In this interactive presentation--one in a series of multimedia frameworks--McKinsey alumnus Kevin Coyne describes the GE–McKinsey nine-box matrix. The GE-McKinsey matrix is an important tool for managing a product portfolio. Strategic Management Insight shows you its value in making. Product Strategy Matrixes: McKinsey/General Electric Matrix. To view this video please enable JavaScript, and consider upgrading to a web browser that.


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Within the matrix, an arrow is added to each circle, showing its future direction.

Prioritize Investments The final step in general electric matrix matrix analysis is to decide the wheres and hows of the investment decisions for the company in practice. Some questions that may need to be answered in addition to the matrix analysis include: Are some units really worth the investment?

How much should be invested in each unit?

GE McKinsey Matrix

general electric matrix Which area within a unit should get more investment than others? In the s, General Electric Company was an umbrella corporation managing a wide array of complex and unrelated products. There was a dissatisfaction from the returns on investment from many of the products.


The method for investment decisions was based on various projections such as future cash flows, market growth etc. There projections remained unreliable and inaccurate.

GE McKinsey Matrix: How To Apply it To Your Business

Apple A assessment of Apple according to this matrix reveals an interesting picture. Also it is affected by the respective market share of an organization. The arrow is outwards thus showing that the SBU is expected to grow and gain general electric matrix and then its tip indicates the future position of the SBU.

These investments should be split into categories such as research and development, acquisition of other SBU's, extensive advertisements and expanding production capacity.

Second, the business units that only make losses should be divested. general electric matrix

Enduring Ideas: The GE–McKinsey nine-box matrix

general electric matrix Further analysis may reveal that investments into some of the business units can considerably improve their competitive positions or that the industry may experience major growth in the future.

High profit, industry growth, and low competition. Now, we need to decide the weight of each factor—that is, how important each factor is—by giving it points from 1 not important to 10 very important. The total of all the weights should be Let us assume that general electric matrix profit is the most important of the factors; if so, give it a weight of, general electric matrix, 5 out of Give industry growth 3 out of 10, and low competition 2 out of 10 these are just random weights, given only for example.

GE McKinsey Matrix, a great product portfolio analysis tool | ToolsHero

So, this means that the possibility of making a high profit is general electric matrix most important consideration in entering the market, followed by market growth and low competition.

Now, rate each factor for each business unit on a scale of 1 not attractive to 10 very attractive. Let us say that for Unit A, low competition is the most general electric matrix factor.

Both axes are divided into three categories high, medium, low thus creating nine cells. The business unit is placed within the matrix using circles. The size of the circle represents the volume of the general electric matrix.