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Global Strategic Analysis GE Nine Cell-MATRIX

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The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio analysis as a step in the strategic planning process.

What does it identify

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Uses two dimensions: - Industry Attractiveness - Business Strength (Competitive position)

Objective

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To position each SBU on the chart depending on SBUs strength and attractiveness of industry sector or market on which it is focused. Each axis is divided in Low, Medium or High axis.

Industry Attractiveness
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Market Size /Market growth Industry Profit MARGIN Technology Economies of scale Competitive Intensity Seasonality Cyclicality Environmental
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Business Strength

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Profit Margin Relative Market share Competitive Strength and weaknesses Technological Capability Ability to compete on price and quality Caliber of Management

Weightage
Factors weight Rating (0-1 scale) 0.8 1 0.7 0.6 0.8 0.5 0.5 15 15 10 10 20 5 5 12 15 7 6 16 2.5 2.5

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Weighted Score

20
Total

0.7

14
75(0.8)

Score: 0.5- (average)/medium) <0.5- low >0.5- high

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Name of Institution
Business Strength strong Average Weak

High

Invest/Expand Select/Earn

Industry Attractiveness

Low

Medium

Harvest/Divest

Green Zone

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Industry would like to be in Green zone, where Industry Attractiveness and Strength is more/medium. Strategy in this zone is to invest/expand. Choose among various investment strategies.

Name of Institution

Grow-Attract High Investment, firms may go for product differentiation or cost leadership, huge cash is generated and market leaders are there. Hold- Attract moderate investment, Market penetration. Followers exist here. Harvest- Unattractive players, low priority, diversification, M&A ,Acquisition takes place here.
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Yellow zone

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Different combinations of Industry attractiveness and Business strength. Hold and Maintain type strategies work here.

11

Red zone

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Contains different industry attractiveness. Prescribes retrenchment strategies( Restructuring/ divestment/Liquidation/Turnaround

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