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Answer – Boston Matrix

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This is the suggested answer to the Boston Matrix exercise on Colorado Ricardo Mountain Bikes.

Boston Matrix: Stars, Cash Cows, Question Marks and Dogs, by market growth and relative market share

The Existing Off-Road Bike: Cash Cow

High relative market share within its loyal Colorado niche, but low overall market growth given three years of declining sales, places the existing bike firmly in the Cash Cow quadrant. It needs little further investment and should continue generating cash Ricardo can use elsewhere.

The Possible E-Mountain Bike: Question Mark

The wider e-bike market is growing quickly, but Colorado Ricardo currently has no share of it at all. A high-growth market combined with low (zero) current share is the definition of a Question Mark – it could become a Star with the right investment, or fail and become a Dog if Ricardo enters half-heartedly.

Key point: cash generated by a Cash Cow should be used to fund the Question Marks that could become tomorrow’s Stars – which is exactly the decision Ricardo faces now, using the healthy cash reserves the existing bike has built up to fund a real attempt at the e-mountain-bike market (Henderson, 1970).

This is the same underlying decision explored in the Ansoff’s Matrix exercise – the Boston Matrix simply adds a view of how much investment each option deserves.