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Nine Cell Matrix Pres

The GE/Nine Cell Matrix is a strategic management tool developed by McKinsey & Company to analyze GE's portfolio of business units. It maps business units based on their industry attractiveness on the vertical axis and the business unit's own strength on the horizontal axis. This creates a 9-cell grid to assess whether a unit should receive resources to grow, be maintained, or harvested. Though an improvement on the BCG Matrix, it provides a limited view by not considering interactions among units or core competencies.

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1K views

Nine Cell Matrix Pres

The GE/Nine Cell Matrix is a strategic management tool developed by McKinsey & Company to analyze GE's portfolio of business units. It maps business units based on their industry attractiveness on the vertical axis and the business unit's own strength on the horizontal axis. This creates a 9-cell grid to assess whether a unit should receive resources to grow, be maintained, or harvested. Though an improvement on the BCG Matrix, it provides a limited view by not considering interactions among units or core competencies.

Uploaded by

jyothirajscribd
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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GE Matrix/Nine Cell Matrix

Jyothiraj B.G.
INTRODUCTION
• GE/Nine Cell Matrix is a strategic and marketing management
tool used for portfolio analysis
• Developed by McKinsey & Company in 1970’s
• A tool for screening GE's large portfolio of strategic business
units (SBU)
• This business screen became known as the GE/McKinsey
Matrix
GE MATRIX VS BCG MATRIX -
DIFFERENCES

• The GE matrix has nine cells vs. four cells in the BCG matrix
• The GE Matrix compares different businesses on "Business
Strength" and "Market Attractiveness" variables instead of
market growth rate and relative market share
GE MATRIX VS BGC MATRIX -
SIMILARITIES
• Similar to the BCG growth-share matrix - it maps SBUs on a
grid of the industry and the SBU's position in the industry
• Attempts to improve upon the BCG matrix
– Generalizes the axes as "Industry Attractiveness" and "Business Unit
Strength”
– GE matrix uses the industry attractiveness as a proxy for market
growth rate and the strength of the business unit as a proxy for relative
market share
INDUSTRY ATTRACTIVENESS
• The vertical axis of the GE/McKinsey matrix is industry
attractiveness, which is determined by
– Market growth rate
– Market size
– Demand variability
– Industry profitability
– Industry rivalry
– Global opportunities
– Macro-environmental factors
BUSINESS UNIT STRENGTH
• The horizontal axis is the strength of the business unit, which
is determined by
– Market share
– Growth in market share
– Brand equity
– Distribution channel access
– Production capacity
– Profit margins relative to competitors
GE MATRIX - ALTERNATIVE
POSITIONS & STRATEGIES
• The Matrix is divided into nine cells - nine alternatives for
positioning of any SBU
• The nine cells in the matrix can be grouped into three major
segments
SEGMENT 1

Segment 1 - Grow
• The best segment
• Business is strong and the market is attractive
• The company should allocate resources in this business and
focus on growing the business and increase market share
SEGMENT 2

Segment 2 - Hold
• The business is either strong but the market is not attractive or
the market is strong and the business is not strong enough to
pursue potential opportunities
• Decision makers should make judgment on how to further deal
with these SBUs
• Some of them may consume to much resources and are not
promising while others may need additional resources and
better strategy for growth
SEGMENT 3

Segment 3 - Harvest
• The worst segment
• Businesses are weak and their market is not attractive
• Decision makers should consider either repositioning these
SBUs into a different market segment, develop better cost-
effective offering, or get rid of these SBUs and invest the
resources into more promising and attractive SBUs
GE MATRIX
STRATEGIC IMPLICATIONS
• Resource allocation recommendations can be made to grow,
hold or harvest a SBU based on its position on the matrix
• Grow
– Strong business units in attractive industries, average business units in
attractive industries, and strong business units in average industries
STRATEGIC IMPLICATIONS
• Hold
– Average businesses in average industries, strong businesses in weak
industries, and weak business in attractive industries
STRATEGIC IMPLICATIONS
• Harvest
– Weak business units in unattractive industries, average business units
in unattractive industries, and weak business units in average industries
LIMITATION OF GE MATRIX
• While the GE business screen represents an improvement over
the more simple BCG growth-share matrix, it still presents a
somewhat limited view by not considering interactions among
the business units and by neglecting to address the core
competencies leading to value creation.
• Rather than serving as the primary tool for resource allocation,
portfolio matrices are better suited to displaying a quick
synopsis of the strategic business units.
Thank You

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