9 cells of ge matrix
- 1. Presented to: prof. P.k Agarwal Presented by: Mohit Arora
- 2. The GE/ MacKinsey matrix was developed in the 70’s as a portfolio analysis matrix for business units. It was developed by MacKinsey & Company, as part of a consulting assignment for General Electric. Most of the time the addition of “MAC KINSEY “ is omitted and the model only refers to General Electric. 5. Stating the marketing strategy 6. Developing the operational marketing plan 4. Strategic Analysis – SWOT-Analysis – Portfolio Analysis – Key issues – Progress unchanged – Definitive structural problem 1. Starting points • Vision, mission • Goals • Current strategies • Business definition 3. Internal Analysis 2. External Analysis Micro Macro GE Analysis / MABA: • Portfolio analysis model • More dimensional (multifactor) For the use of : • SBU’s (Strategical Business Units) • PMC’s (Product Market Combinations) • To see your relative position in a certain market
- 4. Examples of factors for MA ( Market Attractiveness) axis: • Size of the market • Expected (or previous) growth of the market • Matter of competition • Opportunities or threats (part of SWOT analysis) • Entry barriers 1) Decide which factors you need to make your analysis: Examples of factors for BA ( Business Attractiveness) axis: • Relative market share • Growth of share • Brand awareness • Vision, mission, effective strategy • Strengths/ Weakness • Current assets/ financial sources
- 5. S.No. Market 1 Market 2 Market 3 Market 4 Market 5 Factor Weight Scores 1 Market size 0.2 25 75 25 25 50 2 Market growth 0.1 25 100 25 50 25 3 Competition 0.4 50 75 25 75 75 4 Price sensitivity 0.2 50 75 50 100 100 5 Entry barriers 0.1 50 75 25 25 50 1 42.5 77.5 30 62.5 67.5 MARKET ATTRACTIVENESS 0.2*25=5 0.1*25=2.5 0.4*50=20 0.2*50=10 0.1*50=5
- 6. S.No. Market 1 Market 2 Market 3 Market 4 Market 5 Factor Weight Scores 1 Market share 0.1 25 100 25 50 75 2 Relative growth 0.4 50 100 25 50 75 3 Brand value 0.2 50 100 25 50 75 4 Profitability 0.2 100 100 25 50 75 5 Entry barriers 0.1 100 100 25 50 75 1 62.5 100 25 50 75 BUSINESS ATTRACTIVENESS 10 0 10 0 66 66 33 33 0 0 MARKET ATTRACTIVENESS BUSINESS ATTRACTIVENESS 77.5; 100 67.5; 75 42.5; 62.5 62.5; 50 30; 25 STRONG AVERAGE WEAK STRONG AVERAGE WEAK BIG MARKET SMALL MARKET BU 1 BU 2 BU 3 BU 4 BU 5
- 7. Advantages of GE Matrix: • Helps to prioritize the limited resources in order to achieve the best returns. • Managers become more aware of how their products or business unit perform. • Identifies the strategic steps the company needs to make to improve the performance of its business portfolio. • It is more refined than the BCG Matrix as it replaces a single factor, “market growth,” with many factors under “market attractiveness. Similarly, competitive strength of a business unit in the GE Matrix includes many more factors than just market share. Disadvantages: • But like the BCG Matrix, the GE Matrix also fails to consider interdependencies between business units under one corporation and their core competencies. • The GE Matrix is complicated exercise that probably demands the expertise of a consultant, which incurred an additional cost. • It does not help in allocation the relative investments for each products.
- 8. • Many businesses have multiple SBUs. • It can be difficult to decide where to invest limited fund. • The GE McKinsey Matrix provides a structured means to help. • It works by plotting market attractiveness and business strength or attractiveness. • This is done not only for the current situation, but also for where each SBU is expected to be in future.