Problem:
Which matrix quadrant is the best position to be in for a US corporation? Is it the cash cows, stars, question marks, or the dog? What do these matrix quadrant really mean to US corporations?
Strategy Formulation:
Large sized companies have the capabilities of organizing their various business divisions into the available quadrants in the matrix. The matrix displays the various business units in a graph of market growth rate against the market share which is relative to the available competitors in the industry. The matrix is made up of four main quadrants the cash cows, stars, question marks, and the dog. They both characterize several divisions of a firm according to the market growth rate and the relative market share.
Opinion on Reliance:
The company should not hold much reliance of the findings because the link which exists between the market share and profitability is highly questionable as a result of the increasing market share which is considered to be expensive. In addition to this, the approach employed has the capability of overemphasizing high growth as it declines the declining potential market. Moreover, the fact that the model considers the market growth rate to be a given factor provides a reason why the company should not rely much on the model. The firm is known to have a capability of growing the market (Seeger, 2004).
The Suggestions of the Findings:
The electronic division can be located in the upper right quadrant. From the BCG matrix the upper right quadrant is represented by the question marks or referred to as the child problem. This finding therefore suggests that the electronic division is a business unit which has a small market share within a high growth market. Despite the fact that the business unit will grow and move to the star quadrant is not known however, resources are required to ensure that there is growth in the market share.
The appliance division is located at the lower left quadrant of the matrix. This quadrant is referred to as the cash cows. This therefore suggests that the business unit has a large market share within a slow growing industry despite the fact that the industry is mature. Little investment is required for this division since it generates cash which could be used in the investing of other business units (Seeger, 2004).
Recommendations:
From the findings, there are two major recommendations which could be made for instance; the firm should consider having a large market share in the industry as this boosts the firm's competitive advantage in terms of the available costs in comparison to the existing competition. The end result of this action ensures that the most powerful competitor have a competitive advantage in terms of the profits that they make therefore generating more cash inflows.
The firms available should accordingly allocate its activities in response to the lifecycle phase with an aim of maintaining a balance between the profitability of the firm and its growth potential. This will ensure that there is an increment in the needs fro liquid funds of financing the market which is constantly growing (Mullender, 2012).
Other Measurements:
There are other measurements which could be used in further reinforcing or negating the available findings. This includes the use of SWOT analysis measures. This measure has a capability of providing the relevant information which offers assistance when it comes to matching the organization's resources as well as capabilities within an environment which is competitive and where it carries out its operations. This measure therefore proves to be handy when it comes to strategy formulation and strategy selection. In addition this measure, the use of Porter's competitive strategy is considered to be ideal. This is because companies have the capability of using its strengths with an aim obtaining the three generic strategies available such as differentiation, focus and cost leadership. The reason of the application of these strategies is that the strategies are not dependent on the industry or on the firm (Mullender, 2012).