Ge Matrix 3p251w

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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 |

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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.

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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.

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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)

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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.

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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.

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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.

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´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.

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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.

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´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.

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'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.

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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 .

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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.