Corrected exercises on the BCG matrix

The objective of these 2 exercises corrected on the BCG matrix (Boston consulting group) is an initiation to the acquisition of basic techniques allowing to highlight the transfers and the techniques implemented at the course level and to adapt the supports pedagogical according to the techniques studied

Corrected exercise 1 on the BCG matrix

Using the information below, build and interpret a BCG matrix situating the different DAS of Cherry, an agri-food company specializing in the exploitation of fresh red fruits.

SAR CA CherryCA Main competitorGrowth (excluding inflation)
Frozen red fruits200 50  3%
D esserts made with red fruits (crumbles, tira misus, etc.)30 60 10%
Red fruit aromas50 100  0%
Yoghurts with red fruits 60 180 8%
Red fruit ice cream10050  12%
Collective catering40 50  10%
  • Answer

The different DAS can be presented in a BCG matrix:

 Interpretations and recommendations of the BCG matrix

SARAreaRecommendations
Collective catering Red fruit dessertsFruit yogurtsDAS DilemmaDAS in the launch phase: high growth:Invest more in these DAS to support them in order to get out of the dilemma zone and move into the star zone.Seek differentiation and strengthen communication.To avoid its descent into the deadweight zone, investment efforts must be multiplied for DAS Yoghurt with fruits, which has a small market share compared to its competitor, but the market remains promising.
  Red fruit ice creamDAS StarsDAS which generates considerable revenue. The market is attractive due to its strong growth:strengthen the leader’s position by investing in communication to reach more customers and keep sales up.product improvements help it stay ahead of the competition
Frozen red fruitsDAS cash cowThe DAS holds 40% of the market far ahead of the direct competitor. He alone generates 40% of the turnover of the Cherry company. But the market growth rate remains low (3%) compared to the average (7%):Build customer loyalty through aggressive advertising and promotions and maintain leadership position.Use DAS revenue to accelerate transition from dilemma DAS to star DAS area.
Red fruit aromasSAR deadweightThe market is not changing for this DAS:Prepare to abandon it: divestment / liquidation of stock / end-of-series promotions…Keep DAS to complement Cherry’s range and hinder competition and keep the company’s image in the market (DAS based on research and innovation)

Corrected exercise 2 on the BCG matrix

Company X specializes in the marketing of mid-range biscuits. Over the years, it has diversified into biscuits from other regions and other countries, more top-of-the-range biscuits, but also dairy products and cereals. She would like to take stock of her various activities.

ActivitiesMarket growth rate (in %)Turnover of the activity
(in euros)
Main competitor turnover
(in euros)
Size of the
total market (in euros)
Net margin
(in %)
premium cookie5,000,000 4,000,00050,000,00015
mid-range cookie210,000,00020,000,000100,000,0002
entry-level dairy product25,000,000100,000,000300,000,0005
premium dairy product1212,000,00015,000,00050,000,00020
cereal growers5,000,00080,000,000150,000,000-2
Cookies from the South of France535,000,00090,000,0001,200,000,0001
Mid-range Bordeaux15,000,000  60,000,000500,000,0002
South African cookies22,000,00050,000,000250,000,000-5
chile cookies78,000,0004,000,00040,000,0007

Task : With reference to the previous table, construct a BCG matrix and develop strategic recommendations for each activity

  • Answer
ActivitiesWeight in turnover (in %)Market share (in %)Main competitor market share
(in %)
Relative market share
1/ top-of-the-range biscuit 4.27  10.008.00 1.25
2/ mid-range biscuit8.5510.0020.000.50
3/ entry-level dairy product 21.37 8.33 33.33 0.25
4/ high-end dairy product 10.2624.0030.000.80
5/ cereal growers 4.27 3.33 53.33 0.06
6/ Cookies from the south of France29.912,9177.500.39
7/ Mid-range Bordeaux 12.82 3.00 12.00 0.25
8/ Cookies from South Africa1.710.820.000.04
9/ Chili cookies 6.84 20.00 10.00 2.00

The median growth rate is (15 + 2 +… – 5 + 7) = 45/9 or 5%.

Interpretation and recommendation:

The company does not have a cash cow product, which risks weighing on its cash flow.

The high-end dairy product business (4) is clearly buoyant: this is where massive investment is needed.

Regarding the high-end biscuits (1) and Chilean biscuits (9) activities, they still need to be developed: they are currently stars.

The objective is to further gain market share. These activities will then be called upon to become cash cows.

Activities 5 and 8 (cereals and biscuits from South Africa) are in a dead weight situation and contribute negatively to the margin: they must be abandoned.

The other activities are to be maintained as they are by limiting investments as much as possible.

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