Really pleased as part of BeTheBusiness Mentor programme to help a growing UK cleaning business apply Boston Matrix for how they focus on product life-cycle and spend their time. I think of it like being a family Kids (Stars) take time, but have potential. Teenagers (Question Marks) can be difficult. Adults (Cash Cows) more or less look after themselves. Elderly (Dogs) may be ready to retire.
BOSTON MATRIX
The Boston Matrix, also known as the BCG Matrix or Growth-Share Matrix, is a strategic management tool developed by the Boston Consulting Group in the early 1970s. It provides a visual representation of a company's product portfolio based on two key dimensions: market growth rate and relative market share. The matrix helps businesses analyze and categorize their products or business units into four quadrants, each with distinct strategic implications.
1. Stars: The top-left quadrant represents products or business units with a high market growth rate and a high relative market share. These products have significant potential for growth and profitability and are considered "stars" in the portfolio. Companies should invest resources in stars to maintain and strengthen their dominant position in the market. As the market matures and growth rates decline, stars may move to different quadrants over time.
2. Cash Cows: The bottom-left quadrant includes products or business units with a high relative market share but a low market growth rate. These are termed "cash cows" as they generate substantial cash flow and profits for the company. Cash cows are established and successful products in mature markets. While they may not have significant growth prospects, they require minimal investment and are sources of stable revenue. Companies can use the cash generated from cash cows to invest in other parts of the portfolio.
3. Question Marks (or Problem Children): The top-right quadrant features products or business units with a high market growth rate but a low relative market share. These are "question marks" or "problem children" because they have uncertain potential and require further evaluation. They may have the potential to become stars if they gain market share, but they also carry higher risks of failure. Companies need to decide whether to invest in question marks to turn them into stars or divest if they are unlikely to succeed.
4. Dogs: The bottom-right quadrant consists of products or business units with both low market growth rate and low relative market share. These are referred to as "dogs" and represent the least attractive part of the portfolio. Dogs have limited growth and profit prospects, and companies might consider divesting or phasing out these products to allocate resources more efficiently to other parts of the portfolio.
By using the Boston Matrix, companies can make informed strategic decisions regarding their product offerings. It aids in resource allocation, identifying growth opportunities, and managing risk within the product portfolio. However, the Boston Matrix has its limitations, such as its reliance on only two dimensions and potential oversimplification of complex business situations. Therefore, it should be used in conjunction with other strategic tools and market analysis to ensure a comprehensive and effective strategic planning process.
Read more
https://www.feedough.com/what-is-a-bcg-matrix-examples-how-to-guide/
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Tim HJ Rogers
BeTheBusiness Mentor
http://www.timhjrogers.com/bethebusiness/
MBA Management Consultant + Change Practitioner
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Tim@AdaptConsultingCompany.com
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