Which zone in the GE business screen indicates that the company may adopt growth strategy?
|
Posted in Business Management, Decision Making, Financial Management, Marketing, Sales, Startups, Strategy on Mar 4th, 2015 | 0 comments Show
A popular “Corporate Portfolio Analysis” technique is the result of pioneering effort of General Electric Company along with McKinsey Consultants which is known as the GE NINE CELL MATRIX. GE Nine-Box MatrixThis is a strategy tool that offers a systematic approach for the multi business enterprises. It helps them to prioritize their investments among the various business units. It is a framework that evaluates business portfolio and provides further strategic implications.  Each business is appraised in terms of two major dimensions – Market Attractiveness and Business Strength. If one of these factors is missing, then the business will not produce desired results. Neither a strong company operating in an unattractive market, nor a weak company operating in an attractive market will do very well. The vertical axis denotes industry attractiveness, which is a weighted composite rating based on eight different factors.They are:
What Does the Horizontal Axis Represent?It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below:
The two composite values for industry attractiveness and competitive position are plotted for each strategic business unit (SBU) in a COMPANY’S PORTFOLIO. The PIE chart (circles) denotes the proportional size of the industry and the dark segments denote the company’s respective market share. The green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion strategies. Businesses in the green zone attract major investment. Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach. Advantages
Disadvantages
PORTER’S FIVE FORCES-INDUSTRY ANALYSIS What is GE model in strategic management?The GE-McKinsey Matrix (a.k.a. GE Matrix, General Electric Matrix, Nine-box matrix) is a portfolio analysis tool used in corporate strategy to analyze strategic business units or product lines. This matrix combines two dimensions: industry attractiveness and the competitive strength of a business unit into a matrix.
What does Green Zone symbolize in GE nine cell matrix?1) Green indicates invest/expand if the product falls in green zone, the business strength is strong and industry is at least medium in attractiveness, the strategic decision should be to expand, to invest and to grow.
What does the GE business screen use to determine the attractiveness of an organization?Industry attractiveness is measured by looking at the market size, market growth, potential profitability, and future projection of the industry. Tools such as Five Forces, Six Forces and PESTLE are commonly used.
What are strategies in GEThis 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.
|
