GE 9-CELL

McKinsey matrix / GE matrix portfolio analysis model

GE MCKINSEY MATRIX

The GE matrix / McKinsey matrix is a model to perform a business portfolio analysis on the Strategic Business Units of a corporation.

PORTFOLIO ANALYSIS

Analyze its current business portfolio and decide which SBU's should receive more or less investment

Develop growth strategies for adding new products and businesses to the portfolio

Decide which businesses or products should no

longer be retained.

GE MATRIX VS BCG MATRIX

Market (Industry) attractiveness Competitive strength. GE / McKinsey Matrix - 3*3 grid BCG Matrix - 2*2  

VERTICAL AXIS - INDUSTRY ATTRACTIVENESS

Market growth rate Market size Demand variability Industry profitability Industry rivalry Global opportunities Macro environmental factors

HORIZONTAL AXIS- STRENGTH OF THE BUSINESS UNIT

Market share

Growth in market share

Brand equity

Distribution channel access

Production capacity

Profit margins relative to competitors

Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry

Industry attractiveness    = 

  factor value1   x   factor weighting1

 +  factor value2   x   factor weighting2+…

Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows:

Market size is represented by the size of the circle.

Market share is shown by using the circle as a pie chart.

The expected future position of the circle is portrayed by means of an arrow.

LIMITATIONS OF GE- MATRIX

Valuation of the realization of the various factors Aggregation of the indicators is difficult Core competencies are not represented Interactions between Strategic Business Units are not

considered