Boston Matrix

Sharon Wu

What is Boston Matrix• It is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970’s. • The collection of businesses or products that make up a business

Function• Balance portfolio with some products in each category• It is used in market to classify the types ofproducts present in any company according to market share and market growth.

General summary1. Star

• High market growth

• High market share

• Cash neutral

• Hold

2. Problem child

• High market growth • Low market share

• Cash absorbing

• Build

3. Cash cow

• Low market growth

• High market share

• Cash generating

• Harvest or milk

4. dog

• Low market growth • Low market share

• Cash neutral

• divest

Chart

1. starDetails:

• High share of a rapidly growing market• Position of leadership in a high growth market• Net cash inflow is neutral or at best modest• The business is relatively strong and the market is growing

Examples: Estee Lauder ( advanced night repair ) ; some alcoholic drink

2. Cash Cow• High share of a slowly growing market• Mature stage in the product life cycle• Mature, success product• Dominant share• Little potential for growth

Examples: tube material PA14D polypropylene; iphone

3. dogs• Unattractive• Low share of a slowly growth market• Not going anywhere• Not real potential • Products are in the decline phase of their life cycle

Examples: V998; Nokia

4. Problem child products• Low share of a rapidly growing market• Cash flow is negative• Has potential but the future is uncertain• Could become either a star or a dog

Examples: diamond

Advantages & disadvantages

• It is only a snapshot of the current position • Does not take account of environmental factors• Good for analysing product portfolio decisions