The BCG Matrix and Synergy Effects

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Wallace G., USA - NY

The BCG Matrix and Synergy Effects

(How) could the the BCG Matrix be adapted to include synergy effects between business units?

  Thijs, Netherlands
 

Synergy

Synergy between business units can be created by e.g. a shared distribution-proces.

  Luc Baz., France
 

Synergies not in BCG Matrix

As far as I know, synergies are between business units or organizational entities. The BCG is not accommodating this.

  Jaap de Jonge
Editor, Netherlands
 

Synergy Effects in BCG Matrix

I believe the BCG Matrix can actually help to graphically explain existing synergy between product lines and business units.
Let's take a simplified example. Suppose we have a company with just 2 business units operating in the same market:
- Business Unit A is manufacturing and selling one traditional product, a cash cow.
- Business Unit B is manufacturing and selling one new high-tech product, still a question mark.

Clearly in this case there can be synergy between these products and also between the business units.
Without the presence of B, unit A would run the risk that its cash flow product may one day age and go out of style. It then has no strategic successor.
Without the presence of A, it might be more difficult for unit B to obtain the financial funding needed to develop the product. Also it would have to spend a big marketing effort to make the product known in the market.

 

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