The boston matrix

Sometimes people use the term business plan when they are referring to a project. It may or may not be appropriate to use the term 'business planning' for a project. Some projects are very substantial and equate to an autonomous independent business activity, in which case a business plan is entirely appropriate.

The boston matrix

The four quadrants of the growth-share matrix. Growth-share matrix is a business tool, which uses relative market share and industry growth rate factors to evaluate the potential of business brand portfolio and suggest further investment strategies.

Understanding the tool BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and its potential. It classifies business portfolio into four categories based on industry attractiveness growth rate of that industry and competitive position The boston matrix market share.

These two dimensions reveal likely profitability of the business portfolio in terms of cash needed to support that unit and cash generated by it.

The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested. One of the dimensions used to evaluate business portfolio is relative market share. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits.

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Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share.

High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. Therefore, business units that operate in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future.

The boston matrix

There are four quadrants into which firms brands are classified: Dogs hold low market share compared to competitors and operate in a slowly growing market. In general, they are not worth investing in because they generate low or negative cash returns. But this is not always the truth.

Some dogs may be profitable for long period of time, they may provide synergies for other brands or SBUs or simple act as a defense to counter competitors moves.

Therefore, it is always important to perform deeper analysis of each brand or SBU to make sure they are not worth investing in or have to be divested.

Retrenchment, divestiture, liquidation Cash cows. According to growth-share matrix, corporates should not invest into cash cows to induce growth but only to support them so they can maintain their current market share.

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Again, this is not always the truth. Cash cows are usually large corporations or SBUs that are capable of innovating new products or processes, which may become new stars. If there would be no support for cash cows, they would not be capable of such innovations.

Product development, diversification, divestiture, retrenchment Stars. Stars operate in high growth industries and maintain high market share. Stars are both cash generators and cash users.

They are the primary units in which the company should invest its money, because stars are expected to become cash cows and generate positive cash flows. Yet, not all stars become cash flows.

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This is especially true in rapidly changing industries, where new innovative products can soon be outcompeted by new technological advancements, so a star instead of becoming a cash cow, becomes a dog. Vertical integration, horizontal integration, market penetration, market development, product development Question marks.The BCG Growth-Share Matrix is a portfolio planning tool developed by the Boston Consulting Group in the early 's.

The Boston Consulting Group (BCG) is a global management consulting firm with over 80 offices around the world. Our consultants advise leading organizations in value creation strategies, innovation, transformation, supply chain management and more.

The boston matrix

Using the Boston Consulting Group Portfolio Matrix to Analyze Management of a Business Undergraduate Student Program at a Small.

Liberal Arts University. Free business planning and marketing tips, samples, examples and tools - how to write a business plan, techniques for writing a marketing strategy, strategic business plans and sales plans. The growth–share matrix (aka the product portfolio matrix, Boston Box, BCG-matrix, Boston matrix, Boston Consulting Group analysis, portfolio diagram) is a chart that was created by Bruce D.

Henderson for the Boston Consulting Group in to help corporations to analyze their business units. Originally involved in residential development, The Hamilton Company, Inc.

has grown into a full-service real estate firm, managing and leasing over 2,, square feet of commercial space and in excess of 5, residential units, and developing and constructing both residential and commercial projects throughout Greater Boston.

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