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The General

Electric Model/
McKinsey
Matrix.

GE APPROACH

GE & McKinsey management consultants


worked together to develop GE business
screen, a multifactor assessment based on an
analysis of factors relating to profitability
GE Approach is an extension of the BCG Matrix
GE Rates each SBU (not only products within
firms), on the basis of factors, for industry
attractiveness and business strength
A procedure of aggregating various executives
opinions on these weights results in high,
medium, or low attractiveness and business
strength ratings

GE APPROACH
Developed by McKinsey & Company in 1970s.
GE is a model to perform business portfolio
analysis on the SBUs.
It is an Enlarged & Sophisticated version of
Boston Consulting Group Matrix.
GEs model is based on the companies seven
businesses. It holds that a company can
appropriately rate its different business for the
purpose of Strategic planning on the basis of
two main parameters
Market Attractiveness & Business Strength.

GE Screen Uses These


Parameters To Evaluate SBUs

Market Attractiveness

Annual market growth rate.


Overall market size.
Historical profit margin.
Current size of market.
Market structure.
Market rivalry.
Demand variability.
Global opportunities.

GE Screen Uses These


Parameters To Evaluate SBUs

Business Strength

Current market share.


Brand image & Equity.
Production capacity.
Corporate image.
Profit margins relative to competitors.
R & D performance.
Managerial personal.
Promotional effectiveness.

GE APPROACH
This is a second model to analyze the SBUs
(First being Boston Consulting Group Matrix)
and has been founded by General Electric. This
model is also known as Market Attractiveness
and Company Strength Matrix.
Both axes are divided into three segments,
yielding nine cells. These nine cells are
grouped into three zones.

GE Multifactor Portfolio Matrix


High

Business Strengths

High

Industry Attractiveness
Medium
Low

Protect
Position

Invest to
Build

Build
selectively

Selectively Limited
Build
Medium selectively manage for expansion
earnings
or harvest
Low

Protect & Manage for


refocus
earnings

Divest

Invest/Grow
Selectivity
/Earnings
Harvest
/Divest

GE APPROACH
The block with the lateral zone consists of three
cells in the upper left corner. If an Organization
falls in this zone the business is in a favorable
position with relatively attractive growth
opportunities. This is indicated by
that
shows to invest in this product / service.

GE Multifactor Portfolio Matrix


High

Business Strengths

High

Industry Attractiveness
Medium
Low

Protect
Position

Invest to
Build

Build
selectively

Selectively Limited
Build
Medium selectively manage for expansion
earnings
or harvest
Low

Protect & Manage for


refocus
earnings

Divest

Invest/Grow
Selectivity
/Earnings
Harvest
/Divest

GE APPROACH
The blocks with plain zone consists of the three
diagonal cells from the lower left to the upper
right. A position in the
zone is viewed as
having medium attractiveness. Organizations in
this zone must therefore exercise caution when
making additional investments in this product /
service. The suggested strategy is to seek to
maintain share rather than growing or reducing
share.

GE Multifactor Portfolio Matrix


High

Business Strengths

High

Industry Attractiveness
Medium
Low

Protect
Position

Invest to
Build

Build
selectively

Selectively Limited
Build
Medium selectively manage for expansion
earnings
or harvest
Low

Protect & Manage for


refocus
earnings

Divest

Invest/Grow
Selectivity
/Earnings
Harvest
/Divest

GE APPROACH
The blocks with a diagonal zone consists of the
three cells in the lower right corner. A position in
the
zone is not attractive. The suggested
strategy is that management should begin to
make plans to exit the industry.

Overview
High

Market Attractiveness

Low

Business Strengths

High

Low

Attractive

Moderate
Attractive

Unattractive

GE Multifactor Portfolio Matrix

LIMITATIONS OF GE MATRIX
Core competencies are not represented
Interactions between Strategic Business Units
are not considered.

CASE STUDY

Case Study of TATA


TATA

IT (Information Technology) : TCS


Consumer Durable : Automobiles,
Titan etc.
Textiles : Tata Fabrics, West Sides etc

GE Matrix For TATA


Business Strengths

High

Market Attractiveness

High

Low

IT
Consumer
Durables

Textiles

Low