Boston matrix

= BCG matrix

A means of analysing and categorizing the performance of business units in large diversified firms by reference to market share and growth rates. It was developed by the Boston Consultancy Group (BCG), a leading firm of strategic consultants. Four main categories are displayed in a two-dimensional matrix, which seeks to identify those business units that generate cash and those that use it, and then to relate the position of the business units to the formulation of an overall business strategy. The Boston matrix has also been applied to a company's product range so that an overall product development strategy can be implemented.

• Cash Cows: mature businesses or products with a high market share but low growth rate. Typically, most fixed investment has already been made and a substantial cash flow is generated, the surplus being used to develop and support other businesses or products requiring higher levels of investment and marketing support.

• Stars: businesses or products with a high rate of growth, which are often able to generate sufficient cash to fund the high investment necessary to meet increasing demand. As the market matures, such businesses or products should be managed in order to become future cash cows.

• Question Marks (or Problem Children): although operating in a growth market, the low market share is likely to mean that these business units are unable to sustain the required level of investment needed in order to try and turn them into stars. Competitor pressures may result in such a business or product becoming a dog.

• Dogs: the combination of low growth rate and market share is typical of these businesses and products, which operate in mature markets. Firms frequently face strategic decisions regarding whether to continue to support dogs or to implement a divestment strategy. Barriers to exit would also need to be considered.

Boston matrix