The Boston matrix is a tool used to analyze and plan the offerings of a company. It is an important tool for product portfolio management and corporate planning. The Boston matrix is also known as the Growth Share matrix. The Boston Matrix helps companies to make quick decisions on which products should receive investment and which products should not receive investment.
The Boston Matrix has four quadrants, each of which represents a different strategy. The four quadrants are labeled Stars, Cash Cows, Dogs, and Question Marks, and each quadrant represents a different product portfolio strategy. The Stars quadrant is for products that have high market share and high growth potential. These products should receive the most investment, as the company believes that these products will be very profitable for them in the long run.
The Cash Cows quadrant is for products that have low growth potential but strong market share. Companies have to decide whether to invest in these products to maintain their market share or to harvest the profits from these products and reinvest elsewhere.
The Dogs quadrant is for products that have low market share and low growth potential. These products are not profitable and not strategic. Companies should consider selling these products or discontinuing investment in them to free up resources that can be used in more profitable and promising areas.
The Question Marks quadrant is for products that have high growth potential but low market share. Companies must decide whether they should invest in these products to gain more market share or if they should continue to invest in other more profitable products.
The Boston Matrix is used to evaluate the product portfolio of a company and make decisions on which products to invest in and which products to reduce investment in. Companies should determine which product strategies to pursue and which products to focus on. By doing so, companies can maximize their profitability and minimize their risk. Furthermore, using the Boston Matrix can help companies identify opportunities where they can gain valuable market share.
