Bruce, the inventor of Boston Matrix and the founder of Boston Consulting Group, believes that a company must have a product portfolio with different "market growth rate" and "relative market share" if it wants to succeed. So he drew a "two-dimensional four-quadrant matrix diagram" with these two dimensions, and gave four quadrants in this matrix.

Two-dimensional four quadrants of Boston matrix;

First, a cash cow.

Cash cow business, also known as "printing machine", usually has a relatively high market share, but the market growth rate is therefore low. For example, Microsoft's Windows and Office, and Google's search business are all cash cows and printing machines.

Second, the star business (star)

Star business is usually a promising new business, occupying a relatively high market share in a fast-growing market. For example, Amazon, which started by selling books, entered the fast-growing cloud computing business and took the lead. Although it doesn't make money at first, it even needs a lot of capital investment, but this is the future. Once the star business becomes a cash cow, the company will enter the next outbreak period.

Third, the question mark.

Problem businesses are those with relatively low market share, but the market growth rate is growing rapidly. For example, Google's investment in artificial intelligence, robotics, driverless and other businesses. They are called "problem businesses" because they will eventually become star businesses, and even cash cow businesses will still die, which is an uncertain problem.

Four, thin dog business (dog)

Businesses with low market share and no growth opportunities are called thin dog businesses, such as Microsoft's smart phones, Tencent's Weibo and Baidu's e-commerce.

Application: Four Strategic Suggestions of Boston Matrix

Now, if you go back and listen to the consultant, you will understand what he means by star and thin dog. You can even predict what strategic advice he will give you.

His suggestions may be these four:

First, the development strategy. That is, the strategy of using the income of "cash cow business" to invest in "problem business" in order to increase the relative market share and become "star business" as soon as possible;

Second, keep the strategy. It is not easy to invest in a new direction, raise cattle well, maintain market share and make "cash cow business" generate more income.

Third, the harvesting strategy. For the "cash cow business" with strong substitutes, such as Kodak's film camera, and the "problem business" and "thin dog business" with poor development prospects, we can consider harvesting short-term benefits as soon as possible and then preparing to give up.

Fourth, give up the strategy. For the unprofitable "thin dog business", resolutely clean up, cancel and sell, and use resources in other promising businesses.

Every world-renowned consulting firm has its own unique skills and slang, such as McKinsey's Golden Tower Principle, Porter's Five Forces Model, trout's Positioning Theory and Bruce's Boston Matrix.

What is "Boston Matrix"? Bruce, the founder of Boston Consulting Group, drew a "two-dimensional four-quadrant matrix diagram" with "relative market share" as the horizontal axis and "market growth rate" as the vertical axis, and divided the company's business portfolio into cash cow business, star business, problem business and thin dog business.

By dividing the business in this way, we can not only see the relationship between business and cash flow clearly, but also seek the best business combination and development trend in the dynamic by using development strategy, maintenance strategy, harvest strategy and abandonment strategy.

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