GE matrix / McKinsey matrix
Introduction
The GE matrix / McKinsey matrix is a model to perform a business portfolio analysis on the Strategic Business Units of a corporation. It has many key uses like
  • Developed by McKinsey & Company in 1970’s.
  • GE is a model to perform business portfolio analysis on the SBU’s.
  • GE is rated in terms of ‘Market Attractiveness & Business Strength’
  • It is an Enlarged & Sophisticated version of BCG.
  • Analyze its current business portfolio and decide which SBU's should receive more or less investment, and
  • Develop growth strategies for adding new products and businesses to the portfolio
  • Decide which businesses or products should no longer be retained. Limitations
  • Subjective measurements across SBUs
  • Process also highly subjective
  • From the selection and weighting of factors to the subsequent development of both a firm’s position and the market attractiveness
  • Businesses may have been evaluated with respect to different criteria
  • Sensitive to how a product market is defined
  • Market Attractiveness
  • Annual market growth rate
  • Overall market size
  • Historical profit margin
  • Current size of market
  • Market structure
  • Market rivalry
  • Demand variability
  • Global opportunities

  • Business Strength
  • Current market share
  • Brand image
  • Brand equity
  • Production capacity
  • Corporate image
  • Profit margins relative to competitors
  • R & D performance
  • Managerial personal
  • Promotional effectiveness
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