This the detailed BCG matrix analysis of Nissan which is one of the renowned company have been operating in automobile industry. This analysis will place the Nissan products in one of the quadrant of BCG matrix; Question marks, cash cows, dogs and stars based on the result of that particular product market share and growth.
Background of BCG Matrix
The BCG Matrix was developed by Bruce Henderson in the 190s in the USA. Boston Consulting Group (BCG) is one of the most famous global consulting company. The basic principle behind the BCG matrix is help companies create money through analysis of its products and also arrange it into a matrix form. BCG matrix can help a company in two ways: first is to control the capital and the second is help decide whether to continue or terminate a product line. The BCG matrix consists of two elements i.e. market growth and market share. It is divided into four stages namely question marks, stars, cash cows and dogs. These are four Strategic Business Units and BCG matrix helps describe at the same time the situation of these four strategic business units. This helps the company gather and analyze the information about the products.
Nissan Company Background
Nissan is a company of Japanese origin found in 1933. It is today ranked as the sixth-largest automaker in the world and the second largest car maker in Japan in terms of number of units produced. Nissan offers a large variety of automobiles such as Sports cars, SUV’s and Sentra cars (Farfan, 2014).
BCG Matrix for Nissan
The four stages along with the products that are currently in these stages are analyzed next.
Question Marks
The products in this stage are also known as problem child. These products have a high market growth rate but the market share is low. These products in order to evolve into stars require heavy investments. They have a long term profit potential. Through strategic development they can evolve into stars and then later into cash cows. However, if a product in this stage after funding cannot grow its market share, should be considered by the company for termination as it is unable to compete with the products of the rivals. So this decision to continue investing or not requires careful consideration by the company. One of Nissan’s affiliated business sectors is its Marine business. This business is a question mark for Nissan. This business does not occupy a strong market share but as this product is a part of Nissan’s product diversification, it has a high market growth rate. Thus it requires careful consideration by the management of Nissan.
Stars
Star is business unit that has high of both factors i.e. market share and market growth rate. Products under this stage require large investments in order to retain their high market share. A star business unit promises a profit in the long run in the future. For its star stage, one product is the Infinite cars and secondly, Nissan has adopted a new product development strategy in order to become the world leader in zero emission vehicles in the automobile industry (Jindal et al., 2011). The electric vehicles of Nissan will dominate the automobile market with a very fast market growth rate in the future. Nissan Leaf, an electric vehicle introduced by Nissan in 2010 is the first of its kind to be manufactured on a large scale in the world. Over 28,000 units of this car were sold in the world.
Cash Cows
These are the business units which have a high market share but a low market growth rate. They have established their place in the market and now need very little investment. The large profits earned from these business units are used for funding products under the question mark stage. They are in a strong competitive position. Products under this stage help Nissan earn profits to cater for expenses such as R&D cost and other operational expenses. The world’s largest maker of forklifts is Nissan and offers a wide range. Secondly passenger cars also generate the largest of profits for Nissan. Thus these two are currently cash cows for Nissan. But due to intense competition in the market especially for cars, the market growth rate for Nissan is declining.
Dogs
These are business units that have a low market share and a low market growth rate. It is the worst combination and in a continued decline in the market. Divestment and closure is usually recommended for products in this stage. Either the company can continue to invest in order to retain the low market share or stop its trading. Altima Couple launched in 2007 by Nissan failed and was terminated in 2013 (Nguyen, n.d.). This model was a dog for Nissan as it had a very low market share and growth rate.
Above is a detailed analysis of the BCG matrix of Nissan.
References
Farfan, B., 2014. Nissan Motor Co. Mission Statement Enriching Lives with Value. [Online] Available at: http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Nissan-Motor-Co–Mission-Statement.htm [Accessed 7 June 2017].
Jindal, D., Jee, C. & Thankur, R.R., 2011. Nissan: go-global strategy. Business Strategy Series, 12(4), pp.195-201.
Nguyen, M., n.d. Explain Nissan Motor. [Online] Available at: https://www.academia.edu/6823654/Explain_Nissan_Motor [Accessed 7 June 2017].