Transcript Boston Matrix

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
CHART
THE FOUR SECTIONS – DOGS AND QUESTION
MARKS
• Dogs – products that
have low market
share in a slowly
growing market, are
unappealing, or fail
to bring revenue to a
business
• 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
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