GE Matrix

Prepared For:

Md. Nazrul Islam Prepared By:

Assistant Professor
Department Of Business Ayesha Akter Asa
Administration (BBA) ID:183020101033
Prime University Batch :49th
Department Of Business
Administration (BBA)
Prime University
 Introductions
“The GE-Matrix is a strategy tool that offers a systematic
approach for the multi business corporation to prioritize its
investments among its business units.”

The GE-Matrix is a nine-box matrix which is used as a strategy

tool. It helps multi-business corporations evaluate business
portfolios and prioritize investments among different business
units in a systematic manner.
How It Came To Being?
In 1970’s , GE was unsatisfied with the returns on investments.
 It consulted with McKinsey & company and this resulted into
a formation of a nine-box matrix.
That helped analyze portfolio of the strategic business unit
(SBU) of the corporation.
Computation of this matrix allows business to take decision on
whether to invest or to divest or carry a further research on the
product .
 Components of GE-MATRIX
For the calculation process the company
needs to evaluate following :
♣ Industry attractiveness.
♣ Strength of a business unit.
 Industry Attractiveness
Industry attractiveness indicates how hard or easy it will be for a company to compete in the
market and earn profits.
• More profitable = More attractive .
• Factors used to determine Industry Attractiveness.

Factors used to determine Industry Attractiveness.

 Long run growth rate
 Industry size
 Industry profitability
 Industry structure
 Product life cycle changes
 Changes in demand
 Trend of prices
 Macro environment factors
 Seasonality
 Availability of labor
 Market segmentation
Strength of a business unit or a product
 The matrix measures how strong, in terms of competition, a
particular business unit is against its rivals.
 If the company has a sustainable competitive advantage, the
next question is: “For how long it will be sustained?”

Factors used to determine Strength of a business unit .

 Total market share.  Customer loyalty.

 Market share growth compared to rivals.  Strength of a value chain.

 Brand strength.  Level of product differentiation.

 Profitability of the company.  Production flexibility.

 Construction of GE-MATRIX
 The G.E matrix is constructed in a 3x3 grid with Market
Attractiveness plotted on the Y-axis and Business Strength on the
X-axis, both being measured on a high, medium, or low score. Five
steps must be considered in order to formulate the matrix.
 The range of products produced by the SBU must be listed.
 Factors which make the particular market attractive must be
identified.
 Evaluating where the SBU stands in this market.
 Determining which category an SBU lies in; high, medium, or low.
GE-MATRIX
 Plotting The Information
Step-1
Select criteria to rate the industry for each product line or business unit. Assess
over all industry attractiveness for each product line or business unit on a scale
form
1- unattractiveness
2- very attractiveness
Step -2
Select the key factors needed for success in each product line or business unit.
Assess the business strength and competitive position for each product line or
business unit a scale
1- very week
2- very strong
Plotting The Information (Contd.)
Step-3
Step-3
Plot each product line business unit position on a matrix like that
Plot each product line business unit position on a matrix like that
depicted in figure
depicted in figure
Step-4
Step-4
Decide the firm current portfolio or assuming that present corporate
Decide the firm current portfolio or assuming that present corporate
and business strategy remain unchanged
and business strategy remain unchanged
when find the performance gap to change the mission or vision and
when find the performance gap to change the mission or vision and
objective of the company
objective of the company
 Advantages
Helps
Helpstotoprioritize
prioritizethe
thelimited
limitedresources
resourcesininorder
order
to achieve the best returns.
to achieve the best returns.
Managers
Managersbecome
becomemoremoreaware
awareofofhow
howtheir
their
productsor
products orbusiness
businessunits
unitsperform.
perform.
Identifies
Identifiesthe
thestrategic
strategicsteps
stepsthe
thecompany
companyneeds
needstoto
maketotoimprove
make improvethetheperformance
performanceofofits itsbusiness
business
portfolio.
portfolio.
 Disadvantages
Requires
Requiresaaconsultant
consultantororaahighly
highlyexperienced
experienced
persontotodetermine
person determineindustry’s
industry’sattractiveness
attractivenessand
and
business unit strength as accurately as possible.
business unit strength as accurately as possible.
ItItisiscostly
costlytotoconduct.
conduct.
ItItdoesn’t
doesn’ttake
takeinto
intoaccount
accountthe
thesynergies
synergiesthat
that
couldexist
could existbetween
betweentwotwoorormore
morebusiness
businessunits.
units.