Diagrammo Management theories explained

Have a Question?

If you have any question you can ask below or enter what you are looking for!

GE / McKinsey matrix

GE / McKinsey matrix

The GE / McKinsey matrix is a portfolio analysis matrix for business units. The model was developed in the seventies by McKinsey & Company as part of a consulting assignment for General Electric. The matrix is similar to the BCG-Matrix (or Portfolio Analysis) and Maba.

The GE / McKinsey matrix

The GE / McKinsey matrix consists of nine cells. There are two axes. The y-axis shows the market attractiveness and on the x-axis is the competence or strength of the business unit. Both axes are divided into three categories (high, medium and low). To assess the matrix circles are placed within the cells. The size of the circle is related to the amount of sales. Within the circle can be placed the percentage of market share.

Market Attractiveness

It is possible to determine whether a market is attractive enough to join. This can be decided based on the following factors:

  • Size of the market
  • Growth trends
  • Sales and profit margins
  • Societal trends
  • Technological developments
  • Opportunities for competitive advantage

Business Unit Strength

To determine the competitiveness these factors can be distinguished:

  • Value of core competencies
  • Existing assets
  • Brand awareness
  • Quality and distribution
  • Financial resources

GE / McKinsey matrix strategies

By assessing a business unit with the GE / McKinsey three strategies can be formed:

  • Invest / Growth – Marketing expansion and through investment facilitate this growth
  • Protect / Hold – By investing consolidating the current market position
  • Harvesting / Selling – This strategy is about maximizing returns without additional investments

Comparison with BCG-Matrix / Portfolio Analysis

The GE / McKinsey is similar to the portfolio analysis or BCG-Matrix. In comparison:

  • The BCG-Matrix focusses on growth, whereas The GE / McKinsey matrix mainly views the attractiveness of the market
  • The GE / McKinsey matrix also maps the strength of the business unit, whereas the BCG-Matrix is about market only
  • The BCG-Matrix consists of four cells, the GE / McKinsey matrix has nine cells

Leave a Reply

Your email address will not be published. Required fields are marked *

You can use these HTML tags and attributes <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>