The Boston Box

9.7 The Boston Box

The Boston Consulting Group devised a model for assessing a company’s portfolio of products, and this has become universally known as the Boston Box (Figure 9.4). In keeping with many other models, in its simplest form it can be a useful shorthand by which managers can encapsulate a particular market offering.

The axes on the grid are scaled in percentage values of market share and market growth. The four product identities within the grid define the attributes of the product or service. These are known as:

䊉 cash cows 䊉 stars 䊉 question marks 䊉 dogs.

Managing in the Media

Market share

High

Low

Question High

Figure 9.4 The Boston Consulting Group matrix.

The term ‘cash cow’ has almost passed into common language to define a low-growth, high-share product that requires little effort to generate income for the business. Stars products are those that have fast growth and

a high market share. As they mature, they ‘fall’ and ideally become cash cows. The question products are often new and with great potential. Will they become stars? Dogs, products at the end of their life, are retained to complete the portfolio or support a maintenance agreement.

At a more complex level, the Boston Box can be an illustrative model by which the analysis can lead to options for strategic choices. This can be achieved by considering what is required in a particular situation to shift a product around the grid to become, say, the star performer. For example;

a small production company may have several department teams involved in the production process – graphics, post-production, production and location work. If we were to take a holistic view of the company and to say that overall, as a single entity, it was profitable, then that would be sufficient justification for each division to be maintained.

However, if we were to do a value chain on each step through the pre- production, production and post-production process, we may find that the post-production suite was a very expensive area to manage. This facility, comprising of equipment, maintenance charges, air conditioning and the rental for the room itself, is a fixed cost to the business. The staff editor is

Strategic management

well respected in the industry, but is only employed on in-house productions. Would it be cheaper to move offices and work near an edit facility house than to maintain an expensive edit suite that is being under utilised? Should the editor be ‘released’ to go freelance?

Applying the Boston Box method, we might say that the editor was a questionable star performer but not being fully used. The edit suite with the editor could be marketed as a separate unit in its own right. This could be an effective and potentially profitable area of business, perhaps becoming a cash cow to the business. Many production companies do just that; they market the services of each department to increase the utilisation of resources.

Of course there are many issues that influence the business decisions, but the evidence suggests that many small companies don’t even start that debate in a structured manner.