he GE 9-box Matrix plots each product, service, or business unit into nine cells that

indicate whether the company should invest, diversify, or do more research.

The GE Matrix has two axes: industry attractiveness (vertical axis) and the competitive
strength of the unit (horizontal axis). Each business unit is evaluated on these two
parameters.

Industry attractiveness shows the attractiveness of the economic sector in which the
product, service, or business unit is located. Competitive strength shows the strength
of the organization in that sector.

Industry Attractiveness
Industry attractiveness indicates how hard or easy it is for a business to compete in
the market and earn profits. More profit means more attractiveness.

Industry attractiveness is assessed by checking:

• Growth Rate: The business’s current growth rate and how it is

expected to perform in the long run.
• Competition: More competitors mean more challenges.
• Entry Barriers: Higher entry barriers are better if the business is
established. It will take time for new entrants to become established.
 • Profitability: How profitable the product is and if the market has
substitutes.
• Industry Structure: Evaluated using the structure-conduct-
performance (SCP) model.
• Product Life Cycle Changes: How often products are updated or new
products are launched. Newer, more successful products push older
products out of the market.
• Changes in Demand: For example, if animal meat is replaced with AI-
based meat.
• The Trend of Prices: If prices are volatile and dependent on external
factors.
• Seasonality: Checks if there is a demand only in a specific season.
• Availability of Manpower: Checks the workforce availability in the
future.
• Market Segmentation: How the market is segmented. For example,
most sunglasses are owned by Luxottica and are sold under different
names – Ray-Ban, Oakley, Vogue, Armani.
• Macro Environment Factors: Evaluated using a Political, Economic,
Social, and Technological (PEST) analysis.

Competitive Strength
Competitive strength indicates how strong a particular product, service, or business
unit is against its rivals. How long can the product maintain its competitive
advantage?

Competitive strength is assessed by checking:

• Market Share: What is the product’s market share compared to its

rivals?
• Average Profitability: How profitable is the segment?
• Size of Product Mix: If Samsung’s Galaxy model is more successful,
the company can focus on releasing a series in this product line. This is
one product line. Likewise, it can have other product lines. Looking
visually at product mixes can help determine the competitive strength.
• Brand’s Strength: How do consumers see the brand, and how is the
customer loyalty?
• Product Flexibility: How easily the product can adapt to changes in
the market conditions.
Let’s take the example of Google. Google’s search engine is the primary Google
product, having a 70% market share, and is in the GREEN zone (Invest/Grow).
Google’s Chromecast is an innovative product sold at an affordable price. It is in the
YELLOW zone (Selective Investment), and Google’s books are in a highly competitive
market competing against Amazon and are in the RED zone (Harvest/Divest)

Invest/Grow
Businesses should invest in these segments if a product, service, or business unit falls
into this category, as they will give the highest returns. Since these products will
operate in a growing market, they will require cash to sustain the market share.

Businesses should ensure there are no constraints for these products to grow.
Investments should be provided for doing R&D, advertising, acquiring new products
or services, and increasing the production capacity to meet the market demands.

Selectivity/Earnings
Companies should invest in these segments if they have money left over within their
business unit and believe they will generate cash in the future. These products have
uncertainty and thus are given the least preference.

If there are no dominant players in the industry, the market is enormous; the
business should invest if the product falls in this segment.
Harvest/Divest
If a product is in an unattractive industry, has no competitive advantage, and
performs poorly, it falls into this category. Businesses that fall into this category
should be harvested or divested.

If the products under this segment generate cash, they should be treated like “Cash
Cows” in the BCG Matrix. The excess cash should be invested into other segments
(harvest). It is worth investing in this segment if the cash generated is always greater
than the investments.

If the product is losing, the business should sell the loss-making unit and invest
elsewhere (divest).

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