Question：In 2019 Toyota Motor Corporation (TMC) was the highest ranked global
car brand. Evaluate the usefulness of the Boston Matrix to TMC.
Answer：A Boston Matrix is a technique for analyzing product portfolios with both evident usefulness and limitations. This essay will analyze the usefulness of Boston Matrix to TMC, a high-ranked global car brand. The first and second part talks about two usefulness of Boston Matrix to TMC while the next parts illustrates its limitations which have to be emphasized during usage.
At first, Boston Matrix is useful to balance product lines. The Boston Matrix helps managers to manage the balance in the company’s current portfolio by classifying products and services into stars, cash cows, question marks and dogs. Through this analysis, the products are clearly classified according to the standard of relative market share and market growth. According to the definition, there are four classes in the Boston Matrix, which are stars with high market growth and high market share products, cash cows with high market share and low market growth, Question marks which has low market share in a fast-growing market and dogs with low market share in a market with low growth and almost all products could be classified into one type.
Secondly, the Boston Matrix is useful to help take appropriate decisions. When adopting the Boston Matrix on actual management, it helps by offering a base for management. Because the Boston Matrix could be widely used to answer a range of basic questions on operation of a company, such as which product to invest in and should the unsuccessful product be completely eliminated. For instance, for the management of the company TMC, before officially setting the plan for research and development, managers could use Boston Matrix to evaluate the products’ market share and growth rate to balance the products by avoid having overmuch products on one specific category and adjustment products on each category based on the development strategy.
However, there are limitations that have to be emphasized when using the Boston Matrix. At first, the Boston Matrix is relatively simple and could only be used as a primary reference or foundation. Usually, a further detailed plan requires other supportive methods. Secondly, when using the Boston Matrix, other indicators of the profitability is neglected. For big companies especially TMC, there are numerous other indicators of the profitability practically.