Using the Boston Matrix at Identification of the Corporate Life Cycle Stage

Zdeněk Konečný and Marek Zinecker
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Zdeněk Konečný: Department of Economics, Faculty of Business and Management, Brno University of Technology, Kolejní 2906/4, 612 00 Brno, Czech Republic
Marek Zinecker: Department of Economics, Faculty of Business and Management, Brno University of Technology, Kolejní 2906/4, 612 00 Brno, Czech Republic

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2015, vol. 63, issue 1, 235-243

Abstract: The main aim of this article is to develop a new model supporting the identification of the particular corporate life stage within the corporate life cycle. This model will be derived from the Boston matrix. The main reason for using this approach as the base for making new model of the corporate life cycle is the fact, that every quadrant of the Boston matrix can be assigned to one phase of the product life cycle and there is supposed, that the phase, in which are most products, determines the phase of the corporate life cycle. For application the Boston matrix by identification phases of the corporate life cycle is necessary to define low and high values of both its variables using some quantities from the model of corporate- and market life cycle by Reiners (2004). So the interval of low and high sales growth is determined by comparing sales of the company and sales of the market and furthermore, there is considered the rate of inflation to eliminate the impact of price changes. And for determination low and high market shares, there are compared the shares of sales and shares of total assets. After that, there will be possible to identify all the quadrants and thus all the individual phases unequivocally, which is the basic advantage compared to most existing models of the corporate life cycle. The following aim of this article is to compare the occurrence of individual phases, identified by this modified model, depending on the sector sensitivity to the economic cycle, measured by the coefficient of correlation between sales on the market and GDP. There are selected two sectors of the Czech economy, namely one cyclical and one neutral sector. Subsequently there is selected a sample of companies from both these sectors. The data are collected from financial statements of companies and from analytical materials by the Czech Ministry of Industry and Trade and by the Czech Statistical Office. On the basis of this research, there were recorded differences especially in the number of companies in the phases of stabilisation and decline, depending on the sector sensitivity to the economic cycle.

Keywords: Boston matrix; corporate life cycle; market conditions; market share; rate of sales growth (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:mup:actaun:actaun_2015063010235

DOI: 10.11118/actaun201563010235

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