GE 9 cell matrix -an important topic to understand in strategy.GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises to prioritize their investments among the various business units. The GE matrix has been developed to overcome the obvious limitations of BCG matrix.This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.Under this each business is appraised in terms of two major variables/dimensions – Market Attractiveness and Business Strength.The GE matrix takes into account multiple factors that can impact a company's performance, including market attractiveness, competitive strength, and business size. This provides a more holistic view of the business portfolio than other methods.

1. General Electric GE (9 cell) matrix
GE nine-box matrix is a strategy tool that offers a systematic approach for
the multi business enterprises to prioritize their investments among the
various business units. The GE matrix has been developed to overcome the
obvious limitations of BCG matrix.GE 9-box Matrix plots each product,
service, or business unit into nine cells that indicate whether the company
should invest, diversify, or do more research. The model is inspired by
traffic lights which are used to manage traffic at crossings, wherein green
light says go, yellow says caution and Red say stop. This matrix is
a strategy tool that provides guidance on how a corporation should prioritize
its investments among its business units, leading to three possible scenarios:
invest, protect, harvest, and divest. It is a framework that evaluates business
portfolio and provides further strategic implications. Under this each
business is appraised in terms of two major variables/dimensions – Market
Attractiveness and Business Strength.
1. Industry attractiveness: It indicates how hard or easy it will be for a
company to compete in the market and earn profits. The more
profitable the industry is the more attractive it becomes. When
evaluating the industry attractiveness, organization assess:
 Market size and the potential for growth.
 Buyer and supplier power.
 The potential for new entrants (competition) or substitution with
another product.
 Industry profitability.
 Entry and exit barriers.
 Pricing trends, economies of scale, market growth rate, segmentation,
distribution structure, etc.
2. Business strength: It measures how strong, in terms of competition, a
particular business unit is against its rivals. When evaluating the
Business strength, analysts look:
 Actual market share and market share growth potential.
 Profit margins, cash flow, and manufacturing costs.
 Brand equity and customer loyalty.
 Product or service uniqueness.

2.  Technological capabilities and so on
The competitive Business strength of the individual SBUs is represented on
the x-axis while market attractiveness is represented on the y-axis. Both
competitive strength and market attractiveness are determined by a weighted
score calculated from the relevant factors that apply to each.
Figure:GE matrix
These two variables are quantified into three categories: Low, Medium, and
High. Product falling into green section(invest/grow) reflects the business is
in the good position, but product lying into yellow
section(selectivity/earning) needs the managerial decision for making
choices and the product in the red zone(harvest/divest), are dangerous as
they will lead the company to losses. This creates a 3×3 matrix with 9
scenarios, but three main approaches:
 Invest/Grow: Businesses should invest in these segments if a product,
service, or business unit falls into this category, as they will give the highest
returns.
 Selectivity/Earnings: Companies should invest in these segments if they
have money left over within their business unit and believe they will

3. generate cash in the future. These products have uncertainty and thus are
given the least preference.
 Harvest/Divest: If a product is in an unattractive industry, has no
competitive advantage, and performs poorly, it falls into this category.
Businesses that fall into this category should be harvested or divested.
Advantages of GE matrix
 By evaluating different businesses within a company's portfolio, the GE
matrix can help executives make informed decisions about which businesses
to invest in, which to divest, and which to hold onto.
 The GE matrix takes into account multiple factors that can impact a
company's performance, including market attractiveness, competitive
strength, and business size. This provides a more holistic view of the
business portfolio than other methods.
 The GE matrix helps companies identify potential areas for growth by
highlighting attractive markets and help companies allocate resources to
areas that are likely to generate the highest returns.
 The GE matrix can be a useful tool for facilitating communication and
collaboration between different departments and can help align everyone
around a common set of goals and priorities.
Disadvantages of GE matrix
 The GE Matrix relies heavily on subjective judgments to assess industry
attractiveness and business unit strength. This subjectivity can lead to bias
and inconsistencies in the analysis.
 The GE Matrix only evaluates a company's current portfolio of businesses
and does not take into account potential future opportunities or threats.
 The GE Matrix oversimplifies complex strategic decisions by reducing them
to a two-dimensional matrix. It fails to capture the nuances and complexities
of a company's business portfolio.
 The GE Matrix relies on qualitative assessments of industry attractiveness
and business unit strength, and does not consider important quantitative
factors such as market share, revenue, and profitability.

4.  The GE Matrix does not take into account the interdependencies between
different business units or industries. This can lead to incorrect evaluations
of industry attractiveness or business unit strength.
Key Differences between BCG matrix and GE matrix
1. Focus: The BCG matrix focuses on a company's product portfolio, while the
GE matrix takes a broader perspective, considering the company's overall
business portfolio.
2. Dimensions: The BCG matrix uses two dimensions, market growth rate and
market share, to classify a company's products into four categories: stars,
question marks, cash cows, and dogs. The GE matrix, on the other hand,
uses nine dimensions, including industry attractiveness, competitive
strength, market size, and market growth rate, to evaluate a company's
business units.
3. Analysis: The BCG matrix is a static analysis tool that provides a snapshot
of a company's product portfolio at a specific point in time. The GE matrix,
however, is a dynamic tool that considers changes in the business
environment and the company's strategy over time.
4. Strategic implications: The BCG matrix is primarily used for resource
allocation decisions, helping companies decide where to invest their
resources and which products to divest. The GE matrix, on the other hand, is
a more comprehensive tool that can be used to develop and adjust a
company's overall business strategy.
5. Limitations: The BCG matrix has been criticized for oversimplifying
complex business environments and for its reliance on market share and
growth rate as the sole criteria for evaluating products. The GE matrix, while
more comprehensive, can be more time-consuming and costly to implement
due to the increased number of dimensions used.
Overall, both the BCG and GE matrices are valuable tools for strategic planning
and portfolio analysis, but they differ in their focus, dimensions, analysis, strategic
implications, and limitations.