Opportunities of NBFCs Industry

7/26/2019 Opportunities of NBFCs Industry

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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 product’s

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 don’t need the same level of support as bef ore. 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% 1

Birla sun life mutual fund 9.63%



10 5 1 0.5 0.1

StarQuestion mark

Case cow Dog

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.

I N D U S T R Y G R

O W T H R A T E

H I G H

L O W

HIGH LOWRELATIVE MARKET SHARE



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.

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Opportunities of NBFCs Industry