Scribd
Upload
12 views

GE and BCG

GE and BCG

Uploaded by

mahmoud abdelhai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
12 views

GE and BCG

GE and BCG

Uploaded by

mahmoud abdelhai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 3

MARCH 2017

STRATEGIC MANAGEMENT
BCG MATRIX- LIMITATIONS
GE BUSINESS SCREEN- LIMITATIONS
Portfolio Analysis is an analysis of elements of a company's product and
business units mix to determine the optimum allocation of its resources.
Portfolio analysis helps in the development of corporate strategy in a
multiple-business corporation.
Portfolio analysis puts the company’s head office in the role of the investor;
the head office sees the product lines and business units as a series of
investment from which it expects profitable returns. The mix of product lines
and business units revisited and rearranged periodically to ensure the best
return on the company investments.
Two of the most popular portfolio techniques are the BCG Growth-Share
Matrix and GE Business Screen.

A- BCG Growth-Share Matrix is one of the most popular portfolio


techniques. Each of the corporation’s product lines or business units is
plotted on the matrix according to both the growth rate of the industry
in which it competes and its relative market share.

BCG Matrix- Limitations

 BCG matrix classifies businesses as low and high, but generally


businesses can be medium also. Thus, the true nature of
business may not be reflected. Hence, the use of highs and lows
to form four categories is too simplistic.
 High market share is not the only success factor. Hence, the link
between market share and profitability is debatable. Low-share
businesses can also be profitable. Also a high market share does
not necessarily lead to profitability all the time.
 Growth rate and relative market share are not the only indicators
of profitability. This model ignores and overlooks other indicators
of profitability.
 Market growth is not the only indicator for attractiveness of a
market.
 The model neglects small competitors that have fast growing
market shares. Product lines or business units are considered
only in relation to one competitor: the market leader.
 Market share is only one aspect of overall competitive position.
 It neglects the effects of synergies between business units.
 The problems of getting data on the market share and market
growth.

B- GE Business Screen is a model that was created by General Electric,


with the assistance of the McKinsey & Company consulting firm. The
model is more complicated than BCG matrix. The matrix includes nine
cells based on long-term industry attractiveness and business strength
competitive position.

GE Business Screen - Limitations

 It can get quite complicated and unmanageable.


 The numerical estimates of industry attractiveness and business
strength/competitive position give the appearance of objectivity,
but they are in reality subjective judgments that may vary from
one person to another.
 It cannot effectively depict the positions of new products or
business units in developing industries.

You might also like