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    Nine Cell Matrix

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    Akash gaur
    The GE matrix is a tool used by General Electric to evaluate its business units and make investment decisions. It plots each business unit across two axes: industry attractiveness and the competitive strength of the business unit. Industry attractiveness considers factors like market growth and profitability, while competitive strength looks at customer loyalty, differentiation, and margins. Together these place each unit into one of nine cells that indicate whether the strategy should be to invest, hold, or harvest/divest from that business. The matrix provides a framework to systematically analyze a multi-business company's portfolio.

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    Nine Cell Matrix

    Uploaded by

    Akash gaur
    610 views3 pages
    The GE matrix is a tool used by General Electric to evaluate its business units and make investment decisions. It plots each business unit across two axes: industry attractiveness and the competitive strength of the business unit. Industry attractiveness considers factors like market growth and profitability, while competitive strength looks at customer loyalty, differentiation, and margins. Together these place each unit into one of nine cells that indicate whether the strategy should be to invest, hold, or harvest/divest from that business. The matrix provides a framework to systematically analyze a multi-business company's portfolio.

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    The GE matrix is a tool used by General Electric to evaluate its business units and make investment decisions. It plots each business unit across two axes: industry attractiveness and the competitive strength of the business unit. Industry attractiveness considers factors like market growth and profitability, while competitive strength looks at customer loyalty, differentiation, and margins. Together these place each unit into one of nine cells that indicate whether the strategy should be to invest, hold, or harvest/divest from that business. The matrix provides a framework to systematically analyze a multi-business company's portfolio.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    610 views3 pages

    Nine Cell Matrix

    Uploaded by

    Akash gaur
    The GE matrix is a tool used by General Electric to evaluate its business units and make investment decisions. It plots each business unit across two axes: industry attractiveness and the competitive strength of the business unit. Industry attractiveness considers factors like market growth and profitability, while competitive strength looks at customer loyalty, differentiation, and margins. Together these place each unit into one of nine cells that indicate whether the strategy should be to invest, hold, or harvest/divest from that business. The matrix provides a framework to systematically analyze a multi-business company's portfolio.

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    GE Matrix:

    The nine Cell Matrix or the GE matrix is a tool that facilitates multi business corporations to
    make a investment decisions among its business units.it si a framework that that evaluate
    business portfolio and provide strategic implications for each business unit.
    In the year 1970, General electrics(GE) approached Mckinsey & company to develop a
    portfolio analysis matrix for screening its business units. And this screening matrix became
    GE/Mckinsey matrix and is shown below:

    This matrix comprises two axis. The Industry attractiveness is mentioned on the Y axis and
    competencies of business unit is plotted on the X-axis. Both axis is divided into 3 categories
    (High, medium, low) thus creating nine cells.
    In the business world the scarcity of sources are affecting the decision making a lot. With
    limited resources, but many opportunities of using them, the businesses need to choose how
    to use their them in a best possible manner. e.g, Multi business companies manage complex
    business portfolios, often, with as much as 50, 60 or 100 products and services. The
    products or business units differ in what they do, how well they perform or in their future
    prospects. This makes it very hard to make a decision in which products the company
    should invest. Hence, this tool solves the problem by comparing the business units and
    assigning them to the groups that are worth investing in or the groups that should be
    harvested or divested.
    Industry Attractiveness: The vertical axis of GE/Mckinsey matrix is industry attractiveness
    . It indicates how hard or easy it will be for a company to compete in the market and earn
    profits. The more profitable the industry is the more attractive it becomes. There is no
    definite list of factors that should be included in industry attractiveness but the following ar
    the most common:

     Industry size
     Historical and expected market growth rate.
     Industry profitability.
     Global opportunities
     All macroeconomic factors(PEST)
     Threats and opportunities (components of SWOT analysis)
     Technological development
     Availability of subsitutes
     Degree of competitive advantage
     Market competion
    Etc.

    Competitive strength of a business unit or a product:


    On the X-axis the matrix measures how strong, in terms of competition, a particular
    business unit is against its competitors. And If the company has a sustainable
    competitive advantage, the next question is: “For how long it will be sustained?”
    The following factors determine the competitive strength of a business unit:

     Customer loyalty
     Brand equity
     Product differentiation
     Level of profit margin as compare to competitors
     Strength of value chain
     Growth in market share
    There are three different strategies that can be adopted using GE matrix:
    1. Invest and grow: this is facilitated by making investment in the market or by
    expanding it.
    2. Hold: By making careful investments, the current market is consolidated.
    3. Harvest or sell : Here companies make no extra investments but mainly focusing
    on maximizing returns. By assigning a weight to each factor, the GE McKinsey
    Matrix can be used more effectively. Based on these weights, the scores for
    competitiveness and market attractiveness can be calculated more accurately for
    each business unit.

    Following is the visual representative example of GE matrix and how it is helping to


    understand different products strength and attractiveness for decision making
    purpose.

    BUSINESS UNIT STRENGTH INDUSTRY ATTRACTIVENESS MARKET SIZE


    21 10 10
    46 24 45
    87 27 75
    34 26 42
    46 37 62
    95 94 41
    69 54 75
    74 48 35
    53 42 46
    29 65 55
    26 75 97

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