GE 9 cell matrix

1. BUSINESS POLICY &
STRATEGIC
MANAGEMENT

2. HOW BCG BECAME OBSOLETE
Cash flow became less of an issue with more
efficient capital markets and lower interest
rates
Process could be manipulated by defining the
market narrowly or broadly
Multiple companies could not jointly pursue a
strategy to be #1, but they tried…with
disastrous consequences

3. EVOLUTION OF THIS ANALYSIS
The GE Nine(9) Cell Matrix is a strategy tool developed
by McKinsey and Company consultancy group in the
1970s.
It is a variant of the Boston Consulting Group (BCG)
portfolio analysis and measures business unit strength
against industry attractiveness.

4. THE GENERAL ELECTRIC MODEL:
TYPICALLY USED TO ANALYZE A
COMPANY'S VARIOUS BUSINESS
UNITS OR PRODUCT LINES.
MARKET
ATTRACTIVENESS
BUSINESS STRENGTH
0
5
0
5
High
Medium
Low
1.67
3.33
1.67
3.33
Strong Medium Weak

5. TWO KEY DIMENSIONS
Market Attractiveness: This dimension assesses the overall appeal of the
market in which a business unit or product operates. Market attractiveness is
typically determined by factors such as market size, growth rate,
profitability, customer demand, competitive dynamics, and regulatory
environment. The scale often ranges from low to high.
Competitive Strength of Business: This dimension evaluates the relative
competitive strength of the business unit or product within its specific
market. Competitive strength is influenced by factors such as market share,
brand reputation, technological capabilities, cost efficiency, and the quality
of the product or service, etc. It is also usually rated on a low to high scale.

6. EVALUATING MARKET
ATTRACTIVENESS AND
BUSINESS STRENGTH
Weight
Rating
(1 – 5) Value
Market
Attractiveness
Sales Volume in Market
Market Growth Rate
Competitive Intensity
0.4
0.2
0.4
3
5
4
1.2
1.0
1.6
3.8
Weight
Rating
(1 – 5) Value
Business
Strength
Market Share
Brand Reputation
Distribution Coverage
Unit Costs
0.2
0.3
0.1
0.4
5
5
4
3
1.0
1.5
0.4
1.2
4.1

7. MANAGEMENT STRATEGIES
Protect
Position
Invest
to Build
Divest
Limited
Expansion
or Harvest
Manage for
Earnings
Build
Selectively
Protect and
Refocus
Build
Selectively
Selectivity/
Manage for
Earnings
MARKET
ATTRACTIVENESS
BUSINESS STRENGTH
0
5
High
Medium
Low
1.67
3.33
0
5 1.67
3.33
Strong Medium Weak

8. PROBLEMS WITH PORTFOLIO
MODELS
1. Subjective Inputs Lead to Self-Confirming Strategies:
Assessment of business units or products within a
portfolio relies heavily on subjective judgment rather than
objective data and analysis. There's a risk of reinforcing
existing beliefs and strategies, leading to self-confirming
biases.
2. Lack of Independence of SBU (Strategic Business Units):
In portfolio analysis, SBU independence refers to the
degree to which each business unit operates autonomously
and has its own distinct strategy. Too interdependent or
similar in their operations. This can lead to a lack of
diversification and risk management within the portfolio,
making it vulnerable to external market shocks that affect
multiple units simultaneously.

9. 3. Cannibalization: Cannibalization occurs when a new
product or business unit within a company's portfolio
competes with and erodes the market share and revenue
of existing products.
4. Synergy: Synergy is a concept that refers to the
potential for two or more business units or products
within a portfolio to create greater value or achieve better
results when they work together than they would
independently. The problem arises when portfolio
analysis fails to identify and capitalize on opportunities
for synergy. This can result in missed cost-saving or
revenue-enhancing potential.
5. Works Best with Companies at the Edges: Portfolio
analysis is often considered most effective when applied
to companies at the extreme ends of the business
spectrum, such as those with very mature or very diverse

10. CONCLUSION
Q&A

11. THANK YOU
Learnings