Opportunities of NBFCs industry

Large unitapped market, both rural and urban and also geographically.
Tie-up with global financial sector giants.
New opportunities in credit card, personal finance, home equity, and vehicle finance, etc.

Threats of NBFCs

High cost of funds.

Restrictions on deposit taking NBFCs.
Growing retail thrust within banks and competition from unorganized money lender.
Significant slowdown in the economy affecting the various segments of NBFC
deterioration of assets quality and rising level of NPA.

BCG MATRIX

If you are working with a product portfolio you have a range of tools at your disposal to
determine how each one or a group of the products are doing. You could consider using the
Product Life Cycle but if you need a current snap shot of how the products are doing you
would benefit more from using the Boston Consulting Group Matrix.

The matrix assess products on two dimensions. The first dimension looks at the products
general level of growth within its market. The second dimension then measures the products
market share relative to the largest competitor in the industry. Analyzing products in this way
provides a useful insight into the likely opportunities and problems with a particular product.

Stars (high share and high growth)

Star products all have rapid growth and dominant market share. This means that star products
can be seen as market leading products. These products will need a lot of investment to retain
their position, to support further growth as well as to maintain its lead over competing
products. This being said, star products will also be generating a lot of income due to the
strength they have in the market. The main problem for product portfolio managers it to judge
whether the market is going to continue to grow or whether it will go down. Star product can
become Cash Cows as the market growth starts to decline if they keep their high market share.

Cash Cows (high share, low growth)

Cash cows dont need the same level of support as before. This is due to less competitive
pressures with a low growth market and they usually enjoy a dominant position that has been
generated from economies of scale. Cash cows are still generating a significant level of

income but is not costing the organisation much to maintain. These products can be milked
to fund Star products.

Dogs (low share, low growth)

Product classified as dogs always have a weak market share in a low growth market. These
products are very likely making a loss or a very low profit at best. These products can be a big
drain on management time and resources. The question for managers are whether the
investment currently being spent on keeping these products alive, could be spent on making
something that would be more profitable. The answer to this question is usually yes.

Problem Child (low share, high growth)

Also sometime referred to as Question Marks, these products prove to be tricky ones for
product managers. These products are in a high growth market but does not seem to have a
high share of the market. The could be reason for this such as a very new product to the
market. If this is not the case, then some questions need to be asked. What is the organization
doing wrong? What is competitors doing right? It could be that these products just need more
investment behind them to become Stars.

Company

Industry growth rate

Relative market share

HDFC

37%

2.77

Shriram

14%

.10

LIC

24.53%

.36

Bajaj capital

26.49%

Birla sun life mutual fund

9.63%

RELATIVE MARKET SHARE

HIGH

Star

0.5

0.1

Question mark

20

30

INDUSTRY GROWTH RATE

40

HIGH

10

LOW

Dog

LOW

40

10

Case cow

Strategy Recommendation for star (high growth, high market share):

HDFC, Bajaj Capital has star position in the BCG matrix. This is the market leader in
NBFC industry. HDFC a have high no of Householders, because of good housing loan
facility of the market. Bajaj Capital offers best investment advisory and financial planning
services.

Strategy Recommendation for Question Marks(high growth, low market share):-

Here, in BCG Matrix LIC, shriram commercial vehicle finance is in Question mark
stage. They have low market share in compare of HDFC and Bajaj Capital. They have
high cash demands and generate low returns, because of their low market share. Such
businesses required large amount of cash, not only for expansion to keep up with the
rapidly growing market, but also for marketing activities to build market share and
catch the industry leader.