Page 174 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes The model assumes that high market growth of star businesses will ultimately slow down, and
stars may become cash cows, permitting the market leader to take cash out of them to invest in
other businesses.
However, some of the underlying assumptions of the BCG matrix may not hold good for some
businesses.

Example: Some electronic appliances and the so-called fashion goods have very short
life-cycle, whereas staples like bread have very extended life-cycles. The business may therefore
not follow the typical behaviour pattern assumed by the BCG matrix.

Case Study BCG at Work in PepsiCo

t can be said that PepsiCo products and business portfolio can be divided in four major
products or services; each service operates in accordance with its functions along with
Ithe products and services in different areas especially made as a distinction of each
division. The PepsiCo analysis will be based in assessment of the services offered by the
company.
PepsiCo consists of 5 major brands: Gatorade, Quaker, Pepsi products, Frito-Lay and
Tropicana. The products that belong to the question mark are Gatorade and also Tropicana.
Because of the emergence of different healthy drinks and beverages in the global market,
the market share of Tropicana and Gatorade are being threatened. Although these brands
are already established in the marketplace, the company still needs to have an effective
marketing approach to increase the sale of these brands or brands. Accordingly, question
mark category means that these products have a low share of a possible high growth
market and may become a star product because of the positive response of the customers.

As can be seen in the figure, the services that fall in star category belong to the Pepsi
brands. The star category shows the products with a high share of a gradual growth of
market and these products have a tendency to produce high amount of profits. The next
category that can be seen in the figure is the cash cows. Herein, the products are considered
Contd...

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