Which model analyzes a business's product portfolio by classifying products into stars, cash cows, problem children and dogs?

Which model analyzes a business's product portfolio by classifying products into stars, cash cows, problem children and dogs?

• A. Boston Matrix
• B. Ansoff Matrix
• C. Product Portfolio Analysis
• D. McKinsey Matrix

Answer: (A)

The Boston Matrix, also known as the BCG Matrix, analyzes a business's product portfolio by classifying products into four categories: stars, cash cows, problem children, and dogs. This classification rests on two dimensions: market growth rate and relative market share. Stars have high growth and high market share and typically require investment to sustain their momentum. Cash cows have low growth but high share, providing steady cash with minimal investment. Problem children (or question marks) have high growth but low share and need significant investment to increase their position, with uncertain outcomes. Dogs have low growth and low share and are often candidates for divestment or restructuring. This framework helps managers decide where to invest, harvest, or divest, guiding resource allocation across the product portfolio. Other models serve different purposes: the Ansoff Matrix focuses on growth strategies (how to expand sales), a general Product Portfolio Analysis covers broader portfolio considerations without the specific four-category focus, and the McKinsey Matrix uses a 3x3 grid to assess business units by industry attractiveness and competitive strength, which is more complex than the four-category Boston Matrix.

The Boston Matrix, also known as the BCG Matrix, analyzes a business's product portfolio by classifying products into four categories: stars, cash cows, problem children, and dogs. This classification rests on two dimensions: market growth rate and relative market share. Stars have high growth and high market share and typically require investment to sustain their momentum. Cash cows have low growth but high share, providing steady cash with minimal investment. Problem children (or question marks) have high growth but low share and need significant investment to increase their position, with uncertain outcomes. Dogs have low growth and low share and are often candidates for divestment or restructuring. This framework helps managers decide where to invest, harvest, or divest, guiding resource allocation across the product portfolio.

Other models serve different purposes: the Ansoff Matrix focuses on growth strategies (how to expand sales), a general Product Portfolio Analysis covers broader portfolio considerations without the specific four-category focus, and the McKinsey Matrix uses a 3x3 grid to assess business units by industry attractiveness and competitive strength, which is more complex than the four-category Boston Matrix.