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Electric Model/
McKinsey
Matrix.
GE APPROACH
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.
Market Attractiveness
Business Strength
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.
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
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.
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
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.
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
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
LIMITATIONS OF GE MATRIX
Core competencies are not represented
Interactions between Strategic Business Units
are not considered.
CASE STUDY
High
Market Attractiveness
High
Low
IT
Consumer
Durables
Textiles
Low