Boston Matrix
Apply the Boston Matrix to product portfolios by assessing market growth, relative market share, portfolio balance, investment needs and strategic priorities.
- Syllabus
- First assessment 2019
- Course
- Business XBS11/YBS11
- Level
- AS
Exam points
- Classify products using market growth and relative market share to identify portfolio categories.
- Evaluate portfolio decisions through investment needs, cash generation, risk and strategic balance.
1.3.3.1c - Boston Matrix question 1
[Maximum number: 8]
Sources for use with Section B
Extract C
Competition in the Entertainment Industry
The games console market is dominated by three businesses; Sony, Microsoft and Nintendo. For many years Sony’s PlayStation console dominated the market. However, Nintendo regained its leadership position for the first time since 2009 with the sales of its new game console, the Switch.
In 2019, Nintendo sold 17.3 million Switch consoles, Sony sold 17.1 million PlayStation consoles, and Microsoft remained in third place, selling 10 million Xbox consoles.
Extract D
Nintendo’s Goal: Bringing Smiles to People’s Faces
Nintendo was founded in 1899 in Japan. It produced traditional Japanese playing cards. In 1970, Nintendo started the development of games consoles and video games. The entertainment market is dynamic, and Nintendo’s goal is to create fun experiences through product innovation.
Nintendo has sold more than 4.7 billion video games and more than 750 million game console units. This is because of the iconic characters it has created, including Super Mario, Donkey Kong, and Pokémon. Its most successful games consoles included Game Boy and the Wii. The Game Boy became the first handheld console to sell in large numbers but is no longer manufactured and the Wii has declining sales. In 2018, the Nintendo Switch was launched, which allows users to enjoy games anytime, anywhere, with anyone.
Extract E
Organisational changes at Nintendo
Nintendo recently made changes to its organisation that positively impacted on the business. Nintendo merged its two game development divisions, which were previously separate. One division had focused on consoles used in the home like the Wii while the other created games for handheld devices like the 3DS. Combining the two divisions aimed to speed up the development of products and allow Nintendo’s creative teams to share ideas and technology.
The use of a matrix organisation has proved to be a good move given the nature of the Switch, which is both a handheld device and a home console. This differentiates it from other games consoles in the market. The main benefit of the reorganisation is that it allows Nintendo to be more flexible with how it uses its game developers and other employees.
Discuss how the Boston Matrix may help companies such as Nintendo develop their product portfolio.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- The Boston Matrix is a method of portfolio analysis based on market
share and market growth
- It categorises products into Cash Cows, Dogs, Stars and Problem
Children/Question Marks
- It can be used to analyse the current portfolio of products to help with
future strategies and growth. Cash from mature products can be used to
fund new products such as the Switch console
- As market share may be gained through investment in marketing, the
matrix helps to focus on the promotion strategy for new consoles and
games to increase sales
- It will help in the decision making regarding consoles that are regarded
as Dogs that should be discontinued, including the Game Boy
- However, it is only a snapshot of the current product portfolio. It has
little or no predictive value and does not take account of external factors
such as competitors such as Sony and Microsoft
- Just because products are categorised as Dogs does not mean they must
be removed - perhaps they still generate acceptable levels of revenue
- The Boston Matrix cannot be used in isolation and Nintendo must
consider other external and internal factors to help make important
decisions on its product portfolio
- Product life cycle may be a better method of portfolio analysis as it takes
account of the life span of products, which is an important element in
the dynamic games console industry.
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
Isolated elements of knowledge and understanding - recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2
3-5
Accurate knowledge and understanding, applied accurately to the
business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s)
but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced, and
unlikely to show the significance of competing arguments.
Level 3
6-8
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or
qualitative information and shows an awareness of competing
arguments/factors.
Question
Number
Indicative content
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