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GENERAL ELETRIC (GE) MATRIX

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INTRODUCTION TO BUSINESS PORTFOLIO PLANNING
PORTFOLIO PLANNING METHODS
INTRODUCTION TO GE / MCKINSEY MATRIX
STRATEGIC EMPHASIS OF GE MATRIX
BENEFITS OF GE MATRIX
LIMITATION OF GE MATRIX



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INTRODUCTION TO BUSINESS PORTFOLIO PLANNING /
BUILDING

The business portfolio is the collection of businesses and products that
make up the company

The business portfolio planning allows management to fits the company's
strengths and helps exploit the most attractive opportunities.

It analyses the current business portfolio and decide which businesses should
receive more or less investment.

Develop growth strategies for adding new products and businesses to the
portfolio, whilst at the same time deciding when products and businesses
should no longer be retained.

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PORTFOLIO PLANNING METHODS

There are two best-known portfolio planning methods

The Boston Consulting Group Portfolio Matrix

The matrix is defined by two factors: relative market share (the
company's market share relative to the competition) and market
growth.


The McKinsey / General Electric Matrix

The matrix is defined by two broad factors: Market
attractiveness contains broader range of factors of Industry
attractiveness and Competitive strength of each SBU is
assessed in 2 dimensional grid



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INTRODUCTION TO GE / MCKINSEY MATRIX

GE / McKinsey Matrix is strategic and marketing management tool used for
portfolio analysis

This tool is used for analyzing portfolio of products, services, and strategic
business units.

GE Matrix is similar to BCG Matrix and it is an extension of the BCG Matrix
approach - multifactor portfolio analysis tool.

The GE Matrix compares different businesses on "Business Strength" and
"Market Attractiveness

The share of the market or business sales vs. market size is represented as
pie chart inside the bubbles in the matrix.

This allows business users to compare business strength, market
attractiveness, market size, and market share for different strategic business
units (SBUs) or different product offerings on one matrix or chart.
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SAMPLE GE MATRIX

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SAMPLE GE MATRIX

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STRATEGIC EMPHASIS OF GE MATRIX

The GE / McKinsey Matrix is divided into nine cells - nine alternatives for
positioning of any SBU or product offering. Based on the strength of the
business and its market attractiveness each SBU will have a different
position in the matrix. Further, the market size and the current sales will
distinguish each SBU. Based on clear understanding of all of these
factors decision makers are able to develop effective strategies.
The nine cells in the matrix can be grouped into three major segments:

Segment 1: This is the best segment. The 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: 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: This is the worst segment. Businesses in this segment 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.

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BENEFITS OF GE MATRIX

One - Identify your products, brands, experiences, solutions,
or SBU's.

Two - Answer the question, What makes this market so
attractive?

Three - Decide on the factors that position the business on the
GE matrix.

Four - Determine the best ways to measure attractiveness and
business position.

Five - Finally rank each SBU as either low, medium or high
for business strength, and low, medium and high in relation to
market attractiveness.
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LIMITATION OF GE MATRIX

There is no research to prove that there is a relationship
between market attractiveness and business position.
The interrelationships between SBU's, products, brands,
experiences or solutions is not taken into account.
This approach does require extensive data gathering.
Scoring is personal and subjective.
There is no hard and fast rule on how to weight elements.
The GE matrix offers a broad strategy and does not indicate
how best to implement it.

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THANK YOU

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