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    6 Ge Matrix

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    JAY MARK TANO
    The GE-McKinsey Matrix is a tool developed in the 1970s by McKinsey for General Electric to help companies evaluate their business units and determine where to invest resources. The matrix plots business units along two axes: industry attractiveness and business unit strength. This places units into one of nine boxes signaling whether a unit should receive investment to grow, be held, or have resources harvested. The tool provides a systematic approach to prioritize investments among business units.

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    © All Rights Reserved
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    6 Ge Matrix

    Uploaded by

    JAY MARK TANO
    34 views21 pages
    The GE-McKinsey Matrix is a tool developed in the 1970s by McKinsey for General Electric to help companies evaluate their business units and determine where to invest resources. The matrix plots business units along two axes: industry attractiveness and business unit strength. This places units into one of nine boxes signaling whether a unit should receive investment to grow, be held, or have resources harvested. The tool provides a systematic approach to prioritize investments among business units.

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    6 GE MATRIX.pptx

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    The GE-McKinsey Matrix is a tool developed in the 1970s by McKinsey for General Electric to help companies evaluate their business units and determine where to invest resources. The matrix plots business units along two axes: industry attractiveness and business unit strength. This places units into one of nine boxes signaling whether a unit should receive investment to grow, be held, or have resources harvested. The tool provides a systematic approach to prioritize investments among business units.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    34 views21 pages

    6 Ge Matrix

    Uploaded by

    JAY MARK TANO
    The GE-McKinsey Matrix is a tool developed in the 1970s by McKinsey for General Electric to help companies evaluate their business units and determine where to invest resources. The matrix plots business units along two axes: industry attractiveness and business unit strength. This places units into one of nine boxes signaling whether a unit should receive investment to grow, be held, or have resources harvested. The tool provides a systematic approach to prioritize investments among business units.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 21

    The GE-McKinsey Matrix is a tool,

    that helps companies, decide which of its


    business activities, are worth investing
    Hi, I’m
    into.
    Maria!
    What is GE McKinsey Matrix?

    ”The GE-McKinsey nine-box matrix is a strategy tool that offers a


    systematic approach for the multi-business corporation to prioritize its
    investments among its business units.”
    -McKinsey
    Hi,
    I’m
    Maria!
    Hi,
    I’m

    Brief History Maria!

     In 1970s, General Electronic/GE asked its consultant, McKinsey, to develop a portfolio


    management model that would suit its need.

     GE, which had about 150 business units under it at that time, had been using the BCG Matrix,
    but it had eventually felt the need for a more sophisticated framework to help it decide which of
    the units deserved development funds.

     The result was what the business world would come to know as the GE Matrix, a strategy tool
    that helps a corporation decide whether or not to invest or to divest or carry a further
    research about a product.
    Hi,
    I’m
    Maria!
    FACTORS AFFECTING
    INDUSTRY
    ATTRACTIVENESS

     Market size
     Market growth
    I’m
    Maricar  Market profitability
     Pricing trends
     Competitive intensity
     Overall risk of returns in the industry
     Opportunities to differentiate products
    and services
     Segmentation
     Distribution structure (e.g. retail,
    direct, wholesale)
    FACTORS THAT AFFECT
    BUSINESS UNIT
    STRENGTH

     Strength of assets and competencies


    I’m  Relative brand strength
    Maricar
     Market share
     Customer loyalty
     Relative cost position (cost structure
    compared with competitors)
     Distribution strength
     Record of Technological or other innovation
     Access to financial and other investment
    resources
    BUILDING BLOCKS

    GROW = GREEN
    HOLD = ORANGE
    HARVEST =RED
    I’m
    Maricar
     The three cells at the top left hand
    side of the matrix are the most
    attractive in which to operate and
    require a policy of investment for
    Hey! I’m
    Lovely
    growth – these are the colored green.

    Tip!
    These have high market share
    and promise high returns in the future
    so should be invested in.
     The three cells running diagonally from left to
    right have a medium attractiveness, are colored
    orange and the management of business within
    this category should be more cautious and with
    Hey! I’m
    a greater emphasis being placed on selective
    Lovely investment and earning retention.

    Tip!
    These can be uncertain and should only be
    invested in if there is money left over after
    investing in the profitable units.
     The three cells at the bottom right hand side
    are the least attractive, therefore colored red
    and management should follow a policy of
    harvesting and / or divesting unless the
    Hey! I’m
    Lovely
    relative strengths can be improved.

    Tip!
    This should only be invested in if they can
    make more money than what is put into
    them. Otherwise they should be liquidated.
    1. GE Matrix can be used if
    an organization is made up
    ADVANTAGES OF GE of many business units or if
    McKinsey Matrix a business unit is made up
    of a number of different
    product lines.
    I’m Arvin!
    Your speaker!
    2. It helps to prioritize the
    limited resources in order to
    ADVANTAGES OF GE achieve the best returns.

    McKinsey Matrix

    I’m Arvin!
    Your speaker!
    3. Managers become more
    aware of how their products or
    ADVANTAGES OF GE business units perform.

    McKinsey Matrix

    I’m Arvin!
    Your speaker!
    1. The simplicity of BCG
    Matrix has been criticized in
    DISADVANTAGES OF the past but GE Matrix has
    GE McKinsey Matrix also been accused of being
    too complicated/complex
    and taking too long to
    complete.
    Hi! I’m
    Mary
    Grace
    2. It is costly to conduct.

    DISADVANTAGES OF
    GE McKinsey Matrix

    Hi! I’m
    Mary
    Grace
    3. It requires a consultant
    or a highly experienced
    DISADVANTAGES OF person to determine
    GE McKinsey Matrix industry’s attractiveness
    and business unit strength
    as accurately as possible.
    Hi! I’m
    Mary
    Grace
    Hi, I’m
    Maria!

    EXAMPLE of GE McKinsey Matrix

    MARUTI SUZUKI GE MATRIX


    Hi, I’m
    Maria!
    THANK YOU
    CLASSMATES!

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