ million funds available across their strategic business units (SBUs), using the BCG matrix as a guide..
BCG Growth-Share Matrix Resources are allocated to business units according to where they are situated on the grid as follows: Cash Cow - a business unit that has a large market share in a mature, slow growing industry.