Edexcel Business Studies

Edexcel Business Studies

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Boston Matrix

Boston matrix enables firms to asses the qualities of each product, for example whether it has a high market share. Once the firm has done this is, it is then able to asses which type of products it needs more or less of. For example, if a firm has a number of 'Cash cows' and few 'Stars', it therefore needs to develop more 'Stars' in order for them to be the 'Cash Cows' of the future.

The Boston Matrix also allows the firms to see exactly what types of products it sells and for a business to be successful it needs ti have a balanced Boston Matrix. A business cannot wait until a product goes into decline as it would then be too costly to do research and development and a product launch without a source of income.

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Star - Large growth and Large share of the market - Highly successfull - usually expensive to market as it must maintain that position in a growing market

Cash Cows - High market share but low market growth - product maturity - successfull product which could be the leader in a mature market

Question mark - small market share but high market growth - may be successful and may also fail - need protection from the fim and require expensive marketing

Dogs - low market share and low market grwoth - decline - firm may need to get rid of the product unless they think they can improve their sales

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