The following is an example of such a representation: It takes into account a wide range of factors when determining market attractiveness and business strengths, which is replaced by market share and market growth in the BCG matrix.
Aids the business in growing and in providing information about potential market opportunities. There are strategy variations within these three groups. This matrix offers some advantages over BCG matrix in that, it offers intermediate classification of medium and average ratings.
Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach. Market share is shown by using the circle as a pie chart. Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.
Companies should invest into the business units that fall into these boxes as they promise the highest returns in the future. Plotting the Information Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows: It is essential to provide as much resources as possible for BUs so there would be no constraints for them to grow.
It is more complex in comparison to the BCG matrix. Further analysis may reveal that investments into some of the business units can considerably improve their competitive positions or that the industry may experience major growth in the future.
For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry. The expected future position of the circle is portrayed by means of an arrow.
It also integrates a larger variety of strategic variables like the market share and industry size. The answer is no and the matrix should take that into consideration. 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.
Second, the business units that only make losses should be divested. The arrows should point to the future position of a business unit. The BCG matrix is much simpler and the factors needed to construct it are accessed more easily and quickly. Market size is represented by the size of the circle.
This affects the decisions we make about our investments into one or another business unit. The tip of the arrow indicates the future position of the center point of the circle.
The dynamics among SBUs themselves are not taken into account. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive.
Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio. Advantages Helps to prioritize the limited resources in order to achieve the best returns. The general rule should be to invest in business units which operate in huge markets and there are not many dominant players in the market, so the investments would help to easily win larger market share.
What should companies do with these business units? This means that the companies should invest into these business units just enough to keep them operating and collect all the cash generated by it.
Investment strategies are often not implemented in an accurate and proper manner. The following table shows how industry attractiveness and business unit competitive strength will change in 2 years.
Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors. Also, where factors are classified in the GE matrix as high, medium and low, those in the BCG matrix are divided between high and low.
It is expensive to conduct. You should also discuss with your managers whether your business unit competitive strength will likely increase or decrease in the near future.GE Nine-cell matrix.
This matrix was developed in s by the General Electric Company with the assistance of the consulting firm, McKinsey & Co, USA.
Ge9 final ppt 1. GE Nine Cell Matrix 2.
GE Nine Cell Matrix The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix usedto perform business portfolio analysis as a step in the strategicplanning process. The GE/McKinsey Matrix identifies the optimum businessportfolio as one that fits perfectly to the companys strengthsand helps to.
GE/McKinsey Matrix Brief History In the late sixties and early seventies, while the Boston Consulting Group were devising the BCG or Growth Share matrix, General Electric, a leading corporation in the United. Mar 18, · For your free course notes to accompany this video visit killarney10mile.com Jan 18, · This feature is not available right now.
Please try again later.
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.Download