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GE Nine Cell Matrix

GE Nine Cell Matrix


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.

The GE/McKinsey Matrix identifies the optimum business


portfolio as one that fits perfectly to the company's strengths
and helps to explore the most attractive industry sectors or
markets.

The objective of the analysis is to position each SBU on the


chart depending on the SBU's Strength and the Attractiveness
of the Industry Sector or Market on which it is focused. Each
axis is divided into Low, Medium and High, giving the nine-
cell matrix as depicted below.
GE Nine Cell Matrix
Different factors can be used to define Industry Attractiveness. Like:-
Market Size, Market Growth Rate, Demand variability, Industry
Profitability, Competitive Rivalry, Global Opportunities, Entry and exit
barriers, Capital requirement, Macro environmental Factors (PEST)

Different factors can also be used to define SBU Strength. Like:-


Market Share, Distribution Channel Access, Financial Resources, R&D
Capability, Brand equity, Production Capacity, Knowledge of customer
and market, Caliber of management. Relative cost position

The factors and their relative weightings are selected. The rating values
for each factor are entered for each SBU and Industry.
GE Nine Cell Matrix
Industry Business Unit Strength
Attractiveness

Strong Average Weak

High Grow Grow Hold

Medium Grow Hold Harvest

Low Hold Harvest Harvest


GE Nine Cell Matrix
Grow Business units that fall under grow attract high
investment. Firms may go for product differentiation or Cost
leadership. Huge cash is generated in this phase. Market leaders
exist in this phase.

Hold Business units that fall under hold phase attract moderate
investment. Market segmentation, Market penetration, imitation
strategies are adopted in this phase. Followers exist in this phase.

Harvest - Business units that fall under this phase are


unattractive. Low priority is given in these business units.
Strategies like divestment, Diversification, mergers are adopted in
this phase.
Market Attractiveness

Annual market growth


rate
Overall market size
Historical profit margin
Current size of market
Market structure
Market rivalry
Demand variability
Global opportunities
Business Strength

Current market share


Brand image
Production capacity
Corporate image
Profit margins relative
to competitors
R & D performance
Promotional
effectiveness
GE Nine Cell Matrix
Strength
a) It allowsintermediate ratings between high and low and between
strong and week.

b) It helps in channeling the corporate resources to business and


achieving competitive advantage and superior performance.

c) It helps in better strategic decision making and better understanding


of business scope.

Weakness
a)It tends to obscure business that are become to winners because their
industries are entering at exit stage.

b)Assessment of business in terms of two factors is not fair.


EXAMPLE OF GE NINE CELL
MATRIX
About Maruti Udyog
Founded in 1981
Products are Maruti 800, Omni, Alto,SX4,Swift
Desire,Swift,A-star, Gypsy,Wagon R,Ritz,others.
Vision The Leader in the Indian
Automobile Industry, Creating Customer
Delight and Shareholders Wealth;a Pride
of India
Core Values : Our Core Values drive us in every
endeavour-
Customer Obession,
fast, Flexible & first mover,
Innovation & creativity
Networking & Partnership
Openess & Learning
THANK
YOU