Boston Consulting Group's Advantage Matrix

Boston Consulting Group's Advantage Matrix

Boston Consulting Group's Advantage Matrix

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To understand the Boston Matrix(by BRUCE HENDERSON(BOSTON) 1970), you need to understand how market share and market growth interrelate.Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. The higher your market share, the higher the proportion of the market you control.The Boston Matrix assumes that if you enjoy a high market share you will be making money. (This assumption is based on the idea that you will have been in the market long enough to have learned how to be profitable, and will be enjoying scale economies that give you an advantage).The question it asks is, "Should you be investing additional resources into a particular product line just because it is making you money?" The answer is, "not necessarily."This is where market growth comes into play. Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.By contrast, competition in low growth markets is often bitter, and while you might have high market share now, it may be hard to retain that market share without aggressive discounting. This makes low growth markets less attractive.http://www.mindtools.com/pages/article/newTED_97.htmThe business portfolio is the collection of businesses and products...
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