Asked by TaraBusiness 👔

What is Boston Matrix and how does it work?

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Eva Sendrino

Former Economist, currently in the world of blockchain and cryptocurrency!

It is a model which helps businesses analyse their portfolio of businesses and brands. The four categories can be described as follows: Stars are high growth products competing in markets where they are strong compared with the competition. Often Stars need heavy investment to sustain growth. Eventually growth will slow and, assuming they keep their market share, Stars will become Cash Cows Cash cows are low-growth products with a high market share. These are mature, successful products with relatively little need for investment. They need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars Question marks are products with low market share operating in high growth markets. This suggests that they have potential, but may need substantial investment to grow market share at the expense of larger competitors. Management have to think hard about “Question Marks" - which ones should they invest in? Which ones should they allow to fail or shrink? Unsurprisingly, the term “dogs" refers to products that have a low market share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in. Dogs are usually sold or closed.

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