Boston Matrix

Helps businesses analyse their portfolio

Helps businesses decide how to allocate investment across the portfolio

Measures:

• Market share

• Market growth

Star - high market share, high market growth

Cash cow - high market share, low market growth

Question mark - low market share, high market growth - often negative cash flow

Dog - low market share, low market growth

A business would prefer products in all categories (apart from dog) to give it a balanced portfolio.

Advantages:

• Useful for analysing portfolio decisions

• Market share is an adequate measure of a product’s ability to generate cash

Disadvantages:

• Little predictive value

• Doesn’t take account of environmental factors

• Market growth is an inadequate measure of a market’s attractiveness

• Ignores issues such as developing competitive advantages