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Ge

  1. 1. Portfolio Analysis GE Tool for Analyzing Opportunities & Ability to Compete
  2. 2. GE Portfolio Analysis • Classification of SBUs/products into nine cell matrix based on • Market Attractiveness – Multiple Indicators • Business Strength – Multiple Indicators
  3. 3. Steps In Developing GE Matrix 1. Select Factors & Indicators. 2. Assign each indicator a weight (total = 1) based on its importance. 3. Rate the industry on industry indicators and company on business indicators on scale of 1(weak) – 5 (strong). 4. Multiply weight times rating and total for summary measures.
  4. 4. GE Portfolio Analysis Sample Industry/Market Indicators • Market Factors • Size • Growth Rate • Cyclicality • Seasonality • Competition • Type of competitors • Degree of Concentration • Financial & Economic • Contribution Margins • Barriers to Entry or Exit
  5. 5. GE Portfolio Analysis Industry/Market Indicators • Technological • Patents & copyrights • Will it become obsolete • Sociopolitical • Social attitudes & trends • Laws & government regulations
  6. 6. GE Portfolio Analysis Business Strength Indicators • Market • Company’s Market Share • Company’s Sales or Share Growth Rate • Competition • Strength of product, promotion, price, distribution, financial resources, management relative to competition • Financial & Economic • Company’s Margins • Economies of scale
  7. 7. GE Portfolio Analysis Business Strength Indicators • Technological • Company’s ability to cope with change • Technological skills • Patent Protection • Sociopolitical • Company’s responsiveness & flexibility
  8. 8. GE Portfolio Example .68 2.66 2.34Distribution Net 1.655.33Product Quality .331.33Market Share Business .68 3.32 2.34Profit Margins .993.33Growth 1.655.33Size ValueRating (1- 5)WeightMarket Factor
  9. 9. GE Portfolio Analysis Market Low Medium High LowMediumHigh Business
  10. 10. Divest •Sell at time that will maximize cash value •Cut fixed costs and avoid investment Harvest •Minimize Investment •Protect positions in most profitable segments Generate Cash •Manage for current earnings •Concentrate on attractive Segments •Defend Strengths Low Harvest (Gradual Withdrawal) or Limited Expansion •Look ways to expand without high risk •Or Minimize investment Manage for Earnings •Protect existing programs •Concentrate on profitable, less risky segments Challenge Leader/Build Selectively •In most attractive markets •Or counter competition •Emphasize profitability by raising productivity Medium Overcome Weakness, Find Niche or Quit •Build Selectively Challenge Leader •Invest to Build Selectively •Reinforce Strengths Maintain Leadership • Invest to Grow •Concentrate on Maintaining Strength High WeakMediumStrongMarket Attractiveness PositionCompetitive
  11. 11. M a r k e t 1 2 3 4 5 12345 Business Strength Hig LowMediu

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