Sunday, March 23, 2014

"WE" are at par... BCG Matrix

According to corporate and many recently published surveys it is stated that only 10% of management graduates are employable. What does this statistics mean?

I am also a management student from tier-II B-school. Are we not capable of doing what IIM graduate or top tier B-school graduate can do? Obviously… We are…  The only difference is implementation of theoretical/conceptual knowledge when it comes to practical application.

Every management student knows concept of BCG matrix. Let’s take this challenge… How many of us can draw it in excel and decide star, cash, cash-cow & dog position in analysis???

It’s very simple…  Just 3 steps bubble graph.
Here is an example of BCG Matrix of Direct-to-Home (DTH) industry in india.

Step1:  You should have 2 data points a) Competitor Size i.e. no of subscribers in mn & b) Gross additions i.e. on an avg no of Subscribers added month on month.

Step2: Calculate Market Share, Rest of Market, Relative Market Share, Market Growth.



·         Market Share = Competitor Size / Sum of all competitor’s size
              e.g. For Airtel = 8.4 / Sum(8.4, 4.5, 13.9, 9.7, 7.8, 6.6) = 17%

·         Rest of Market = 1 - Market Share
              e.g. For Airtel = 1-17% = 83%

·         Relative Market Share  = Market Share / Max of all competitor’s market share
              e.g. For Airtel = 17% / Max(17%, 9%, 27%, 19%, 15%, 13%)*100 = 60

·         Market Growth  = Gross adds / Competitor Size
              e.g. For Airtel = 0.15 / 8.4 = 1.79


Step3: Select values in Relative Market Share, Market Growth, Market Share and click on bubble graph (Insert > Other Charts > Bubble)



p.s. I have used it for my semester3 project on equity research on Dish TV.




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