Ge business planning model
Rate Factors — Once the weights have been assigned, the rating for each factor needs to be determined for each product or business unit.
Ge matrix example coca cola
This matrix is the forerunner of many other portfolio models including the MACS and the portfolio of initiatives. Assign Weights — Once the factors have been listed down, it is necessary to give them weights. In the s, General Electric asked its consultants, McKinsey, to develop a portfolio management model that would suit it needs. Share your experience and knowledge in the comments box below. Step 6: Prioritize Investments The final step in the matrix analysis is to decide the wheres and hows of the investment decisions for the company in practice. The entire exercise can be costly to conduct for a company Potential synergies and dynamics between 2 or more business units are not taken into account. Because of this, the business moves from one in which to invest to one to consider harvesting.
The total of all the weights should be equal to one and all chosen factors should be assigned a weight. It analyzes market attractiveness and competitive strength to determine the overall strength of a SBU. Within the matrix, an arrow is added to each circle, showing its future direction.
These units are unlikely to be divested and instead will be fed from the revenues of cash cows such as personal computers and iPods. The two dimensions on which BCG matrix is based are market growth and market share.
With the help of an industry analyst, the company may be able to determine the potential direction the future will take.
Diversification — This strategy creates completely new opportunities for the company by creating new products and new markets. If a company believes that their strength lies with the customers, then they should consider a product development strategy.
Whilst the GE McKinsey Matrix is more complex, it overcomes some of the disadvantages of the BCG Matrix, including: Market attractiveness considers a much broader range of factors than just market growth rate.
Ge matrix example
A star has a high market share in a high growing industry. Further analysis may reveal that investments into some of the business units can considerably improve their competitive positions or that the industry may experience major growth in the future. Emereo Publishing. Usually a BU will go from being a question mark, to a star, then a cow, and finally a dog. Factors to score to better determine competitive strength include: Total market share Market share growth relative to competitors Customer loyalty Relative brand strength, brand recognition Cost structure compared to competitors Distribution strength and production capacity Management strength GE McKinsey Matrix vs. These ratings can be between or Determine the strategy option for the units Depending on the position of the unit on the matrix and the box on the matrix in which it has been placed, three categories of investment or divestment decisions can be made: 1 invest; 2 hold; 3 harvest or divest. Here is a simple 5 step process you can follow to get you started: 1.
based on 120 review