STRATEGIC MANAGEMENT ASSIGNEMENT

ON

NINE CELL MATRIX (GE-MCKINSEY MATRIX)

SUBMITTED BY:

KARAN SEJWAR – 19020841216

ARUN KRISHNAN – 19020841006

MAINALI GAUTAM – 19020841015

SOUMYA PRADHAN - 19020841034

 9 Cell Matrix (GE-Mckinsey Matrix)

9 cell matrix is a tool for multi business corporations to know which business units/products they
should definitely invest , which of them they should invest if there’s money left and the situation
could be improved for the business unit/product , and which business units/product to divest or
just keep them operating.

Industry attractiveness

It tells us how easy or hard would it be to business unit to compete and grow and earn profits in
the market it operates. Profitable industries are more attractive. As the investment needed require
long lasting commitment, we should see how an industry will be in the short run rather focusing
on the short run.
Factors most commonly included to determine industry attractiveness are (There is no defined
list of factors to include)-

 Long run growth rate

 Industry size

 Industry profitability: entry barriers, exit barriers, supplier power, buyer power, threat of
substitutes and available complements (by using 5 Porter’s analysis)

 Industry structure (by using Structure-Conduct-Performance framework)

 Product life cycle changes

 Changes in demand

 Trend of prices

 Macro environment factors(PESTEL used)

 Seasonality

 Availability of labor

 Market segmentation

Competitive strength

What we mean is if a business unit has sustainable competitive advantage or not. Next question
to ask is – For how long will it sustain?

The factors used to determine:

 Total market share

 Market share growth compared to rivals

 Brand strength (using brand value for this)

 Profitability of the company

 Customer loyalty
  VRIO resources or capabilities (using VRIO framework for this)

 Business unit strength in meeting industry’s critical success factors (using Competitive
profile matrix for this)

 Strength of a value chain (using Value chain analysis and Benchmarking for this)

 Level of product differentiation

 Production flexibility

Advantages of using 9 cell matrix

 Using scarce resources most effectively for best returns

 Managers get to know how their business units/products perform.

 More sophisticated than BCG

 Identifies the strategic steps the company needs to make to improve the performance of
its business portfolio.

An example of how it’s done

Step 1: Calculating industry attractiveness

Step 2: Calculating Competitive strength

Step 3: Plot business units on a matrix

Step 4: Analyse the information

Step 6:

Ask experts about in which directions would the industry attractiveness and competitiveness move in the
long run and show in the matrix.
Step 6: Decide where and how much to invest