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GE Nine Cell Matr ix

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GE Nine Cell Matr ixThe GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used

to perform business portfolio analysis as a step in the strategicplanning process.

The GE/McKinsey Matrix identifies the optimum business

portfolio as one that fits perfectly to the company's strengthsand helps to explore the most attractive industry sectors ormarkets.

The objective of the analysis is to position each SBU on thechart depending on the SBU's Strength and the Attractiveness

of the Industry Sector or Market on which it is focused. Eachaxis is divided into Low, Medium and High, giving the nine-cell matrix as depicted below.

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GE Nine Cell Matr ixDifferent factors can be used to define Industry Attractiveness. Like:-

Market Size, Market Growth Rate, Demand variability, IndustryProfitability, Competitive Rivalry, Global Opportunities, Entry and exit

barriers, Capital requirement, Macro environmental Factors (PEST)

Different factors can also be used to define SBU Strength. Like:-Market Share, Distribution Channel Access, Financial Resources, R&D

Capability, Brand equity, Production Capacity, Knowledge of customer

and market, Caliber of management. Relative cost position

The factors and their relative weightings are selected. The rating values

for each factor are entered for each SBU and Industry.

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GE Nine Cell Matrix

Industry

Attractiveness

Business Unit Strength

Strong Average Weak

High Grow Grow Hold

Medium Grow Hold Harvest

Low Hold Harvest Harvest

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GE Nine Cell Matrix

GrowBusiness 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.

Hold

Business units that fall under hold phase attract moderateinvestment. Market segmentation, Market penetration, imitation

strategies are adopted in this phase. Followers exist in this phase.

Harvest - Business units that fall under this phase areunattractive. Low priority is given in these business units.

Strategies like divestment, Diversification, mergers are adopted in

this phase.

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Market Attractiveness

Annual market growth rate

Overall market size

Historical profit margin

Current size of market

Market structure

Market rivalry

Demand variability

Global opportunities

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Current market share

Brand image

Production capacity

Corporate image

Profit margins relative to

competitors

R & D performance

Promotional effectiveness

Business Strength

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GE Nine Cell Matrix

Strength

a) It allows intermediate ratings between high and low and betweenstrong and week.

b) It helps in channeling the corporate resources to business and

achieving competitive advantage and superior performance.

c) It helps in better strategic decision making and better understanding

of business scope.

Weakness

a)It tends to obscure business that are become to winners because their

industries are entering at exit stage.

b)Assessment of business in terms of two factors is not fair.

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EXAMPLE OF GE NINE CELL MATRIX

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Founded in 1981

Products are Maruti 800, Omni, Alto,SX4,SwiftDesire,Swift,A-star, Gypsy,Wagon R,Ritz,others.

VisionThe Leader in the Indian Automobile

Industry, Creating Customer Delight andShareholders Wealth;a Pride of India

Core Values : Our Core Values drive us in everyendeavour-

Customer Obession,

fast, Flexible & first mover,

Innovation & creativity

Networking & Partnership

Openess & Learning

About Maruti Udyog

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THANK

YOU