GE NINE CELL

MATRIX
Prepared By
Chirag Dangol
Denish Maharjan
Dolma Tsering Gurung
Content
• CONSTRUCTION OF GE 9 CELL MATRIX
• INTRODUCTION - GE 9 CELL MATRIX
• Factors of Market attractiveness
• Strategy Implications
• Example - Maruti
• Advantages and Disadvantages
• GE VS BCG
• Conclusion

4/10/19 2
CONSTRUCTION OF GE 9 CELL MATRIX
• The GE multi factorial was first developed by Mckinsey for General Electric in the
1970s.
• The GE McKinsey matrix does not only consider growth,it mainly considers
market attractiveness.
• In addition to market share the GE McKinsey matrix also considers the strength
of a business unit.
• Instead of the four cells that are created in the BCG Matrix, the GE McKinsey
matrix creates nine cells

4/10/19 3
CONSTRUCTION OF GE 9 CELL MATRIX
• The range of products produced by the SBU must be listed
• Factors which make the particular market attractive must be identified
• Evaluating where the SBU stands in this market
• Processes through which calculations about business strength and market
attractiveness can be made
• Determining which category an SBU lies in; high, medium, or low.

4/10/19 4
GE 9 CELL MATRIX
• 3*3 is used to perform business port folio analysis as a step in strategic
management process
• Matrix identifies the optimum business port folio as one that fit perfectly strengths
and help to explore most attractive industry sector or market
• Each matrix is depend upon the industrial attractiveness and the strength low
medium high

4/10/19 5
Factors of Market attractiveness
• Market Segment identification and its size
• Growth of the identified market segment
• Pricing trends and industry profitability
• Overall Risk of return in the industry
• Technological requirement
• Delivery methods
• Service particulars

4/10/19 6
How it works - GE 9 CELL MATRIX
Segment 1:
• This is the best segment.
• The business is strong and
the market is attractive.
• The company should
allocate resources in this
business and focus on
growing the business and
increase market share.

4/10/19 7
How it works - GE 9 CELL MATRIX
Segment 2:
• The business is either strong but
the market is not attractive or the
market is strong and the business
is not strong enough to pursue
potential opportunities.
• Decision makers should make
judgment on how to further deal
with these SBUs.
• Some of them may consume too
much resources and are not
promising while others may need
additional resources and better
strategy for growth.

4/10/19 8
How it works - GE 9 CELL MATRIX
Segment 3:
• This is the worst segment.
• Businesses in this segment
are weak and their market
is not attractive.
• Should develop better
cost-effective offering, or
get rid of these SBUs and
invest the resources into
more promising and
attractive SBUs.
4/10/19 9
Strategy Implications of
Attractiveness/Strength Matrix
• Businesses in upper left corner
- Accorded top investment priority
- Strategic prescription is grow and build

• Businesses in three diagonal cells

- Given medium investment priority
- Invest to maintain position

• Businesses in lower right corner

- Candidates for harvesting or divestiture
- May be candidates for an overhaul and reposition strategy

4/10/19 10
Example

4/10/19 11
Example (Cont.)

4/10/19 12
Advantages
• This matrix takes into account a number of factors that the BCG Matrix
does not.
• It is visually easy to understand and provides more options to place a
product as compared to the BCG Matrix, due to the inclusion of the “low”
level on both axes.
• It is conceptually similar to the BCG Matrix, so anyone who is familiar with
the BCG Matrix can easily use the GE-McKinsey Matrix.

4/10/19 13
Disadvantages
• This matrix does not take into account the synergies between various
products. Discontinuing one might adversely impact another.
• The scoring of the various factors using the weights is subjective and leaves
the tool open to bias.
• It does not help in allocating the relative investments for each product.

4/10/19 14
GE VS BCG
The GE / McKinsey Matrix is more sophisticated than the BCG Matrix in three
aspects:
1. Market (Industry) attractiveness replaces market growth
2. Competitive strength replaces market share.
3. Finally the GE / McKinsey Matrix works with a 3*3 grid, while the BCG
Matrix has only 2*2. This also allows for more sophistication.

4/10/19 15
Conclusion
• GE cell Matrix identifies the optimum business port folio as one that fit
perfectly ,strengths and help to explore most attractive industry sector or
market
• 3*3 is used to perform business port folio analysis as a step in strategic
management process
• Though this matrix does not take into account the synergies between
various products, we can say that it is more sophisticated than BCG Matrix.

4/10/19 16
References
• https://www.smstudy.com/article/all-about-ge-mckinsey-matrix
• http://www.bms.co.in/advantages-and-limitations-of-ge-nine-cell-matrix/
• https://www.toolshero.com/strategy/ge-mckinsey-matrix/
• https://
www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insigh
ts/enduring-ideas-the-ge-and-mckinsey-nine-box-matrix

4/10/19 17
4/10/19 18