39965342 reliance bcg matrix emmanuel

8/4/2019 39965342 Reliance BCG Matrix Emmanuel

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BCG Matrix Analysis ofReliance

Presented by Nwankwo

Emmanuel


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Main Subsidiaries

Reliance TelecommunicationLimited (RTL)

Reliance Globalcom Reliance CommunicationsInfrastructure Limited (RCIL)

Reliance Big TV Limited

Reliance Infratel Limited(RITL)


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Why BCG MatrixThree techniques most widely used and most referenced in the business literature:BCG-Growth Share Matrix

GE-McKinsey Industry Attractiveness-Business Strength MatrixArthur D. Little Life Cycle Approach

The BCG matrix method is based on the product life cycle theory that can be used todetermine what priorities should be given in the product portfolio of a business unit.


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??

Cash Cows Dogs$$

Stars Question Marks


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4 categories in a portfolio of acompany

1. Stars (=high growth, highmarket share)

use large amounts of cashand are leaders in the

business so they should alsogenerate large amounts of

cash.

frequently roughly in

balance on net cash flow.However if needed any

attempt should be made to

hold share, because the

rewards will be a cash cow if

market share is kept.

2. Cash Cows (=low growth,high market share)

profits and cash generationshould be high , and because

of the low growth,investments needed should

be low. Keep profits high.

Foundation of a company.


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4 categories in a portfolio of acompany (contd)

3. Dogs (=low growth,

low market share) avoid and minimize the

number of dogs in acompany.

beware of expensiveturn around plans.

deliver cash, otherwiseliquidate.

divest, butoccasionally hold forpossible strategicrepositioning, whichcan lead to question

mark or cash cow.

4. Question Marks (=high growth, low

market share) worst cash

characteristics of all,because high demandsand low returns due tolow market share.

generate insufficientcash, simply absorbgreat amounts of cash

and later, as thegrowth stops, a dog.

either invest heavily orsell off or invest

nothing and generate


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The BCG or Growth-Share matrix imposes a two-dimensional analysis on

management of Strategic Business Units:a comparative analysis of business strength and an assessment of the

environment.

The business strength measure is the business's Relative Market Share.

The environmental measure is the Market Growth Rate.

Formulas for Relative Market Share and Market Growth Rate:

The two dimensional analysis of BCG Matrix


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Service Provider Subscriber (Mn) Market Share (%) Relative

Market Share

Bharti Airtel 130.61 21.73 1.243

Reliance Com + RTL 105.15 17.49 0.805

Vodafone Essar 103.75 17.26 0.794

BSNL 70.62 11.75 0.541

Tata Teleservices 67.88 11.29 0.520

IDEA 65.28 10.86 0.500

Aircel 38.46 6.40 0.295

MTNL 5.12 0.85 0.039

Uninor 5.02 0.84 0.039

Sistema Shyam 4.21 0.70 0.032

Loop Mobile 2.89 0.48 0.022

STel 1.11 0.19 0.009

Videocon 0.65 0.11 0.005

HFCL Infotel 0.327 0.06 0.003

Etisalat/Allianz 0.004 0.00 0.000

Indian mobile mkt 2010


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overall telecom operator market share


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Bharti Airtel 32%Vodafone 20.8% [Consistent]Idea Cellular 12.7% [Moderate Growth, but commendable]Reliance Communications -11.7% [ Losing to competition ]BSNL 9.3% [ Losing to competition]Tata Tele [ Gaining on the back of DoCoMos innovative strategies

Aircel 4%

India Wireless Operators Revenue Market Share
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India Wireless Connection (2010)

Telecom

Operator

Market Share Relative

MarketShare

Bharti Airtel 32.0% 2.735

RCOM 11.7% 0.366

Vodafone 20.8% 0.650

BSNL 9.3% 0.291

IDEA Cellular 12.7% 0.397

Tata Teleservices 8.5% 0.266

Aircel 4.0% 0.125
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TelecomOperator

Market

Share

(in %)

RelativeMarket

Share

MTS (SSTL)1.0% 0.017

RCOM 56.0% 1.514

MTNL 0.0% 0.000

BSNL 6.0% 0.107HFCL 0.0% 0.000

Tata

Teleservic

es

37.0% 0.661

Top CDMA operators in India
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10x 8x 7x 5x 3x 1x .7x .5x .4x . 3x .2x .1x

20%-

18%-

16%-

14%-

12%-

10%-

8%-

6%-

4%-

2%-

0%-

BCG Analysis for Reliance CommunicationsBCG Analysis for Reliance Communications
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??

Cash Cows Dogs$$


Strategy for substantial growth
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??

Cash Cows Dogs

$$


Cash reinvestment


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BCG Matrix(Three Paths to Success)

Continuously generate cash cows and usethe cash surplus from the cash cows toinvest in the question marks that are not

self-sustaining.

Reinvest in Stars, as the market matures,stars will degenerate into cash cows and

the process will be repeated.

Segment the market for dogs, nurse thedogs to health or manage for cash.
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??

Cash Cows Dogs

$$


Three Paths to Success


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BCG Matrix(Three Paths to Failure)

Over invest in cash cows and underinvest in question marks.

Under invest in the stars.

Over milk the cash cows.
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??

Cash Cows Dogs

$$


Three Paths to Failure


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The 4 Portfolio Strategies
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1. High market share is not the only success factor2. Market growth is not the only indicator for attractiveness of a market3. Sometimes Dogs can earn even more cash as Cash Cows4. How growth and share are measured highly affect the overall analysis.5. It does not provide sufficient direction for most effective ways to

implement the investment strategies.

Recommendation:

Either these SBUs should receive enough investment funds toenable them to achieve a real market dominance and become acash cow (or star), or otherwise companies are advised to disinvestand try to get whatever possible cash out of the question marks thatwere not selected.

limitations of the BCG Matrix
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references1. http://www.bcg.com/about_bcg/history/history_1968.aspx

2. http://www.rcom.co.in

3. http://www.simonbrandon.com4. http://www.telecomindiaonline.com/india-telecom-growth-and-subscribers-2010.html

5. http://www.thehindubusinessline.com/2010/05/22/stories/2010052252590700.htm.

6. http://www.businessweek.com/globalbiz

7. http://www.trai.gov.in/WriteReadData/trai/upload/PressReleases/740/PRelease28June10.pdf

8. http://www.ibef.org/industry/telecommunications.aspx.

9. http://en.wikipedia.org/wiki/Reliance_Communications

10. http://economictimes.indiatimes.com/News/News-By-Industry/Telecom/GSM-CDMA-players-maintain-subscriber-growth-momentum/articleshow/4281903.cms

11. Carl W. Stern, George Stalk - Perspectives on Strategy from The Boston Consulting

Group
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39965342 reliance bcg matrix emmanuel

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