GE Matrix process
The General Electric (GE) Market Attractiveness-Business Position Matrix is one of the best-known directional policy matrices, “which categorises business units into those with good prospects and those with less good prospects” (Johnson, Whittington & Scholes, 2011, p.252). The following two factors is the principal cause for the development of the GE Matrix. In the 20th century, since the blossoming of multi-activity enterprises, corporations have faced the challenge of managing its portfolio of business units effectively (McKinsey & Co, 2008). In addition, the prosperity as well as the over simplicity of the BCG Matrix incited the development of a more comprehensive model (Jobber, 2007). This essay will attempt to describe how to use this tool in marketing strategy planning and discuss its restrictions and necessities.
With the purpose of assisting the US General Electric Company in classifying strategic business units (SBU), McKinsey & Co. developed the GE Matrix, which assesses business units in terms of two criteria: the attractiveness of the industry concerned and the competitive strength of the SBU within that industry (Johnson, Whittington & Scholes, 2011). A SBU is an independent department or organizational unit, small enough to be adjustable and comprehensive enough to run control over most of the parts affecting its long-term achievement. Since strategic business units are more flexible and usually have independent tasks and objectives, they allow the owning empire to respond quickly to changing economic or market status. The two criteria can be divided by high, medium and low and put into two axes. The horizontal axis of the matrix is industry attractiveness concerning to a firm of entering or remaining in a particular industry. And the vertical axis is the strength of the business unit referring to how strong the firm or SBU is in terms of the market (Thompson & Martin, 2010). When launching a portfolio analysis of the business unit, the GE Matrix
With the purpose of assisting the US General Electric Company in classifying strategic business units (SBU), McKinsey & Co. developed the GE Matrix, which assesses business units in terms of two criteria: the attractiveness of the industry concerned and the competitive strength of the SBU within that industry (Johnson, Whittington & Scholes, 2011). A SBU is an independent department or organizational unit, small enough to be adjustable and comprehensive enough to run control over most of the parts affecting its long-term achievement. Since strategic business units are more flexible and usually have independent tasks and objectives, they allow the owning empire to respond quickly to changing economic or market status. The two criteria can be divided by high, medium and low and put into two axes. The horizontal axis of the matrix is industry attractiveness concerning to a firm of entering or remaining in a particular industry. And the vertical axis is the strength of the business unit referring to how strong the firm or SBU is in terms of the market (Thompson & Martin, 2010). When launching a portfolio analysis of the business unit, the GE Matrix
References: Evans, V. (2013) Key Strategy Tools: The 80+ Tools for Every Manager to Build a Winning Strategy. 1st edn. Harlow: Pearson Education Jobber, D. (2007) Principles and Practice of Marketing. 5th edn. Glasgow: McGraw-Hill Education Johnson, G., Whittington, R., and Scholes, K. (2011) Exploring Strategy Text & Cases. 9th edn. Harlow: Pearson Education. McKinsey&Company, Insights & Publications (2008) Enduring Ideas: The GE–McKinsey nine-box matrix. Retrieved 8 September, 2013 from http://www.mckinsey.com/insights/strategy/enduring_ideas_the_ge_and_mckinsey_nine-box_matrix Thompson, J. and Martin, R. (2010) Strategic Management: Awareness and Change. 6th edn. Andover: CENGAGE Learning Business Press