What is Ge Nine box matrix?
GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises to prioritize their investments among the various business units. It is a framework that evaluates business portfolio and provides further strategic implications. Click to see full answer. People also ask, what is GE matrix with example?
What do the cells in the GE matrix represent?
The nine cells of the GE matrix represent various degrees of industry attractiveness (high, medium or low) and business strength (strong, average and weak). After plotting each product line or business unit on the nine cell matrix, strategic choices are made depending on their position in the matrix.
When was the GE matrix developed?
This matrix was developed in 1970s by the General Electric Company with the assistance of the consulting firm, McKinsey & Co, USA. This is also called GE multifactor portfolio matrix. The GE matrix has been developed to overcome the obvious limitations of BCG matrix.
What are the advantages of nine cells in the BCG matrix?
Nine cells provide better visual portrait of where business units stand in the matrix. It also separates the invest/grow cells from harvest/divest cells that are much closer to each other in the BCG matrix and may confuse others of what investment decisions to make.
What is the GE McKinsey nine cell matrix?
The GE-McKinsey Matrix (a.k.a. GE Matrix, General Electric Matrix, Nine-box matrix) is a portfolio analysis tool used in corporate strategy to analyze strategic business units or product lines. This matrix combines two dimensions: industry attractiveness and the competitive strength of a business unit into a matrix.
What is GE nine cell matrix with example?
The GE matrix was developed by Mckinsey and Company consultancy group in the 1970s. The nine cell grid measures business unit strength against industry attractiveness and this is the key difference. Whereas BCG is limited to products, business units can be products, whole product lines, a service or even a brand.
How many cells are in a GE 9 cell matrix?
Instead of the four cells that are created in the BCG Matrix, the GE McKinsey Matrix creates nine cells.
What is the basis of GE 9 cell model?
Industry attractiveness & Business Strength.
What is the difference between BCG and GE matrix?
BCG matrix is used by the companies to deploy their resources among various business units. On the contrary, firms use GE matrix to prioritize investment among various business units. In BCG matrix only a single measure is used, whereas in GE matrix multiple measures are used.
What is another name for GE 9 cell model?
Another name for GE 9 cell model is Stop light matrix.
What are the limitations of GE nine cell matrix?
What are the disadvantages of the GE Matrix? Some disadvantages and limitations include: The decisions around attractiveness and strength can be subjective. It requires a lot of market data in order to map out the results, which for a company with a diverse portfolio can be an extensive task.
What is GE model?
The G. E. Business Model as known as the McKinsey Matrix is defined as, "The GE-McKinsey nine-box matrix is a strategy tool that offers a systematic approach for the multi-business corporation to prioritize its investments among its business units".
What are the components of GE matrix?
GE McKinsey Matrix factorsMarket size.Historical and expected market growth rate.Price development.Threats and opportunities (component of SWOT Analysis)Technological developments.Degree of competitive advantage.
What does the GE matrix show?
The GE matrix helps a strategic business unit evaluate its overall strength. Each product, brand, service, or potential product is mapped in this industry attractiveness/business strength space. The GE multi factorial was first developed by McKinsey for General Electric in the 1970s.
What does Green Zone symbolize in GE nine cell matrix?
So it is also called 'Stoplight Strategy Matrix', similar to the traffic signal. The green zone suggests you to 'go ahead', to grow and build, pushing you through expansion strategies.
Why The GE McKinsey Matrix Works
Let’s consider a GE 9 Cell Matrix example to understand the concept. Think of how large conglomerates, such as PepsiCo, or indeed GE, are structured. Large global corporations have within them dozens or even hundreds of different products and product categories. Each of these portfolios is called a strategic business unit (SBU).
The GE Matrix In Strategic Management
The analysis for the GE 9 Cell Model begins with establishing the organizational goals and objectives. Each SBU’s role within the organization and competitive strengths and weaknesses are then assessed. On this basis, businesses are separated into three categories:
How Organizations Can Benefit From The GE 9 Cell Matrix Example
The Nine Cell Matrix can be used in many ways. Let’s break down the benefits:
How Organizations Can Use The GE 9 Cell Matrix To Analyze The Market
Competition can be used as a predictor of future success. By charting the industry attractiveness against the business unit strength, it’s possible to determine which business units will perform the best. This is what an analysis using the GE Nine Cell Model can reveal:
What Is the McKinsey 9 Box Talent Matrix?
The McKinsey 9 Box Talent Matrix can also be used to analyze the workforce in an organization. It helps plot potential against performance and it’s an effective tool to separate the underperformers from the future leaders.
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What does it mean when a product is placed on a matrix?
When a product is placed on the matrix, its position relative to the diagonal line determines the strategy that should be used. In other words, products that fall above the diagonal line are high performers with high growth or cash flow potential. Conversely, products that fall below the line have little potential for growth and are costing ...
What is the McKinsey Horizon Model?
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.
What is a GE matrix?
GE Matrix, General Electric Matrix, Nine-box matrix) is just like the BCG Matrix a portfolio analysis tool used in corporate strategy to analyse strategic business units or product lines based on two variables: industry attractiveness and the competitive strength of a business unit. By combining these two variables into a matrix, a corporation can plot their business units accordingly and determine where to invest, where to hold their position, and where to harvest or divest. However, different from the BCG Matrix, the GE-McKinsey Matrix uses multiple factors that are combined to determine the measure of the two variables industry attractiveness and competitive strength. This is an important distinction, since the BCG Matrix has been criticized a lot on its use of only one single (and perhaps outdated) variable for each axis.
How many different scenarios are there in the matrix?
Based on the 3 degrees (High, Medium and Low) of both Industry Attractiveness and Competitive Strength, the matrix can be crafted consisting of 9 different boxes with 9 different scenarios and corresponding strategic actions. The strategic actions to choose from are: Invest/Grow strategy, Selectivity/Earnings strategy (sometimes referred to as Hold strategy), and the Harvest/Divest strategy.
Is McKinsey a good matrix?
The GE McKinsey Matrix is a good alternative for the BCG Matrix and has the advantage that the two variables used consist of multiple factors combined. It may be quite a task however to quantify factors such as brand equity and industry structure,F and combine them all into a single number that can be plotted on the nine-box matrix. For corporate strategist in portfolio management, the model functions as a great starting point to base investment decisions on.
Definition
GE-McKinsey nine-box matrix is a strategy tool that offers a systematic approach for the multi business corporation to prioritize its investments among its business units. [1]
Understanding the tool
In the business world, much like anywhere else, the problem of resource scarcity is affecting the decisions the companies make. With limited resources, but many opportunities of using them, the businesses need to choose how to use their cash best.
Using the tool
There are no established processes or models that managers could use when performing the analysis. Therefore, we designed the following steps to facilitate the process:
Sources
McKinsey & Company (2008). Enduring Ideas: The GE–McKinsey nine-box matrix.
GE Nine-Box Matrix
What Does The Horizontal Axis represent?
- It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below: 1. Relative Market Share 2. Profit margins 3. Ability to compete on price and quality 4. Knowledge of customer and market 5. Competitive strength and weakness 6. Technological capability 7. Caliber of management The t…
Advantages
- Helps to prioritize the limited resources in order to achieve the best returns.
- The performance of products or business units becomes evident.
- It’s more sophisticated business portfolio framework than the BCG matrix.
- Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio.
Disadvantages
- Needs a consultant or an expert to determine industry’s attractiveness and business unit strength as accurately as possible.It is expensive to conduct.
- It doesn’t take into account the harmony that could exist between two or more business units.