Essay Sample on The Boston Consulting Group Matrix

Introduction

The Boston Consulting Group Matrix is a chart which helps in analyzing the business units thus assisting an organization to strategically long-term plan and allocates resources, through consideration of growth opportunities. The table contains four parts which are the cash cows, dogs, question marks and stars (Rynca, 2016). The cash cows represent high markets share with low growth markets. The cash cows generate much cash but require as little investments as possible. The dogs, on the other hand, have low market share and growth; hence produce funds which may even not maintain the market share though they create employment. The question marks the represent low market share with high market growth.In most cases, question marks are the starting points of many facilities though with time they grow. The stars on the other side are high market shares and high growth markets. The stars are always faced with the challenge of fighting competitors hence requires high funding.

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The Strengths of the Boston Consulting Group Matrix

The model is easy to understand, and it interpretable by anyone. Anyone can easily deduce that cash cow and star are the ideal quadrants for the hospital and dog and question mark should be avoided due to the increase in risk.

The matrix will help the hospital to identify opportunities thus enabling the manager to plan for future actions effectively.

The Boston Consulting Group Matrix will also help the hos[ital. To remove the weak areas after identification of the quadrant not favoring the operation of the hospital decision can be made to transform the quadrant into a good one.

The Limitations of the Boston Consulting Group Matrix

The approach only takes the market share as the success of a business, but high market shares are not a guarantee of profitability.

The Boston Consulting Group matrix also does not have middle paths, in that, they suggest that the business has high growth rate or low growth rate but some firms have moderate growth rates and that scenario having not been captured in this matrix there is no solution for such situation.

The market growth is not the only indicator of the attractiveness of a market as the model suggests.

It also neglects the effects of synergy between business units yet viewed in different angle dogs can be as crucial as cash cows.

The General Electric Matrix

Unlike the Boston Consulting Group Matrix, this is a nine-cell grid which measures the strength of a business unit against industry attractiveness. Before the grids are plotted the factors influencing the market are first decided. The matrix is used in to determine the opportunities that should continue receiving investments and products requiring addition in the product portfolio. The matrix has a scale of high, low and medium with the factors to be based on in industry attractiveness chosen from market size, market growth, pester factors and porters five forces (Ashish, 2010). In business strength the factors which determine the strength of the unit are selected from market share, brand equity, profit margins compared to the competition, and profit margins.

The steps to follow after choosing the factors of comparison are; assigning weight to each factor based on its magnitude, rating each business unit against each factor on a scale, giving each business unit a weighted rating on each factor, and finding the total weighted scores for each business unit. After plotting the chart, the business strategies are set depending on the cell of the grid which the business unit appears. The business strategy can either grow or selectivity or harvest. Grow indicates high market shares with units in this section having possibilities of high returns in the future. Selectivity means ambiguity thus investing in units in this section only requires the use of surplus. Harvest, on the other hand, is for the unattractive, poor performing units.

The Strengths of the General Electric Matrix

• The matrix takes into account several factors with nine factors being used at one go.
• It contains high, low and medium hence giving solutions to every condition of business units.
• Is easy to interpret.
• The use of many variables leads to fully informed decisions and avoids simplistic decisions.
• The Limitations of the General Electric Matrix
• It requires an expert to determine the industry attractiveness and business unit strength accurately.
• The matrix does not take into account the synergies between various products.
• The tools used are open to bias due to the scoring of factors by assigning weights which is subjective since there are no rules or procedures set to determine the weights.
• The McKinsey 7S Model

The model is a tool used in the analysis of a business design by looking at seven internal elements which are: strategy, structure, system, shared values, skills, style, and staff. The main aim of the model is always to achieve the businesses intended objectives (Ravanfar, 2015). By use of the elements mentioned above the model aligns the departments by examining the possible effects of future changes thus improving the performance of the company.it is also of great significance when it comes to determining the best way to implement a proposed strategy. The elements are further grouped into hard and soft elements with the hard element which are strategy, structure, and system being easily identifiable and causing direct influence. The soft elements are more difficult to identify and are shared values, skills, style, and staff.

The strategy is always the firm's plan which has been developed to give it a competitive advantage and ensure it successfully competes in the market (Tools, 2014). The structure is the firm's organization which highlights who reports to whom. The systems are the procedures of the firm, including the decision making process. Skills are the abilities and competencies of the firm's employees. Staff deals with the type and number of employees required by a firm and the recruitment, training, and motivation plans. The style is a representation of the leadership style. Shared values denote the norms and standards guiding the company's actions as well as the employees' behavior.

The Strengths of the McKinsey 7S Model

• The model guides in case of an organizational change.
• All the internal parts of the hospital will be addressed.
• Through the model, someone can easily understand the firm.
• The Limitations of the McKinsey 7S Model
• A change in one part results to change I all parts due to the interrelation of all the factors.
• The differences in the organization are ignored.
• The model does not take into account external elements affecting the firm.
• The model is complex.

Recommendation

Since the strategic planning is annual and a consultant has been hired, I would recommend the use of General Electric Matrix because apart from using more dimensions it will give a more accurate hospital unit position. The General Electric Matrix also employs external factors which have been influenced by the internal factors hence the model is the best placed to aid the hospital in planning than the other two models due to their certain limitations.

References

Ashish, Sood.(2010). GE/McKinsey Matrix. Retrieved from https://doi.org/10.1002/9781444316568.wiem05040Ravanfar, M.M. (2015). Analyzing Organizational Structure based on 7s model of McKinsey.

Rynca, Radoslaw. (2016). Using the Idea of the Boston Consulting Group Matrix in Managing a University. Journal of Positive Management, 7(1).

Tools, M. (2014). Strategy Tools: The McKinsey 7S Framework. Retrieved from http://www.mindtools.com/pages/article/newSTR