Strategic Marketing: Planning and Control, Third Edition

movement of cash and products round the matrix thus ensures the future
cash flows of the business.
There have been a number of revisions and adaptations to this basic
model in order to accommodate different factors. Figure 5.8 highlights the
fact that products in the research and development stage also need invest-
ment which cash generation provides, an issue the standard BCG over-
looks. Figure 5.9 applies the basic portfolio analysis technique but in the
context of the public sector. On one axis of this matrix is the organisation’s
ability to effectively deliver a service within the constraints of current
resources, on the other is the level of the political requirement to offer the
service. This allows a key consideration of the public sector bodies, the
need to provide services to satisfy political objectives, to be accommo-
dated within a portfolio analysis approach.
The BCG is criticised for having a number of limitations amongst
them are:

❍ Market growth is seen as an inadequate measure of a market or of an
industry’s overall attractiveness. This measure does not consider such
issues as barriers to entry, strength of buyers or suppliers or invest-
ment levels.
❍ Market share is an inadequate measure of a products’ relative ability to
generate cash. Other factors such as product positioning, brand image
and access to distribution channels may allow an organisation to gain
higher margin and strong cash flows as a result.

Internal analysis 103

Our competitive position

Stars

Cash generated + + +

Cash used – –

_____

Net +

Question marks

Cash generated +

Cash used – – –

_____

Net – –

Research and

development

Cash generated 0

Cash used – – –

_____

Net – – –

Market sensing

Cash cows

Cash generated + + +

Cash used – _____

Net + +

Dogs

Cash generated +

Cash used – _____

Net 0

High

Low

High Low

Figure 5.8
Matrix to accommodate research and development (Source: McDonald, 1985)