BOSTON MATRIX AIDEN TAIT, BLOCK C

FUNCTION OF THE BOSTON MATRIX The Boston Matrix was created by the Boston Consulting Group It’s a means of analysing a business’s range of products or a business’s portfolio of products A portfolio is a group of products/businesses that make up on whole business

SUMMARY OF THE BOSTON MATRIX The Boston Matrix is made up of four categories that certain products fall under These categories are dogs, question marks, stars, and cash cows The goal of using this matrix is to balance a business’s portfolio This can be done by placing an equal amount of products within each category

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THE FOUR SECTIONS – DOGS AND QUESTION MARKS Question Marks (Problem Child) – products that have the potential to become a dog or a star because they have low market share but are in a growing market Dogs – products that have low market share in a slowly growing market, are unappealing, or fail to bring revenue to a business

THE FOUR SECTIONS – STARS AND CASH COWS Stars – products that have high market share in a rapidly growing market, are appealing, or bring revenue to a business Cash cows – products that have high market share in a slowly growing market, are old and successful products, or bring money to support the other categories

EXAMPLES Dogs: Foster’s Beer Question Marks: Lipton’s “Herbal Infusions” Stars: Perrier’s bottled water Cash Cows: Coca Cola’s “Coke”

ADVANTAGES OF USING THE BOSTON MATRIX Advantages include: Helps a business analyse a product portfolio’s contents By doing this it also helps that business make portfolio decisions Can ‘map’ the strengths and weaknesses of particular products Helps manage cash-flow

DISADVANTAGES OF USING THE BOSTON MATRIX Disadvantages include: Only focuses on the current state of the business and not the future opportunities/threats Does not take into consideration external environmental factors Does not take into consideration the fact that market share and market growth are only two factors of an attractive industry The matrix assumes that each category is independent from the others and that they are not linked when in fact they are

CONCLUSION The Boston Matrix is a technique used to analyse a business’s products or product portfolios It is divided into four categories for those products – dogs, question marks, stars, and cash cows This matrix is used so that there is a balance of products in a business or in its portfolio in each individual category The matrix’s main advantage is to analyse products and their success/failures The matrix’s main disadvantage is that it only focuses on the present state of the business and not its future