Boston matrix

Question 1

what does it measure

Answer 1

tool to help a business understand its product portfolio

Question 2

what are the axis

Answer 2

market growth and market share

Question 3

what are the 4 stages

Answer 3

question mark, star , cash cow, dog

Question 4

question mark

Answer 4

situation: low MS, high MG
impact : need lots of investment eg R+D however requires lots of cash
hope : increase MS and become a star
PLC : Intro stage therefore low sales therefore negative cash flow which is bad as you need cash for investment which kills cash flow
analysis : therefore need to check sources of finance to see if they can do this and do an ARR to see if the product will meet expected return

Question 5

star

Answer 5

situation: high MS, high MG
impact : high MG = new competitors therefore need marketing to protect USP = very expensive
hope : market. growth drops and be cash cow
PLC : growth stage = accelerated sales. might be cash neutral due to the high expenses to protect usp and the increase in sales.
analysis: trying to maximise sales before competitors enter market therefore may introduce price skimming method

Question 6

cash cow

Answer 6

situation: high MS, low MG
impact: high sales = consistent profits therefore positive cash flow. high profits= happy share holders as they’ll receive dividends
hope : milk the cow, stay in this position for as long as possible
PLC : maturity stage as you’ve maximised sales therefore would want to stay in this stage
analysis : as you want to stay, extension strategies may be used eg repackaging
. maybe in annual general meeting (AGM) you may tell shareholders that you want to invest profits into innovations for the future to develop ? and star products and make them cash cows

Question 7

Dog

Answer 7

situation: low MS, low MG
impact: lead to a negative sales trend
hope : extend the life of the product to drag out maximum amount as revenue as you can
PLC : decline stage - maximise sales before its time to divest
analysis : do as many extension strategies as possible
. as this is in your product portfolio and you sell other products, you may use decline stage product as a loss leader to get consumers into your shops and get them to spend money on your star products for example where you are doing price skimming
. can do breakeven analysis and see your breaking even and keeping people a job which could keep you happy.
. know when to divest - when revenues are less than cost