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 ninecell 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 Attractiveness Business Unit Strength

Strong
High
Grow

Average
Grow

Weak
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 allows intermediate 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

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