Boston Box
The Boston Box, also known as the Boston Consulting Group (BCG) Matrix, is a portfolio analysis tool used to evaluate the strategic position of a company's product or service offerings. The tool was developed by the Boston Consulting Group in the 1970s and is based on the idea that a company's product or service offerings can be classified into four categories based on their market share and market growth rate.
The four categories are:
1. Stars: products or services with a high market share and high market growth rate. These are products or services that are in a high-growth market and have a strong competitive position. They typically require significant investment to maintain their position and support their growth.
2. Cash cows: products or services with a high market share but low market growth rate. These are products or services that are in a mature market and have a dominant competitive position. They typically generate a significant amount of cash flow but require less investment to maintain their position.
3. Question marks: products or services with a low market share but high market growth rate. These are products or services that are in a high-growth market but have a weak competitive position. They require significant investment to gain market share and achieve sustainable growth.
4. Dogs: products or services with a low market share and low market growth rate. These are products or services that are in a declining market and have a weak competitive position. They typically generate little cash flow and require minimal investment.
The Boston Box is typically used by companies to assess their portfolio of products or services and determine the appropriate allocation of resources across them. It helps companies identify which products or services require more investment to maintain their position and which ones should be divested or phased out.
The value of using the Boston Box lies in its ability to help companies understand the strategic position of their product or service offerings and allocate resources effectively. By understanding the relative position of their offerings, companies can make informed decisions about where to invest and where to divest.
To use the Boston Box, a company typically plots its products or services on a two-dimensional graph with market share on the y-axis and market growth rate on the x-axis. The resulting diagram allows the company to visually identify which products or services fall into each of the four categories and develop strategies for each category.