Six steps are necessary to implement the GE/McKinsey analysis: 1.

Determine which factors are relevant for the corporation in the industry where it operates 2. Assign a weight to each factor 3. Score each factor 4. Multiply the relative scores and weights 5. Sum all up and interpret the graph 6. Perform a review / sensitivity analysis

Limitations of BCG
The BCG model assumes that high market share and market growth are the only success factors. Based on numerous real life examples, we can conclude that high BCG does not take into account: a. Technological competence b. Ability to maintain low manufacturing costs c. Financial strength of competition d. Distribution capabilities e. Human resources The BCG model focuses on major competitors when analyzing the relative market share of a company. However, it neglects some small competitors with fast growing market shares. It is a rather short-term model that doesnt fully show how characteristics of business units change over the long term. The BCG model is more focused on business units than individual products Assumes that high rates of profit are directly related to high market share The BCG model looks at a business unit in isolation without taking into consideration the possible cooperation among various business units within the organization BCG is a primarily qualitative model The Y axis represents the annual market growth which fails to see the full picture that goes beyond a one year span It does not take into consideration other important factors such as: market barriers/restrictions, market density, profitability, politics With this or any other such analytical tool, ranking business units has a subjective element involving guesswork about the future, particularly with respect to growth rates.

Advantages of Mckinsey
Nine cells vs 4 in BCG Matrix is a far more sophisticated and powerful tool than the BCG Matrix because it takes into consideration more factors to measure the market attractiveness (external factors) and the strength of each SBU (internal factors).