GE Nine Cell Matrix

GE Nine Cell Matrix Presented by:MADHURIBHAWANA PATIALPRABHJEET KAURPOOJA BHANDARIGURJEET SINGH

The GE Multi Factoral was first developed by Mckinsey for General Electric in the 1970s.

G.E. multi factoral analysis is a technique used in brand marketing and product management to help a company decide what product(s) to add to its product portfolio and which opportunities in the market they should continue to invest in and which ones to sell off.

The G.E matrix helps a strategic business unit evaluate its overall strength

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. Market Attractiveness plotted on the Y-axis and Business Strength on the X-axis

Each axis is divided into Low, Medium and High giving the nine-cell matrix as depicted below.

INDUSTRY ATTRACTIVENESSThe attractiveness of a market is demonstrated by how beneficial it is for a company to enter and compete within thismarket.Market Size Market Growth Rate Demand variabilityIndustry ProfitabilityCompetitive Rivalry Global OpportunitiesEntry and exit barriersCapital requirementMacro environmental Factors (PEST)

SBU STRENGTHMarket ShareDistribution Channel Access Financial Resources R&D CapabilityBrand equity Production CapacityKnowledge of customer and marketCaliber of managementRelative cost position

STRATEGIES OF GROW

Business units that fall under grow attract high investment. Firms may go for product differentiation or Cost leadership. Huge cash is generated in this phase. Market leaders exist in this phase.Protect Position Invest to grow Effort on maintaining strengthInvest to Build Challenge for leadership Build selectively on strengthBuild Selectively Invest in most attractive segment Build up ability to counter competition Emphasize profitability by raising productivity

STRATEGIES OF HOLD Business units that fall under hold phase attract moderate investment. Market segmentation, Market penetration, imitation strategies are adopted in this phase. Followers exist in this phase.

Protect & Refocus Manage for current earning Defend strength Selectivity for Earning Protect existing program Investments in profitable segments Build Selectively Specialize around limited strength Seek ways to overcome weaknesses Withdraw if indication of sustainable growth are lacking

STRATEGIES OF HARVESTBusiness units that fall under this phase are unattractive. Low priority is given in these business units. Strategies like divestment, Diversification, mergers are adopted in this phase.

Limited Expansion for Harvest Look for ways to expand without high risk Manage for Earnings Protect position in profitable segment Upgrade product line Minimize investmentHarvest Sell at time that will maximize cash value Cut fixed costs and avoid investment meanwhile

ADVANTAGES OF GE MATRIXRaises awareness between managers about the performance of their products in the market and aids in developing strategies to get maximum returns from the resources available.Helps extract information about a business unit's strengths and weaknesses and to devise strategies to accelerate and improve performance.Aids the business in growing and in providing information about potential market opportunities.It is more complex in comparison to the BCG matrix

DISADVANTAGES OF GE MATRIXThere is no set rule to 'weight' factors and this process may be subjective across different business unit's. For example, the weight given to a factor by one business may be different to the weight/importance given to it by another.The formulation of a G.E. matrix is very expensive and time consuming.Investment strategies are often not implemented in an accurate and proper manner.The dynamics among SBU's themselves are not taken into account.

Step-by-step plan to set up a GE McKinsey matrixDefine the Product Market Combinations (PMCs). Who are the customers of an organization and what are its products and/or services?Define the aspects that determine the attractiveness of the market. Certain weight factors can be assigned to certain aspects. Market attractiveness is a critical factor that has to be considered carefully.Define the aspects that determine the competitive power of the organizations.Assign scores to the different PMCs. Have this done by several people within and outside of the organization. This will ensure a fair representation.

Calculate the final scores. By comparing the final scores for market attractiveness and competitive power with the maximum score, it is possible to determine their position on the matrix.Draw the matrix and plot market attractiveness on the x-axis and competitive power on the y-axis. The higher the volume in turnover of a PMC, the larger the circle.Evaluate and discuss. The matrix can serve as the basis for a discussion about strategic decisions. .682.662.34Distribution Net1.655.33Product Quality .331.33Market ShareBusiness .683.322.34Profit Margins .993.33Growth1.655.33SizeValueRating (1- 5)WeightMarket FactorGE PORTFOLIO EXAMPLEEXAMPLE OF GE NINE CELL MATRIX

About Maruti UdyogFounded in 1981Products are Maruti 800, Omni, Alto,SX4,Swift Desire,Swift,A-star, Gypsy,Wagon R,Ritz,others.Vision The Leader in the Indian Automobile Industry, Creating Customer Delight and Shareholders Wealth;a Pride of IndiaCore Values : Our Core Values drive us in every endeavour- Customer Obessionfast, Flexible & first moverInnovation & creativityNetworking & PartnershipOpeness & Learning

APPLE INC.

APPLE OVERVIEWApple Inc. is a large technology company with several business units operating in different markets, including desktop computers, laptops, tablet computers (iPads), portable music players (iPods), smartphones (iPhones) and software to support these products. A competitor wishing to gain competitive intelligence on the activities of Apple Inc. could do so by placing its business units into a GE/McKinsey Matrix. By analyzing this matrix, it could determine which business units Apple is likely to invest in heavily, develop selectively, or divest.

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