BCG Matrix of Nestle Scribd

BCG matrix of nestle
BCG Matrix also known as the growth-share matrix is used by organizations to classify their business
units or products into 4 different categories: Dogs, Stars, Cash Cows and Question Mark. Growth rate of
an industry and the market share of a respective business relative to the largest competitor present in
the industry are taken as the basis for the classifications, for that reason, BCG Matrix is also called as
Growth-Share Matrix. Dogs These are the products with low growth or market share These are low
growth or low market share products and have very few chances of showing any growth. The
investment strategy for these products has to be very well thought through by the management as
there are chances that these businesses might not yield any profit for the organization. These business
units or products are cash traps and therefore are not seen as a useful source of earning. Dogs are those
products that were perceived to have the potential to grow but however failed to create magic due to
the slow market growth. Failure to deliver the expected results makes the product a source of loss for
the organization, propelling the management to withdraw future investment in the venture. Since the
product is not expected to bring in any significant capital, future investment is seen as wastage of
company resources, which could be invested in a Question mark or Star category instead. Nestle’s
Milkybar product failed to create any significant impact on the business and is placed in the Dog
Quadrant of BCG Matrix of Nestle. Cash Cows These are the products which are in low growth markets
with high market share. Products which are market leaders in their specific industry and their industry is
not expected to see any major growth in the future are considered as Cash Cows. These products are
the money churners for the company and require very low investments to sustain their leadership and
profitability in the market. Cashcows are the products that have a high market share in a market that
has low growth. For Nestle, there is one product that has undoubtedly been the Cash Cow and its
Nestle’s Maggi Noddles. With a market share of 80-85 %, Maggi Noddles holds a very strong hold in the
market and have high customer loyalty. The product requires very less investment to maintain its
market share and fight off any competition. 27 Star These are the products which are in high growth
markets with a high market share. Products or Business Units which hold a high market share and are
also considered to grow in the future are positioned as Stars. As a result, companies are interested to
invest in developing these units further to gain a larger market share and attain a stronger position in
the market. These products have the potential of being positioned as cash cows in the future owing to
the industry growth prospects. The products or business units that have a high market share in high
growth industry are the stars of the organization. In the case of Nestle, Nestle’s Mineral Water and
Nestle’s Nescafe Coffee fall in the Star quadrant of the BCG Matrix of Nestle. Growing healthier lifestyle
trends and emerging markets have prompted the brand to invest large amounts of investments in order
to differentiate the bottled water brands from competitors in mature markets and grow brand
awareness in emerging markets. Question Mark Products in high growth markets with a low market
share. Products or business units of the company that are still in the nascent stage of their product
lifecycle and can either become a revenue generator by taking the position of a Star or can become a
loss-making machine for the company in the future. The industry has high potential to grow hence giving
the room to the products to grow as well only if the pertinent issues are managed effectively. There are
products that formulate a part of the industry that is still in the phase of development, yet the
organization has not been able to create a significant position in that industry. The small market share
obtained by the organization makes the future outlook for the product uncertain; therefore investing in
such domains is seen as a high-risk decision. With increasing competition and growing need to consume
healthy products among consumers, Nestle’s Milk products and Nutrition requires significant investment
from the brand to maintain and grow its market share. Nestle’s Kitkat is another business unit that can
be placed in the Question Mark quadrant of the BCG Matrix of Nestle. High competition and small
market share of the product in the industry is what makes it place in this quadrant.

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