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    General Electric (Ge) Mckinsey & Company Boston Consulting Group (BCG) Portfolio Analysis

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    The GE McKinsey matrix is a 9-box portfolio analysis tool developed for GE by McKinsey in the 1970s. It evaluates business units based on their competitiveness on the x-axis and the attractiveness of their industry on the y-axis. This allows companies to systematically prioritize investments across different business units. The matrix provides a more granular analysis than the BCG matrix by separating the high-growth and low-growth quadrants.

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    General Electric (Ge) Mckinsey & Company Boston Consulting Group (BCG) Portfolio Analysis

    Uploaded by

    MaaryaAslam
    55 views4 pages
    The GE McKinsey matrix is a 9-box portfolio analysis tool developed for GE by McKinsey in the 1970s. It evaluates business units based on their competitiveness on the x-axis and the attractiveness of their industry on the y-axis. This allows companies to systematically prioritize investments across different business units. The matrix provides a more granular analysis than the BCG matrix by separating the high-growth and low-growth quadrants.

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    The GE McKinsey matrix is a 9-box portfolio analysis tool developed for GE by McKinsey in the 1970s. It evaluates business units based on their competitiveness on the x-axis and the attractiveness of their industry on the y-axis. This allows companies to systematically prioritize investments across different business units. The matrix provides a more granular analysis than the BCG matrix by separating the high-growth and low-growth quadrants.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    55 views4 pages

    General Electric (Ge) Mckinsey & Company Boston Consulting Group (BCG) Portfolio Analysis

    Uploaded by

    MaaryaAslam
    The GE McKinsey matrix is a 9-box portfolio analysis tool developed for GE by McKinsey in the 1970s. It evaluates business units based on their competitiveness on the x-axis and the attractiveness of their industry on the y-axis. This allows companies to systematically prioritize investments across different business units. The matrix provides a more granular analysis than the BCG matrix by separating the high-growth and low-growth quadrants.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    GE Mckinsey Matrix

    In the 1970s, General Electric (GE) commissioned McKinsey & Company to develop a
    portfolio analysis matrix for screening its business units. This matrix is a variant of
    the Boston Consulting Group (BCG) portfolio analysis. In practice, the analysis is known
    as the GE McKinsey rix. The GE Matrix is a way of mapping a number of different factors
    to help in the understanding of markets. It is particularly useful for concurrently examining
    multiple markets or a portfolio of products.
    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.

    The GE McKinsey matrix comprises two axes. The attractiveness of the market is represented
    on the y-axis and the competitiveness and competence of the business unit are plotted on the
    x-axis. Both axes are divided into three categories (high, medium, low) thus creating nine
    cells.
    Industrial/Market attractiveness
    The vertical axis of the GE matrix is industry attractiveness Industry attractiveness indicates
    how hard or easy it will be for a company to compete in the market and earn profits. The
    more profitable the industry is the more attractive it becomes. When evaluating the industry
    attractiveness, analysts should look how an industry will change in the long run rather than in
    the near future, because the investments needed for the product usually require long lasting
    commitment. It is determined by the following factors:

    Market growth rate


    Market size
    Demand variability
    Industry profitability
    Industry rivalry
    Global opportunities

    Macro environmental factors (PEST)

    Historical and expected market growth rate

    Price development

    Threats and opportunities (component of SWOT analysis)

    Technological developments

    Degree of competitive advantage

    Business Strength
    The horizontal axis of the GE matrix is the strength of the business unit and the matrix
    measures how strong, in terms of competition, a particular business unit is against its rivals.
    In other words, managers try to determine whether a business unit has a sustainable
    competitive advantage (or at least temporary competitive advantage) or not. The factors for
    determining it are as follows:

    Market share
    Growth in market share
    Brand equity
    Distribution channels access
    Production capacity
    Profit margins relative to competitors

    Value of core competences

    Available assets

    Brand recognition and brand strength

    Quality and distribution

    Access to internal and external finance resources

    Difference of GE and BCG matrix


    GE McKinsey matrix is a very similar portfolio evaluation framework to BCG matrix. Both
    matrices are used to analyse companys product or business unit portfolio and facilitate the
    investment decisions.
    But the GE matrix involves a wider analysis of the firms operations. The dimensions of GE
    matrix are business strength and industrial attractiveness rather than the market share and the

    market growth. BCG is only a four cell matrix, while GE McKinsey is a nine cell matrix.
    Nine cells provide better visual portrait of where business units stand in the matrix. It also
    separates the invest/grow cells from harvest/divest cells that are much closer to each other in
    the BCG matrix and may confuse others of what investment decisions to make. The BCG
    focuses on the products with in the firms products range while GE can be extended to look at
    strategic business units.
    Advantages

    Helps to prioritize the limited resources in order to achieve the best returns.

    Managers become more aware of how their products or business units perform.

    Its more sophisticated business portfolio framework than the BCG matrix.

    Identifies the strategic steps the company needs to make to improve the performance
    of its business portfolio.

    Disadvantages

    Requires a consultant or a highly experienced person to determine industrys


    attractiveness and business unit strength as accurately as possible.

    It is costly to conduct.

    It doesnt take into account the synergies that could exist between two or more
    business units.

    Application
    Three different strategies can be distinguished and adopted using the GE McKinsey matrix:

    Invest/grow growth is facilitated by expanding the market or making investments.


    Hold by making careful investments, the current market is consolidated.
    Harvest / sell no extra investments but mainly focusing on maximizing returns.

    By assigning a weight to each factor, the GE McKinsey nine box matrix can be used more
    effectively. Based on these weights, the scores for competitiveness and market attractiveness
    can be calculated more accurately for each business unit.

    While the GE / McKinsey matrix was originally used to assess a SBU, corporations
    can use this for other purposes as well. It is a good way to determine if a company
    should enter a specific market. It is also a good way to assess how a company is doing
    in a specific market and if repositioning may be necessary to revive a faltering
    product line, brand, or organization.

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