Boston Matrix - Stars

Stars are the business units or products that have the best market shares and generate the most cash are considered stars. However, because of their high growth rate, stars also consume large amounts cash. This generally results in the same amount of money coming in that is going out. Stars can eventually become cash cows if they sustain their success until a time that the market growth rate declines.

There are 2 kinds of Stars: (1) Young Stars which are requiring big capital and investing, because they are still evolving and (2) Mature Stars which are self-financing ability.

Stars within the Boston matrix

An organization will usually consider it worthwhile to invest in retaining and growing a star's strong market share because the revenue it brings in equals or exceeds the investment required.

In an immature market, the rapidly increasing number of new customers results in fast growth and high potential profits, both of which attract new competitors into the market. Organizations operating in immature markets should remember that high revenues might come with high product development and marketing costs.

As a fast growing market reaches maturity, those products with the biggest market share become Cash Cows, whereas those that have not been able to build market share will move into the Dogs category.

Key Points

  • It is usually worthwhile to invest in a Star because the revenue it brings in equals or exceeds the investment required.
More Free eBooks

You may also be interested in: Introduction to the Boston Matrix, Classifying Products and Business Units, Stars, Question Marks, Cash Cows, Dogs, Using the Boston Matrix at Brand Level, A Balanced Portfolio and Advantages and Disadvantages.

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