Companies only invest in them if they generate enough cash to equal the investment amount, otherwise, they may be liquidated. It is more complex in comparison to the BCG matrix. Businesses in the green zone attract major investment.
The following table shows how industry attractiveness and business unit competitive strength will change in 2 years. Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.
Investment strategies are often not implemented in an accurate and proper manner. It is expensive to conduct. When all the information is collected you should include it to your existing matrix, by adding the arrows to the circles. Market share is shown by using the circle as a pie chart.
It is essential to provide as much resources as possible for BUs so there would be no constraints for Ge9 cell model to grow. The Ge9 cell model rule should be to invest in business units which operate in huge markets and there are not many dominant players in the market, so the investments would help to easily win larger market share.
The arrows should point to the future position of a business unit. Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio.
Companies should invest into the business units that fall into these boxes as they promise the highest returns in the future. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.
The tip of the arrow indicates the future position of the center point of the circle. The expected future position of the circle is portrayed by means of an arrow. Market size is represented by the size of the circle. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive.
You should also discuss with your managers whether your business unit competitive strength will likely increase or decrease in the near future.
There are strategy variations within these three groups. Well, the company should consult with the industry analysts to determine whether the industry attractiveness will grow, stay the same or decrease in the future. Plotting the Information Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows: Strategic Implications Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows: This affects the decisions we make about our investments into one or another business unit.
Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units. Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors.
It takes into account a wide range of factors when determining market attractiveness and business strengths, which is replaced by market share and market growth in the BCG matrix.GE / McKinsey Matrix.
In consulting engagements with General Electric in the 's, McKinsey & Company developed a nine-cell portfolio matrix as a tool for screening GE's large portfolio of strategic business units (SBU). The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio The MS-Excel model has a simple Push Button Menu system at the top of the Workbook in cell B2.
(see figure 1) The following general guidelines should be followed. Cells in Green are. The GE 9 cell model is based on. a. Industry attractiveness & Business Strength. b. Industry Growth rate & Business strength. c. Industry Attractiveness & Relative market share.
d. Industry Growth & Relative market share. Answer: a. The BCG Matrix is based on. a.
Industry attractiveness & Business Strength. In this interactive presentation--one in a series of multimedia frameworks--McKinsey alumnus Kevin Coyne describes the GE–McKinsey nine-box matrix, a framework that offers a systematic approach for the multibusiness corporation to prioritize its investments among its business units.
Ge9 final ppt 1. GE Nine Cell Matrix 2. GE Nine Cell Matrix The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix usedto perform business portfolio analysis as a step in the strategicplanning process. The GE/McKinsey Matrix identifies the optimum businessportfolio as one that fits perfectly to the companys strengthsand helps to explore the most attractive industry sectors ormarkets.
Chapter No. 3 Decisions and Strategic Models Decisions: External and Internal business environment have effects on business operations and various strategic decisions taken by organizations. on GE 9 cell Model. GE Matrix refers to Market attractiveness Vs Business position in terms of strength and.Download