Description The GE-McKinsey Matrix is a portfolio management tool that helps corporations prioritize investments among their business units. It provides guidance on whether to invest, protect, harvest, or divest from a business unit based on its market attractiveness and competitive strength. The matrix is useful for corporations with a large portfolio of strategic business units. The GE-McKinsey Matrix was developed in the 1970s by General Electric in collaboration with McKinsey & Company. The matrix compares groups of products with their competitive power and market attractiveness. The portfolios themselves are comprised of the full suite of products or services that a business offers to the market. The matrix allows a large, decentralized company to determine where best to invest its cash by judging each strategic business unit according to whether it will do well in the future. The GE-McKinsey Matrix is fundamentally a portfolio analysis that helps corporations make strategic decisions on a corporate level. This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com

1. GE-McKinsey Matrix
Tutorial & Template
Low
Low
Industry
Attractiveness
Business Unit Strength
Medium
High
Medium High
BU1
BU2
BU3

2. GE-McKinsey Matrix
Description (1/2)
2
The GE-McKinsey Matrix is a portfolio management tool that helps corporations prioritize investments
among their business units. It provides guidance on whether to invest, protect, harvest, or divest from a
business unit based on its market attractiveness and competitive strength. The matrix is useful for
corporations with a large portfolio of strategic business units.
The GE-McKinsey Matrix was developed in the 1970s by General Electric in collaboration with McKinsey &
Company. The matrix compares groups of products with their competitive power and market attractiveness.
The portfolios themselves are comprised of the full suite of products or services that a business offers to the
market. The matrix allows a large, decentralized company to determine where best to invest its cash by
judging each strategic business unit according to whether it will do well in the future. The GE-McKinsey
Matrix is fundamentally a portfolio analysis that helps corporations make strategic decisions on a corporate
level.
Company Name

3. GE-McKinsey Matrix
Description (2/2)
3
Low
Low
Industry
Attractiveness
Business Unit Strength
Medium
High
Medium High
Company Name

4. GE-McKinsey Matrix
Step-by-step tutorial on how to use the GE-McKinsey Matrix
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1 Identify the strategic business units (SBUs) that you want to analyze
2 Determine the industry attractiveness of each SBU
3 Determine the competitive strength of each SBU
4 Plot each SBU on the matrix based on its industry attractiveness and competitive strength
5 Determine the appropriate strategy for each SBU based on its position on the matrix
6 Monitor and adjust your portfolio of SBUs over time to ensure that it remains aligned with your corporate strategy
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5. Step 1
Identify the strategic business units (SBUs) that you want to analyze and add them to our Excel
document “Scorecard”
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Company Name

6. Step 2
Determine the industry attractiveness of each SBU using factors such as market size and market
growth
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Assign a weight of between
0.1 and 1.0 to each factor to
reflect how important it is, and
ensure that they add up to 1.0
Score each factor, using a
scale of 1 to 9, 1 being
extremely unattractive, 5 being
industry average, and 9
extremely attractive
Review the Weighted Average
Score for each Business unit
Use this list as a starting point to brainstorm the factors that you'll use to determine how attractive your markets are.
This is a subjective process, and different organizations will come up with different conclusions. Just be aware that
you'll need to apply these factors to all of the business units or product lines that you evaluate.
Company Name

7. Step 3
Determine the competitive strength of each SBU using factors such as market share and
manufacturing capacity
7
Assign a weight of between
0.1 and 1.0 to each factor to
reflect how important it is, and
ensure that they add up to 1.0
Score each BU strength
factor, using a scale of 1 to
9, 1 being extremely weak,
5 being industry average,
and 9 extremely strong
Review the Weighted
Average Score for each
Business unit
Use this list as a starting point to brainstorm the factors that you'll use to determine how strong your Bus are. This is
a subjective process, and different organizations will come up with different conclusions. Just be aware that you'll
need to apply these factors to all of the business units or product lines that you evaluate.
Company Name

8. Step 4
Plot each SBU on the matrix based on its industry attractiveness and competitive strength (1/2)
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Low
Low
Industry
Attractiveness
Business Unit Strength
Medium
High
Medium High
BU1
BU2
Use a circle for each
business unit,
following these
guidelines:
• Business unit
strength and
industry
attractiveness are
shown by the
circle's position on
the matrix.
• Market size is
represented by the
size of the circle.
• Market share is
represented by a
pie chart within the
circle.
BU3
Company Name

9. Step 4
Plot each SBU on the matrix based on its industry attractiveness and competitive strength (2/2)
9
Low
Low
Industry
Attractiveness
Business Unit Strength
Medium
High
Medium High
BU1
BU2
To edit the market
share, double click on
the pie chart, click on
“edit data” and edit the
market share number.
To edit the size of the
pie chart, simply click
on the chart and
manually increase its
size
BU3
Company Name

10. Step 5
Determine the appropriate strategy for each SBU based on its position on the matrix (1/2)
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Selective
Investment
Harvest / Divest
Low
Low
Industry
Attractiveness
Business Unit Strength
Invest / Grow
Harvest / Divest
Harvest / Divest
Selective
Investment
Invest / Grow
Selective
Investment
Invest / Grow
Medium
High
Medium High
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11. Step 5
Determine the appropriate strategy for each SBU based on its position on the matrix (2/2)
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Invest / Grow
Selective
Investment
Harvest / Divest
Strategic Business Units (SBUs) in the top right corner (green squares) have a relatively
strong position in an attractive industry. This indicates that it's a good idea to invest in these.
Look for growth opportunities, and build on current strengths to improve your position in the
market.
SBUs in the middle (orange squares) are average. Some might have a good position in a
slower industry, or they might have a weak position in a good market, but there's something
positive that you can develop within these business units. You could consider investing more
resources, defending your current position, or attempting to find a niche, for example.
SBUs in the bottom left corner (red squares) are in an unattractive industry, a weak position,
or both. There are no promising scenarios, so it's probably best to look at exit strategies. It
would be unwise to invest any further in these business units, and it would make more sense
to reallocate resources to units in other parts of your Matrix.
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12. Step 6
Monitor and adjust your portfolio of SBUs over time to ensure that it remains aligned with your
corporate strategy
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This step is critical because the market and competitive landscape are constantly changing, and what was
once a high-growth, high-profit SBU may become a low-growth, low-profit SBU over time. By monitoring
your portfolio of SBUs, you can identify which ones are underperforming and take corrective action, such as
divesting or investing in them.
Adjusting your portfolio of SBUs can also involve mergers and acquisitions, which can help you enter new
markets or strengthen your competitive position. The key is to ensure that your portfolio of SBUs is always
aligned with your overall corporate strategy and that you are investing your cash in the right places to
maximize long-term value for your shareholders.
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13. This was just a small preview.
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