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Boston Matrix

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

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Boston Matrix

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  1. Boston Matrix Sharon Wu

  2. 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

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

  4. General summary 1. Star 2. Problem child • High market growth • Low market share • Cash absorbing • Build • High market growth • High market share • Cash neutral • Hold

  5. 3. Cash cow 4. dog • Low market growth • High market share • Cash generating • Harvest or milk • Low market growth • Low market share • Cash neutral • divest

  6. Chart

  7. Details: star • 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

  8. 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

  9. 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

  10. 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

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

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