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` In consulting engagements with General

Electric in the 1970's, McKinsey & Company
developed a   
 
  as a
tool for screening GE's large portfolio of
strategic business units (SBU). This business
screen became known as the | 


 
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` The GE matrix has nine cells vs. four cells

in the BCG matrix.
` The GE / McKinsey matrix is similar to the
BCG growth-share matrix in that it maps
strategic business units on a grid of the
industry and the SBU's position in the
industry.
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` The GE matrix however, attempts to improve upon

the BCG matrix in the following two ways:
` The GE matrix generalizes the axes as "Industry
Attractiveness" and "Business Strength/ competitive
position.´
` whereas the BCG matrix uses the market growth
rate as a proxy for industry attractiveness and
relative market share as a proxy for the strength of
the business unit/ competitive position.
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r

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 r
  



   

` The vertical axis of the GE / McKinsey matrix is

industry attractiveness, which is determined by
factors such as the following:
* Market growth rate
* Market size
* Demand variability
* Industry profitability
* Industry rivalry
* Global opportunities
* Macro environmental factors (PEST)
 

  !

 



` The horizontal axis of the GE / McKinsey matrix is the strength

of the business unit. Some factors that can be used to
determine business unit strength include:
` Market share
` Growth in market share
` Distribution channel access
` Profit margins relative to competitors
` R & D.
` Quality of products and services.
` Branding and promotions success.
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` The nine cell of the GE matrix are grouped

on the basis of low, medium, high industry
attractiveness, and weak, average, strong
business unit strength.
` Three zones of the three cells each are
made, denoting different combination
represented by green, yellow, and red colors.
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` Based on the green zone, the signal is µgo

ahead¶ to grow n build, indicating expansion
strategies.
` Business in the green zone attract major
investment.
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` ´or the yellow zone, the signal is µwait and

see¶ indicating hold and maintain type of
strategies aimed at stability strategy.
` ´or red zone , the signals is µstop¶, indicating
the retrenchment strategies of divestment
and liquidation or for adopting turnaround
strategies.
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` At this stage the marketing manager adapts the list

above to the needs of his strategy. The GE matrix
has 5 steps:
` One - Identify your products, brands, experiences,
solutions, or SBU's.
` Two - Answer the question, å

 





` Three - Decide on the factors that position the
business on the GE matrix.
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` ´our - Determine the best ways to 
 

attractiveness and business position.
` ´ive - ´inally
 each SBU as either low,
medium or high for business strength, and
low, medium and high in relation to market
attractiveness.
  "

` 'es the GE matrix is superior to the Boston

Matrix since it uses several dimensions, as
opposed to BCG's two.
` Compared to the BCG matrix ,it offers an
intermediate classification of medium and
average ratings.


` rowever, problems or limitations include:

` There is no research to prove that there is a
relationship between market attractiveness
and business position.
` The interrelationships between SBU's,
products, brands, experiences or solutions is
not taken into account.


` This approach does require extensive data

gathering.
` Scoring is personal and subjective.
` The GE matrix offers a broad strategy and
does not indicate how best to implement it.