Ge 9 Cell

GE Nine-cell matrix
This matrix was developed in 1970s by the General Electric

Company with the assistance of the consulting firm,
McKinsey & Co, USA. This is also called GE multifactor
portfolio matrix.
The GE matrix has been developed to overcome the obvious
limitations of BCG matrix. This matrix consists of nine cells
(3X3) based on two key variables:
i)
business strength
ii)
industry attractiveness
The horizontal axis represents business strength and the

vertical axis represent industry attractiveness
The business strength is measured by considering such factors

as:
relative market share
profit margins
ability to compete on price and quality
knowledge of customer and market
competitive strengths and weaknesses
technological capacity
caliber of management
Industry attractiveness is measured considering such factors
as :
market size and growth rate
industry profit margin
competitive intensity
economies of scale
technology
social, environmental, legal and human aspects
The industry product-lines or business units are plotted as

circles. The area of each circle is proportionate to industry
sales. The pie within the circles represents the market share of
the product line or business unit.
The nine cells of the GE matrix represent various degrees of
industry attractiveness (high, medium or low) and business
strength (strong, average and weak). After plotting each
product line or business unit on the nine cell matrix, strategic
choices are made depending on their position in the matrix.
Spotlight Strategy
GE matrix is also called Stoplight strategy matrix because
the three zones are like green, yellow and red of traffic lights.
1)
Green indicates invest/expand if the product falls in green

zone, the business strength is strong and industry is at least
medium in attractiveness, the strategic decision should be to
expand, to invest and to grow.
2)
Yellow indicates select/earn if the product falls in yellow

zone, the
business strength is low but industry attractiveness is high, it
needs caution and managerial discretion for making the
strategic choice
3)
Red indicates harvest/divest if the product falls in the red

zone, the business strength is average or weak and
attractiveness is also low or medium, the appropriate strategy
should be divestment.
3
Comparision GE versus BCG Thus products or business units in the green zone are almost
equivalent to stars or cashcows, yellow zone are like question
marks and red zone are similar to dogs in the BCG matrix.
Difference between BCG and GE matrices
BCG Matrix
GE Matrix
1. BCG matrix consists of

four cells
1. GE matrix consists of nine

cells
2. The business unit is rated

against relative market share
and industry growth rate
2. The business unit is rated

against business strength and
industry attractiveness
3. The matrix uses single

measure to assess growth
and market share
3. The matrix used multiple

measures to assess business
strength
and
industry
attractiveness
4. The matrix uses two types

of classification i.e high and
low
4. The matrix uses three

types of classification i.e
high/medium/low
and
strong/average/weak
5. Has many limitations
5.
Overcomes
many
limitations of BCG and is an
improvement over it
Advantages
1)
It used 9 cells instead of 4 cells of BCG
2)
It considers many variables and does not lead to simplistic

conclusions
3)
High/medium/low and strong/average/low classification

enables a finer distinction among business portfolio
4)
It uses multiple factors to assess industry attractiveness and

business strength, which allow users to select criteria
appropriate to their situation
Limitations
1)
It can get quite complicated and cumbersome with the

increase in businesses
2)
Though industry attractiveness and business strength

appear to be objective, they are in reality subjective
judgments that may vary from one person to another
3)
It cannot effectively depict the position of new business

units in developing industry
4)
It only provides broad strategic prescriptions rather than

specifics of business policy
Mckinseys 7S Framework
Mckinseys 7S Framework The framework suggests that
there is a multiplicity of factors that influence an
organizations ability to change and its proper mode of
change. Because of the interconnectedness of the variables, it
would be difficult to make significant progress in one area
without making progress in the others as well. There is no
starting point or implied hierarchy in the shape of the
diagram, and it is not obvious which of the seven factors
would be the driving force in changing a particular
organization at a certain point of time. The critical variables
would be different across organizations and in the same
organizations at different points of time.
The 7 S
Superordinate goals are the fundamental ideas around which
a business is built
Structure salient features of the unitss organizational chart
and inter connections within the office
Systems procedures and routine processes, including how
information moves around the unit
Staff personnel categories within the unit and the use to
which staff are put, skill base, etc
Style characterization of how key managers behave in order
to achieve the units goals
6
Shared values strategy the significant meanings or guiding

concepts that the unit imbues on its members
Skills distinctive capabilities of key personnel and the unit
as a whole
The 7 S model can be used in two ways
1. Considering the links between each of the Ss one can identify
strengths and weaknesses of an organization. No S is strength
or a weakness in its own right, it is only its degree of support,
or otherwise, for the other Ss which is relevant. Any Ss that
harmonises with all the other Ss can be thought of as strength
and weaknesses
2. The model highlights how a change made in any one of the
Ss will have an impact on all the others. Thus if a planned
change is to be effective, then changes in one S must be
accompanied by complementary changes in the others.
Structure
Strategy
Systems
Super ordinate goals
Skills
Style
Staf

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GE Nine-cell matrix

This matrix was developed in 1970s by the General Electric

The horizontal axis represents business strength and the

The business strength is measured by considering such factors

relative market share

ability to compete on price and quality

knowledge of customer and market

competitive strengths and weaknesses

market size and growth rate

industry profit margin

social, environmental, legal and human aspects

The industry product-lines or business units are plotted as

Green indicates invest/expand if the product falls in green

Yellow indicates select/earn if the product falls in yellow

Red indicates harvest/divest if the product falls in the red

1. BCG matrix consists of

1. GE matrix consists of nine

2. The business unit is rated

2. The business unit is rated

3. The matrix uses single

3. The matrix used multiple

4. The matrix uses two types

4. The matrix uses three

5. Has many limitations

It used 9 cells instead of 4 cells of BCG

It considers many variables and does not lead to simplistic

High/medium/low and strong/average/low classification

It uses multiple factors to assess industry attractiveness and

It can get quite complicated and cumbersome with the

Though industry attractiveness and business strength

It cannot effectively depict the position of new business

It only provides broad strategic prescriptions rather than

Shared values strategy the significant meanings or guiding

Super ordinate goals

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