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Market growth also would require the investments in the assets of the business in order to help increasing the capacity and thus can result in the consumption of the cash. This can help them to increase their position in the business because of the cash generation and cash consumption.
The market growth rate also means as the rapidly growing in rapidly growing markets which shows what organizations need to strive for. Thus, the penalty is they are usually net cash users as they always would require investment. The reasons for this matter happen is because the growth of the business is being bought by the high investment especially in the reasonable expectation that a high market share would usually turn into the thought of people as the investments in the profits of the future. Consequently, business units that work in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future. Generally, a growing market would require the investment in the assets to help in increasing the capacity and also the results can be formed in the consumption of cash. Therefore, the business position of the companies would involve the growth-share matrix that provides an indication of its cash generation and its cash consumption. The market growth rate is just likely more about the brand position than just its cash flow. This is becoming as a good indicator of the market’s strength of the future potential which also known as the maturity as usually used in terms of the market life-cycle. It also can be as an indicator for the attractiveness of the future competitors and also can be used in the growth analysis. Thus, the market growth rate can help the companies to determine the brand position that they bring the in the market and this can help them to grow their business successfully. 1.7 STRATEGY FOR EACH QUADRANTS Figure 2: Strategic choices of each quadrants in BCG matrix Figure above shows that the strategic choices that can to be applied in each quadrants in order to help the growth of the company. There are several strategies that need to apply to each of the quadrants and some of them are different strategies. One of the strategies is forward integration. Forward strategy is a strategy where a firm gains ownership or increased control over its previous customers (distributors or retailers). If the manufacturing company engages in sales or after-sales industries it pursues forward integration strategy. This strategy is implemented when the company wants to achieve higher economies of scale and larger market share. Forward integration strategy became very popular with increasing internet appearance. Many manufacturing companies have built their online stores and started selling their products directly to consumers, bypassing retailers. This strategy is effective when there are only few quality distributors are available in the industry, distributors or retailers have high profit margins, distributors are very expensive, unreliable or unable to meet firm’s distribution needs, the industry is expected to grow significantly and there are benefits of stable production and distribution as well as the company has enough …show more content…
Another limitation that can be found is the attractiveness of the market or industry is usually determined by the market growth only, but there will be many more factors that can be used in order to determine the market growth rate. The examples of the other factors are based on the resources, abilities and temperament that are particular to each business (Healy, …show more content…
Before reaching to the transformation of the modern eras, the BCG model only used to analyze about one or two separate divisions in their business (Healy, 1955). Thus, it also may be adapted to provide some approaching into the smaller businesses.
Generally, the BCG model can be used by the small to medium-sized businesses which require them to calculate the position of the individual products rather than SBUs and also using the growth of the individual market segments for each of the products that is important for the market share or industry growth rate aspect. According to Healy (1955), he said that in order to estimate the relative market share growth rate, the direct other brand competitors can be used for each of the
The market growth rate also means as the rapidly growing in rapidly growing markets which shows what organizations need to strive for. Thus, the penalty is they are usually net cash users as they always would require investment. The reasons for this matter happen is because the growth of the business is being bought by the high investment especially in the reasonable expectation that a high market share would usually turn into the thought of people as the investments in the profits of the future. Consequently, business units that work in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future. Generally, a growing market would require the investment in the assets to help in increasing the capacity and also the results can be formed in the consumption of cash. Therefore, the business position of the companies would involve the growth-share matrix that provides an indication of its cash generation and its cash consumption. The market growth rate is just likely more about the brand position than just its cash flow. This is becoming as a good indicator of the market’s strength of the future potential which also known as the maturity as usually used in terms of the market life-cycle. It also can be as an indicator for the attractiveness of the future competitors and also can be used in the growth analysis. Thus, the market growth rate can help the companies to determine the brand position that they bring the in the market and this can help them to grow their business successfully. 1.7 STRATEGY FOR EACH QUADRANTS Figure 2: Strategic choices of each quadrants in BCG matrix Figure above shows that the strategic choices that can to be applied in each quadrants in order to help the growth of the company. There are several strategies that need to apply to each of the quadrants and some of them are different strategies. One of the strategies is forward integration. Forward strategy is a strategy where a firm gains ownership or increased control over its previous customers (distributors or retailers). If the manufacturing company engages in sales or after-sales industries it pursues forward integration strategy. This strategy is implemented when the company wants to achieve higher economies of scale and larger market share. Forward integration strategy became very popular with increasing internet appearance. Many manufacturing companies have built their online stores and started selling their products directly to consumers, bypassing retailers. This strategy is effective when there are only few quality distributors are available in the industry, distributors or retailers have high profit margins, distributors are very expensive, unreliable or unable to meet firm’s distribution needs, the industry is expected to grow significantly and there are benefits of stable production and distribution as well as the company has enough …show more content…
Another limitation that can be found is the attractiveness of the market or industry is usually determined by the market growth only, but there will be many more factors that can be used in order to determine the market growth rate. The examples of the other factors are based on the resources, abilities and temperament that are particular to each business (Healy, …show more content…
Before reaching to the transformation of the modern eras, the BCG model only used to analyze about one or two separate divisions in their business (Healy, 1955). Thus, it also may be adapted to provide some approaching into the smaller businesses.
Generally, the BCG model can be used by the small to medium-sized businesses which require them to calculate the position of the individual products rather than SBUs and also using the growth of the individual market segments for each of the products that is important for the market share or industry growth rate aspect. According to Healy (1955), he said that in order to estimate the relative market share growth rate, the direct other brand competitors can be used for each of the