Boston Matrix

Product portfolios

Because of the inevitability of the eventual decline of all products and services, businesses seek to reduce their exposure to the risk of a product decline by maintaining a portfolio of products.  A balanced portfolio will contain products at various stages of the product life cycle.  Large organisations involved in several markets, will seek to minimise the risks found in individual industries by holding investments in a range of industries.  There are various tools and techniques for analysing a product or Business Unit investment, portfolio.  The most widely used of these is the Boston Consulting Group Matrix, often referred to either as the Boston Box or the BCG Matrix.  This framework allows the product portfolio to be identified in terms of market share and market growth.  Products/ services are placed in the matrix and identified as question marks, stars, cash cows and dogs.

Boston Matrix Diagram