Boston Matrix

The Boston Matrix consulting group developed this as a tool of portfolio Analysis It can be applied to the portfolio of products produced by a firm or the portfolio of business owned by the company Portfolio is the collection of businesses or products that make up a business

The axes of the Matrix

Relative Market Share -This is expressed not as % but share in relation to other firms in market -This is the measure of the firms /Products strength in market Market Growth -% rate of growth of sales in the market -A measure of market atrractiveness From this we derive four cells as a means of analyzing the product

Assumptions underlying BM

Market share can be gained by investment in marketing Market share gains will always generate cash surpluses Cash surpluses can be generated when the product is in the mature stage The best opportunity to build a dominant market position is during the growth phase

Growth-Share Matrix Boston Consulting Matrix

Question Mark
Low share of rapidly growing market Cash flow is negative Has potential but the future is uncertain It could either be a star or a dog

Strategy for Question Mark

Invest to increase the market share Substantial investment to achieve growth at the expense of powerful competitors Invest in promotions Build selectively

Stars
High Share of rapidly growing market Position of leadership in a high growth market The product/business is relatively strong and the market is growing Although the product generates income it is countered by high spending Net cash flow is neutral

Strategy for stars

Investment to sustain growth Build sales and market share Spend to keep competitors at bay Invest to maintain or increase leadership position Repel challenges from competitors

Cash Cows High share of slowly growing Market Mature stage in PLC Little potential for growth Large positive cash inflow

Strategy for Cash Cows

Harvest Defend market share Aim for short term profits Little need of investment Little potential for further growth Reduce investment in order to maximize short term cash flow and profits Use profits from cash cows to invest in new products

Dogs
Means unattractive Low share of a slowly growing Market No real potential Dogs are either - Products that have failed -Products that are in decline phase

Strategy for Dogs

Phase out or sell off (Divest) Not worth investing in Any profit made has to be re invested just to maintain market share

Boston Matrix Summary

Star -High market growth -High market share Cash neutral HOLD

Question Mark -High market growth - Low market share Cash Absorbing BUILD

Cash Cow -Low market growth -High market share Cash Generating Harvest or milk

Dog -Low market growth -Low market share Cash Neutral DIVEST

Criticism

Market growth is inadequate measure of a markets attractiveness Market share is an adequate measure of products ability to generate cash The focous on market share and market growth ignores issues such as developing a sustainable competitive advantage The product life cycle varies

BCG Matrix for Bharti Airtel

HIGH

Mobile Services DTH & IPTV Broad Band

LOW

HIGH

LOW