Mc Kinsey Matrix
10/13/2010
GE _ McKinsey Matrix
QuickMBA / Strategy / GE-McKinsey Matrix
GE / McKinsey Matrix
In consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below:
GE / McKinsey Matrix Business Unit Strength High High Medium Low
Medium
Low
The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways: The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit. The GE matrix has nine cells vs. four cells in the BCG matrix. Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry. quickmba.com/strategy/…/ge-mckinsey/ 1/4
10/13/2010
GE _ McKinsey Matrix
Industry Attractiveness The vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following: Market growth rate Market size Demand variability Industry profitability Industry rivalry Global opportunities Macroenvironmental factors (PEST) Each factor is assigned a weighting that is appropriate for the industry. The industry attractiveness then is calculated as follows: Industry attractiveness = factor value1 x factor weighting1 + factor value2 x factor
GE _ McKinsey Matrix
QuickMBA / Strategy / GE-McKinsey Matrix
GE / McKinsey Matrix
In consulting engagements with General Electric in the 1970's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). This business screen became known as the GE/McKinsey Matrix and is shown below:
GE / McKinsey Matrix Business Unit Strength High High Medium Low
Medium
Low
The GE / McKinsey matrix is similar to the BCG growth-share matrix in that it maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways: The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit. The GE matrix has nine cells vs. four cells in the BCG matrix. Industry attractiveness and business unit strength are calculated by first identifying criteria for each, determining the value of each parameter in the criteria, and multiplying that value by a weighting factor. The result is a quantitative measure of industry attractiveness and the business unit's relative performance in that industry. quickmba.com/strategy/…/ge-mckinsey/ 1/4
10/13/2010
GE _ McKinsey Matrix
Industry Attractiveness The vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following: Market growth rate Market size Demand variability Industry profitability Industry rivalry Global opportunities Macroenvironmental factors (PEST) Each factor is assigned a weighting that is appropriate for the industry. The industry attractiveness then is calculated as follows: Industry attractiveness = factor value1 x factor weighting1 + factor value2 x factor