Five steps must be considered in order to formulate the matrix; The range of products produced by the SBU must be listed Factors which make the particular market attractive must be identified Evaluating where the SBU stands in this market Processes through which calculations about business strength and market attractiveness can be made Determining which category an SBU lies in; high, medium, or low. It is based on various factors; the size of the market and the rate at which it is growing, the possibility of profit, the number of competitors within the industry and their weaknesses. The arrow is outwards thus showing that the SBU is expected to grow and gain strength and then its tip indicates the future position of the SBU.
It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below: The nine cells of the GE matrix are grouped on the basis of low to high industry attractiveness, and weak to strong business strength.
Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors. Businesses in the green zone attract major investment. Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach.
This matrix offers some advantages over BCG matrix in that, it offers intermediate classification of medium and average ratings.
It also integrates a larger variety of strategic variables like the market share and industry size. Advantages Helps to prioritize the limited resources in order to achieve the best returns.
Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio. It is expensive to conduct.GE McKinsey matrix is a very similar portfolio evaluation framework to BCG matrix.
Both matrices are used to analyze company’s product or business unit portfolio and facilitate the investment decisions. The main differences: Visual difference.
BCG is only a four cell matrix, while GE McKinsey is a nine cell matrix. Nine cells provide better.
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In this interactive presentation--one in a series of multimedia frameworks--McKinsey alumnus Kevin Coyne describes the GE–McKinsey nine-box matrix, a framework that offers a systematic approach for the multibusiness corporation to prioritize its investments among its business units.
The GE McKinsey matrix is a nine-box matrix which is used as a strategy tool. It helps multi-business corporations evaluate business portfolios and prioritize investments among different business units in a systematic manner. BCG Matrix and GE 9 Cell Planing - Free download as Word Doc .doc /.docx), PDF File .pdf), Text File .txt) or read online for free.
Scribd is 1/5(1). GE / McKinsey Matrix. In consulting engagements with General Electric in the 's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU).