Nowadays, in a stronger context of globalisation, companies have to face more and more complex challenges such as a higher international competition, emerging markets, many economic changes or new technological progresses etc. Strategic management decisions have to be completely successful in this context, otherwise the consequences of any failure or mistake can be dramatic for companies in terms of profits or reputation. Senior executives actually have to use several conceptual models to be efficient particularly in their decision making.First of all, we will determine why conceptual models are so commonly used in strategic management. Then, we will describe and explain the BCG Growth / Share Matrix and finally, we will evaluate the different strengths and weaknesses of this conceptual model by analyzing and synthesizing the views of several authors. More abstract from Conceptual models in strategic management: The Boston Consulting Group growth / share.
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. ] Why conceptual models are so commonly used in strategic management?Managers have different analytical tools at their disposition to make efficient strategic decisions. Many concepts have been created to help them in their decision making process. Let’s now see what can be the models used by managers and how they can contribute to strategic business thinking… The first example is about the famous PEST Analysis (Political, Economic, Social, Technological and sometimes Environmental and Legal), which provides an analysis of the macro-environmental influences acting on a company. [.
.. ] [… ] The authors Phil Sadler, (Strategic Management, p. 99), also agrees on that point as he mentioned that the “implicit assumption” of this BCG Matrix is that each business is independent, which is not always the case in practice. According to the website of the management & competitive intelligence consulting firm “Cipher”, several others limitations and criticisms can be made about the BCG concept.
First, a high growing market is not always attractive. A growing market considerably attracts news entrants and “if capacity exceeds demand then the market may become a low margin one and therefore unattractive” (problems of stability and size actually). ..
. ] [… ] Canwell, Key concepts in strategic management, p. 87, 88).
Managers also commonly use many others analytical tools, such as business portfolio-planning models (the BCG Growth / Share Matrix or the McKinsey Matrix for example). To sum up, we can say that conceptual models generally represent useful analytical tools for managers. It obviously helps them to make sense of strategic challenges. They can also focus their attention on a specific part of a business (internal and external environment, portfolio-planning and so on). …
] [… ] Hamermesh made a report regarding the disadvantages of the BCG Growth / Share Matrix. Indeed, he notably mentioned that “portfolio planning on the basis of early methods was very useful when decisions had to be made concerning which business units were to be sold off, but was much less useful in connection with growth and business development”. According to Gerry Johnson and Kevan Scholes (Exploring Corporate Strategy, p.
188, 189), several others reproaches can be formulated regarding the BCG Matrix. […