While the electric vehicle manufacturer has reported operating losses in every year since its IPO, the company has certainly been exciting auto enthusiasts. As an investment, Tesla is an interesting selection, as well. The stock also has a good amount of risk. One of the primary questions that investors are asking is when will the company finally turn a profit?
The four quadrants of the growth-share matrix. Growth-share matrix is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies.
Understanding the tool BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential.
It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position relative market share.
These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it.
The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested. One of the dimensions used to evaluate business portfolio is relative market share.
This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits.
Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share. High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth.
Therefore, business units that operate in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future. There are four quadrants into which firms brands are classified: Dogs hold low market share compared to competitors and operate in a slowly growing market.
In general, they are not worth investing in because they generate low or negative cash returns. But this is not always the truth. Some dogs may be profitable for long period of time, they may provide synergies for other brands or SBUs or simple act as a defense to counter competitors moves.
Therefore, it is always important to perform deeper analysis of each brand or SBU to make sure they are not worth investing in or have to be divested. Retrenchment, divestiture, liquidation Cash cows.
According to growth-share matrix, corporates should not invest into cash cows to induce growth but only to support them so they can maintain their current market share. Again, this is not always the truth. Cash cows are usually large corporations or SBUs that are capable of innovating new products or processes, which may become new stars.
If there would be no support for cash cows, they would not be capable of such innovations. Product development, diversification, divestiture, retrenchment Stars. Stars operate in high growth industries and maintain high market share.
Stars are both cash generators and cash users. They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows.
Yet, not all stars become cash flows. This is especially true in rapidly changing industries, where new innovative products can soon be outcompeted by new technological advancements, so a star instead of becoming a cash cow, becomes a dog.
Vertical integration, horizontal integration, market penetration, market development, product development Question marks. Question marks are the brands that require much closer consideration.This Toyota SWOT analysis reveals how one of the most innovative automotive companies used its competitive advantages to become the dominant player in the automotive industry.
Fukuoka | Japan Fukuoka | Japan.
BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth (vertical axis) axis.
SWOT Analysis Strength As for sure, Mercedes-Benz is a well-known vehicle business throughout the world. It is a global leader in premium cars and has a strong brand value. Hence, the strengths would be a lot than I expected. The marketing mix of Audi discusses the 4P's of Audi which is a German based car manufacturing company known to stand amongst the top three luxury cars initiativeblog.com oversees all its global production from its head quarters in Bavaria, Germany.
Audi has a good presence in across the globe. The business outlook at Tesla Motors, Inc. is initiativeblog.com the electric vehicle manufacturer has reported operating losses in every year since its IPO, the .