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GE Nine Cell MatrixThe 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.The objective of the analysis is to position each SBU on thechart depending on the SBUs Strength and the Attractivenessof the Industry Sector or Market on which it is focused. Eachaxis is divided into Low, Medium and High, giving the nine-cell matrix as depicted below.
GE Nine Cell Matrix Different factors can be used to define Industry Attractiveness. Like:- Market Size, Market Growth Rate, Demand variability, Industry Profitability, Competitive Rivalry, Global Opportunities, Entry and exit barriers, Capital requirement, Macro environmental Factors (PEST) Different factors can also be used to define SBU Strength. Like:- Market Share, Distribution Channel Access, Financial Resources, R&D Capability, Brand equity, Production Capacity, Knowledge of customer and market, Caliber of management. Relative cost position The factors and their relative weightings are selected. The rating values for each factor are entered for each SBU and Industry.
GE Nine Cell MatrixIndustry Business Unit StrengthAttractiveness Strong Average Weak High Grow Grow Hold Medium Grow Hold Harvest Low Hold Harvest Harvest
GE Nine Cell Matrix Grow – Business units that fall under grow attract high investment. Firms may go for product differentiation or Cost leadership. Huge cash is generated in this phase. Market leaders exist in this phase. Hold – Business units that fall under hold phase attract moderate investment. Market segmentation, Market penetration, imitation strategies are adopted in this phase. Followers exist in this phase. Harvest - Business units that fall under this phase are unattractive. Low priority is given in these business units. Strategies like divestment, Diversification, mergers are adopted in this phase.
Market Attractiveness Annual market growth rate Overall market size Historical profit margin Current size of market Market structure Market rivalry Demand variability Global opportunities
Business Strength Current market share Brand image Production capacity Corporate image Profit margins relative to competitors R & D performance Promotional effectiveness
GE Nine Cell MatrixStrengtha) It allows intermediate ratings between high and low and between strong and week.b) It helps in channeling the corporate resources to business and achieving competitive advantage and superior performance.c) It helps in better strategic decision making and better understanding of business scope. Weaknessa)It tends to obscure business that are become to winners because their industries are entering at exit stage.b)Assessment of business in terms of two factors is not fair.
About Maruti Udyog• Founded in 1981• Products are Maruti 800, Omni, Alto,SX4,Swift Desire,Swift,A-star, Gypsy,Wagon R,Ritz,others.• Vision – “The Leader in the Indian Automobile Industry, Creating Customer Delight and Shareholder’s Wealth;a Pride of India”• Core Values : Our Core Values drive us in every endeavour- Customer Obession, fast, Flexible & first mover, Innovation & creativity Networking & Partnership Openess & Learning