1. Boston Matrix is a tool of portfolio analysis
2. Not only it can portfolio a product which is produced
by a firm, but also can portfolio a business.
3. Portfolio is the collection of businesses or products
that make up a business.
Boston matrix is an useful tool to
analysis the portfolio and collection of
products.
The Boston matrix’s ideal is balanced
portfolio with some products in each
category.
Products are categorised as:
1. Question marks: High market growth, low
market share, cash absorbing.
2. Stars: High market growth, high market share,
cash neutral.
3. Cash cows: Low market growth, high market
share, cash generating.
4. Dogs: Low market growth, low market share,
cash neutral.
High market growth, low market share cash
absorbing.
It has a potential but we can not sure if it will better
future
Probably it will become either a dog or a stars
Example: diamond
High market growth, high market share, cash neutral.
The product usually is income. However, it is
countered by high spending on marketing the
product.
Example: iphone, imac etc.
Low market growth, high market
share, cash generating .
Little potential for growth
Example: gold
Low market growth, low market share, cash
neutral.
No real potential
Products that are in the decrease phase of their
life circle.
Example: Nokia
There as also several problems to using the
Boston Matrix. Often people assume that higher
rates of profit are directly related to high rates of
market share. This is not always the case. For
example a product may come onto the market
that gains a high market share quickly but there
are still the very high development costs to cover
first. Finally the main problem is that it over
simplifies a complex decision so the Boston
Matrix should only be used for planning.