Developed by The Boston Consulting Group in the 1970s, the Boston Matrix remains a valuable tool to assist in product/service portfolio planning. The framework classifies product lines (or business units) on the basis of their market share and their market growth, and can be applied to develop a strategy for business units and for maintaining a balanced product portfolio. An underlying objective in applying the framework is to ensure equilibrium between cash-generating products and cash-absorbing products.
The matrix is made up of four quadrants defined by market share on one axis, and market growth on the other axis. It is furthermore assumed that higher growth rates consume higher levels of cash, while higher market shares imply greater generation of cash. The positions on the matrix can therefore inform on the overall balance of the product or business unit portfolio and provide guidance on actions to take on each product or business.
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