The matrix was developed in the early 1970s by Bruce Henderson to help companies allocate resources between business units. It categorizes units as stars, cash cows, dogs, or question marks based on their relative market share and growth rate. Stars have high share and growth but also consume significant cash. Cash cows have high share but low growth, generating more cash than they use. Dogs have low share and growth, breaking even. Question marks have high growth but low share, consuming cash with little return. The matrix is intended to help companies invest strategically in units with the most potential.