GE Nine Cell Matrix

GE Nine Cell Matrix
The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio analysis as a step in the strategic planning process. The GE/McKinsey Matrix identifies the optimum business portfolio as one that fits perfectly to the company's strengths and helps to explore the most attractive industry sectors or markets.
The objective of the analysis is to position each SBU on the chart depending on the SBU's Strength and the Attractiveness of the Industry Sector or Market on which it is focused. Each axis is divided into Low, Medium and High, giving the nine-cell matrix as depicted below.

GE Nine Cell Matrix Industry Attractiveness Business Unit Strength Strong High Average Weak Medium Low .

Competitive Rivalry. Like:Market Size. Capital requirement. Global Opportunities. Demand variability. Entry and exit barriers. Macro environmental Factors (PEST) . Industry Profitability.GE Nine Cell Matrix Different factors can be used to define Industry Attractiveness. Market Growth Rate.

Distribution Channel Access. Knowledge of customer and market. Relative cost position . Brand equity. Like:Market Share. Financial Resources. Caliber of management. R&D Capability.GE Nine Cell Matrix Different factors can also be used to define SBU Strength. Production Capacity.

The rating values for each factor are entered for each SBU and Industry.GE Nine Cell Matrix The factors and their relative weightings are selected. .

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  Production capacity  Corporate image  Profit margins relative to competitors  R & D performance  Promotional effectiveness .

GE Nine Cell Matrix Industry attractiveness and business unit strength are calculated by first identifying criteria for each. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry Industry attractiveness = factor value1 x factor weighting1 + factor value2 x factor weighting2 +… . determining the value of each parameter in the criteria. and multiplying that value by a weighting factor.

with the information conveyed as follows: Market size is represented by the size of the circle. . Market share is shown by using the circle as a pie chart. The expected future position of the circle is portrayed by means of an arrow.GE Nine Cell Matrix Each business unit can be portrayed as a circle plotted on the matrix.

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GE nine-cell Planning Grid Zone Green Strategic Signal Invest/Expand Yellow Select/Earn Red Harvest/Divest .

the objective is to earn short term profit. Harvest/Divest: In the case of red-cell. GE Nine-cell Planning Grid • • . This zone is characterized by high business strength & high industry attractiveness which is a Ideal situation for growth. • Example: Initially IT industry was most attractive but later on it was facing competition from all sorts of places. in R&D and advertising. Harvesting means withdraw from a business but withdrawal is not immediate.• Invest/ Expand: In this Zone there is opportunity to Grow through further Investment & Expansion.. it presents opportunities for selective earning.e. Select/Earn : This zone presents a mixed situation in which growth possibility is low. organization has to stop. In this case Harvesting or Divesting strategies are suitable. How ever this situation does not remain for a long time. Initially focus is on cost-cutting i. However.

Strategies based on GE Nine Cell Matrix Industry Attractiveness Business Unit Strength Strong Average Weak High Grow Grow Hold Medium Grow Hold Harvest Low Hold Harvest Harvest .

Firms may go for product differentiation or Cost leadership. .GE Nine Cell Matrix Grow – Business units that fall under ‘grow’ phase. Market leaders exist in this phase. attract high investment. Huge cash is generated in this phase.

market penetration. Followers exist in this phase. imitation strategies are adopted in this phase.GE Nine Cell Matrix Hold – Business units that fall under ‘hold’ phase attract moderate investment. . Market segmentation.

GE Nine Cell Matrix Harvest . diversification. Strategies like divestment. . mergers are adopted in this phase. Low priority is given to these business units.Business units that fall under this phase are unattractive.

b) It helps in channeling the corporate resources to business and achieving competitive advantage and superior performance.GE Nine Cell Matrix Strength a) It allows intermediate ratings between high and low and between strong and week. c) It helps in better strategic decision making and better understanding of business scope. .

b)Assessment of business in terms of two factors is not fair.GE Nine Cell Matrix Weakness a)It tends to obscure business that are become to winners because their industries are entering at exit stage. .

EXAMPLE OF GE NINE CELL MATRIX .

• Vision – “The Leader in the Indian Automobile Industry.others. Creating Customer Delight and Shareholder’s Wealth. Flexible. Ritz. Swift.SX4. and first mover. Alto. Gypsy.  Innovation and creativity  Networking and Partnership  Openness and Learning . Omni. Swift Dezire.  fast. a Pride of India” • Core Values: Maruti claims to be driven by some Core Values in every endeavour Customer Obsession. Wagon R.About Maruti Udyog • Founded in 1981 • Products are Maruti 800. A-star.

800 .

GE Matrix For TATA Strong High IT Business Strengths Consumer Durables Weak Market Attractiveness Textiles Low .

THANK YOU !! .

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