The Boston Box'

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The Boston Box.
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The Boston Box 

• To conceptualise the competitive position of an
  organisation within the sector it operates, the
  Boston Consulting Group devised a model known as
  The Boston Box.
• To manage a portfolio of products effectively it
  is necessary to evaluate the market share and
  growth prospects of each of the organisations
  products

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The Boston Box 

• The Boston Box provides a framework for
  analysis. This analysis can help organisations
  with decisions as to the need and measure of
  expenditure for each Strategic business unit or
  product or even for the divestiture of under
  performing products which drain funds with
  little return.
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The Boston Box.

• From an operations management perspective,the
  evaluation of these product positions also
  indicates the relative level of forecasting and
  planning input needed to achieve optimum results
  in the areas of raw material procurement through
  to finished product availability.

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The Boston Box 

• In order for the Boston box to function the
  Boston Box postulates that income and profits
  generated are purely based on market share.
• Therefore the more you spend on
  advertising,marketing and product promotion, the
  more market share,income and profits will be
  generated.

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 The Boston Box

•   BCG believe that each product has its time and
  product strategies(and therefore investment) must
  take into account factors such as the market
  situation (growth,stability or decline) and the
  position of the product in the product
  lifecycle.(why waste scarce resources for minimal
  return on investment).

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The Boston Box.
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The Boston Box.

• Question Marks are new products that operate in
  markets with potentially high growth rates.
  They enter the market with a small market share
  in relation to the market leader. In order to
  improve their position, the organisation must
  invest heavily in marketing / advertising.

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The Boston Box.

• If one has chosen correctly QMs can develop
  into Stars.
• Stars high growth products with high market
  share. Heavy investment needed to sustain growth
  often not highly profitable at this stage but as
  growth slows investment needs decline and the
  product can become a Cash Cow.

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The Boston Box.

• Cash Cows. Due to low market growth rate, such
  products need very little investments and usually
  generate a very positive cash flow. This is
  necessary as these funds will be needed to aid
  investment into Question Marks and Stars.

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The Boston Box.

• Dogs are products that have a low relative
  market share in low growth markets .
• Dogs can be profitable but usually profits are
  low, most of these products may form a niche
  market or perhaps could be sold off to generate
  income.
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The Boston Box.

• According to Dagmar Recklies c 2001
• The model can reveal valuable insights on the
  actual composition of a companies product
  portfolio and on the activities necessary to
  improve it. However, it would be a mistake not to
  go any further. Many products or services of
  organizations are not really profitable in will
  probably never be. They are necessary to
  complement profitable core products, to
  differentiate from competitors ore simply are a
  value added that the customers expect.

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The Boston Box

• The Boston Box is an excellent model for such
  situations. Its basic premise that high market
  shares lead to high profits is especially
  applicable to volume-dependent industries.

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The Boston Box.

• Today the situation has changed in many
  industries. Only those businesses who are
  profitable in their sectors will be able to
  extend their market share. The Boston Box does
  not into consideration critical success factors
  like specialisation, flexibility, and customer
  orientation.
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