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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

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boston matrix

Boston Matrix

Aiden Tait, Block C

function of the 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
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
the four sections dogs and question marks
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
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
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 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 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
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