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GE Matrix

The GE/McKinsey matrix is a strategic planning tool developed by McKinsey & Co. for GE in the 1970s to evaluate its business units. It builds upon the BCG growth-share matrix by mapping units on industry attractiveness and competitive strength axes, using 9 cells instead of 4. Industry attractiveness is determined by factors like growth, size, profitability. Competitive strength considers factors like market share, margins, R&D. The 9 cells are grouped into green (invest), yellow (maintain), and red (divest) zones to recommend expansion, stability, or retrenchment strategies. The GE matrix provides a broader analysis than the BCG matrix but requires more data and subjective scoring.

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3K views15 pages

GE Matrix

The GE/McKinsey matrix is a strategic planning tool developed by McKinsey & Co. for GE in the 1970s to evaluate its business units. It builds upon the BCG growth-share matrix by mapping units on industry attractiveness and competitive strength axes, using 9 cells instead of 4. Industry attractiveness is determined by factors like growth, size, profitability. Competitive strength considers factors like market share, margins, R&D. The 9 cells are grouped into green (invest), yellow (maintain), and red (divest) zones to recommend expansion, stability, or retrenchment strategies. The GE matrix provides a broader analysis than the BCG matrix but requires more data and subjective scoring.

Uploaded by

satyadarshi ravi singh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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` In consulting engagements with General


Electric in the 1970's, McKinsey & Company
developed a      as a
tool for screening GE's large portfolio of
strategic business units (SBU). This business
screen became known as the | 

 
| 
 | 

` The GE matrix has nine cells vs. four cells


in the BCG matrix.
` The GE / McKinsey matrix is similar to the
BCG growth-share matrix in that it maps
strategic business units on a grid of the
industry and the SBU's position in the
industry.
| 
 | 

` The GE matrix however, attempts to improve upon


the BCG matrix in the following two ways:
` The GE matrix generalizes the axes as "Industry
Attractiveness" and "Business Strength/ competitive
position.´
` whereas the BCG matrix uses the market growth
rate as a proxy for industry attractiveness and
relative market share as a proxy for the strength of
the business unit/ competitive position.
| 
 

  


  

r

| 

 


 r   


    

` The vertical axis of the GE / McKinsey matrix is


industry attractiveness, which is determined by
factors such as the following:
* Market growth rate
* Market size
* Demand variability
* Industry profitability
* Industry rivalry
* Global opportunities
* Macro environmental factors (PEST)
    !   
 

` The horizontal axis of the GE / McKinsey matrix is the strength


of the business unit. Some factors that can be used to
determine business unit strength include:
` Market share
` Growth in market share
` Distribution channel access
` Profit margins relative to competitors
` R & D.
` Quality of products and services.
` Branding and promotions success.
|    

` The nine cell of the GE matrix are grouped


on the basis of low, medium, high industry
attractiveness, and weak, average, strong
business unit strength.
` Three zones of the three cells each are
made, denoting different combination
represented by green, yellow, and red colors.
|    

` Based on the green zone, the signal is µgo


ahead¶ to grow n build, indicating expansion
strategies.
` Business in the green zone attract major
investment.
|    

` ´or the yellow zone, the signal is µwait and


see¶ indicating hold and maintain type of
strategies aimed at stability strategy.
` ´or red zone , the signals is µstop¶, indicating
the retrenchment strategies of divestment
and liquidation or for adopting turnaround
strategies.
| 
 

` At this stage the marketing manager adapts the list


above to the needs of his strategy. The GE matrix
has 5 steps:
` One - Identify your products, brands, experiences,
solutions, or SBU's.
` Two - Answer the question, å   

   
` Three - Decide on the factors that position the
business on the GE matrix.
| 
 

` ´our - Determine the best ways to  


attractiveness and business position.
` ´ive - ´inally  each SBU as either low,
medium or high for business strength, and
low, medium and high in relation to market
attractiveness.
   "

` 'es the GE matrix is superior to the Boston


Matrix since it uses several dimensions, as
opposed to BCG's two.
` Compared to the BCG matrix ,it offers an
intermediate classification of medium and
average ratings.
 

` rowever, problems or limitations include:


` There is no research to prove that there is a
relationship between market attractiveness
and business position.
` The interrelationships between SBU's,
products, brands, experiences or solutions is
not taken into account.
 

` This approach does require extensive data


gathering.
` Scoring is personal and subjective.
` The GE matrix offers a broad strategy and
does not indicate how best to implement it.

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