GE-McKinsey Nine-Field Matrix: PowerPoint Template

Introduction

The GE-McKinsey Nine-Field Matrix helps companies identify which business units to invest in and which ones to divest or restructure.

It provides a framework for strategic decision-making based on an objective analysis of a company's business portfolio.

What is the GE-McKinsey 9 Nine-Field Matrix?

The GE-McKinsey Nine-Field Matrix is a business strategy tool used to assess a company's business portfolio.

It was developed by General Electric and McKinsey & Company in the 1970s to help businesses make strategic decisions about which business units to invest in and which ones to divest.

The matrix consists of a 3x3 grid, with the y-axis representing industry or market attractiveness and the x-axis representing competitive strength.

Each axis is divided into three categories: high, medium, and low.

The industry attractiveness axis considers factors such as market size, growth rate, profitability, and competition.

The business strength axis considers factors such as market share, profitability, and brand strength.

What are the nine cells of the GE-McKinsey Nine-Field Matrix?

Each business unit in a company is then placed in one of the nine cells of the matrix, based on its industry attractiveness and business strength.

The 9 cells are:

1. High industry attractiveness, high business strength: These are the most attractive businesses for a company to invest in, as they have both a strong competitive position and are in an attractive industry.
2. Medium industry attractiveness, high business strength: These businesses have a strong competitive position but are in a less attractive industry.
3. Low industry attractiveness, high business strength: These businesses may be profitable, but they are in an unattractive industry and may not be sustainable in the long run.
4. High industry attractiveness, medium business strength: These businesses are in an attractive industry but may not have a strong competitive position.
5. Medium industry attractiveness, medium business strength: These businesses are in a less attractive industry and may not have a strong competitive position.
6. Low industry attractiveness, medium business strength: These businesses are in an unattractive industry and may not be profitable in the long run.
7. High industry attractiveness, low business strength: These businesses have potential in an attractive industry, but they are not currently competitive.
8. Medium industry attractiveness, low business strength: These businesses have potential, but they are in a less attractive industry and are not currently competitive.
9. Low industry attractiveness, low business strength: These businesses are not competitive and are in an unattractive industry.

What are the advantages of using the GE-McKinsey Nine-Field Matrix?

The GE-McKinsey Nine-Field Matrix is a useful tool for businesses to assess their business portfolio and make strategic decisions.

Some advantages of using this matrix include:

1. Comprehensive analysis: The GE-McKinsey Nine-Field Matrix provides a comprehensive analysis of a company's entire business portfolio, including business units and market segments, enabling companies to identify strengths, weaknesses, opportunities, and threats.
2. Objective analysis: The matrix provides an objective analysis of a company's business units, based on two key metrics - industry attractiveness and business strength - allowing companies to make informed decisions about investment, divestment, and restructuring.
3. Strategic focus: The matrix helps companies make strategic decisions about which business units to invest in, which ones to divest, and which ones to restructure, enabling them to optimize their portfolio and maximize their returns.
4. Clear visualization: The matrix provides a clear visualization of a company's business portfolio, with each business unit placed in one of the nine cells of the matrix, making it easy for companies to identify their most and least attractive business units.
5. Flexibility: The matrix is flexible and can be adapted to suit the specific needs and goals of a company, enabling companies to tailor the analysis to their own business and industry.

Overall, the GE-McKinsey Nine-Field Matrix is a valuable tool for businesses to assess their business portfolio and make strategic decisions based on objective analysis.

It enables companies to optimize their portfolio and maximize their returns by focusing on their most attractive business units and divesting or restructuring their least attractive ones.

What are the limitations of the GE-McKinsey Nine-Field Matrix?

While the GE-McKinsey Nine-Field Matrix is a valuable tool for businesses to assess their business portfolio and make strategic decisions, there are also some limitations to its use.

These limitations include:

1. Subjectivity: The matrix relies on subjective judgments of market attractiveness and competitve strength, which can vary depending on the perspective of the analyst. This subjectivity can lead to different results when different analysts use the matrix.
2. Limited metrics: The matrix only considers two metrics - market attractiveness and competitve strength - which may not fully capture the complexities of a company's business portfolio. Other important metrics, such as customer satisfaction and innovation, are not included in the matrix.
3. Lack of dynamic analysis: The matrix is a static tool that only provides a snapshot of a company's business portfolio at a particular point in time. It does not take into account changes in the market, industry, or economy that may affect a company's business units in the future.
4. Difficulty in data gathering: Gathering accurate and reliable data for both industry attractiveness and business strength can be challenging, particularly for smaller companies with limited resources.
5. Oversimplification: The matrix may oversimplify the complexities of a company's business portfolio, leading to overly simplistic or inaccurate conclusions.
6. Lack of consideration for interdependencies: The matrix evaluates each business unit independently and does not consider the interdependencies between them. For example, a company may choose to divest a business unit that is not performing well, but this decision may have a negative impact on other business units that rely on it.

Overall, while the GE-McKinsey Nine-Field Matrix is a valuable tool for businesses to assess their business portfolio, it is important to recognize its limitations and use it in conjunction with other strategic analysis tools and methodologies.

What is the purpose of the GE-McKinsey Nine-Field Matrix?

The purpose of the GE-McKinsey Nine-Field Matrix is to help businesses make strategic decisions about their business portfolio.

The matrix evaluates each business unit in a company based on two key metrics: industry attractiveness and business strength. The purpose is to determine which business units a company should invest in, which ones to divest, and which ones to restructure.

The matrix helps businesses to identify their most attractive and least attractive business units and to focus on maximizing their returns by investing in their most attractive business units and divesting or restructuring their least attractive ones.

This helps companies to optimize their portfolio and align their resources with their business strategy.

What are the key differences between the BCG Matrix and the GE-McKinsey Nine-Field Matrix?

The BCG Matrix and the GE-McKinsey Matrix are both business strategy tools used to analyze a company's business portfolio, but there are some key differences between them.

Key differences between BCG Matrix and GE McKinsey Matrix

1. Focus: The BCG Matrix focuses on a company's product portfolio, while the GE-McKinsey Matrix considers a company's entire business portfolio, including business units and market segments.
2. Metrics: The BCG Matrix evaluates a company's products based on two metrics: market share and market growth rate. The GE-McKinsey Matrix evaluates a company's business units based on two metrics: industry attractiveness and business strength.
3. Matrix structure: The BCG Matrix is a two-by-two matrix, while the GE-McKinsey Matrix is a three-by-three matrix.
4. Business unit categorization: The BCG Matrix categorizes business units as either "stars", "cash cows", "question marks", or "dogs". The GE-McKinsey Matrix categorizes business units based on a combination of their industry attractiveness and business strength.
5. Strategic focus (Strategic Focus Framework): The BCG Matrix helps companies determine which products to invest in, which to divest, and which to hold onto. The GE-McKinsey Matrix helps companies make strategic decisions about which business units to invest in, which ones to divest, and which ones to restructure.

In summary, the BCG Matrix is a tool used to analyze a company's product portfolio, while the GE-McKinsey Matrix is used to analyze a company's entire business portfolio. The two matrices use different metrics and categorization schemes to evaluate a company's portfolio, and they have different strategic focuses.

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Summary

The GE-McKinsey Nine Field (or Box) Matrix framework offers a systematic approach to prioritize investments among products or business units.

In a world with increased competition and limited resources, the decision in which business unit or product portfolio to allocate capital and other resources is one of the most critical elements for a company's future success. This template helps you to address the complexity of the decision process.

The GE-McKinsey Nine Field with 9 cells indicate whether the company should invest into a business unit or product, harvest it or need to do further R&D if there are still resources left. Worst case, the business unit or product should be divested.

In the model, the business unit or products are evaluated on two axes: industry or market attractiveness and a competitive strength of the respective unit or product.

Our free and fully editable GE-McKinsey Nine-Field Matrix PowerPoint template is a powerful tool for businesses to assess their business portfolio and make strategic decisions.

The template is designed to be user-friendly and easy to customize, allowing businesses to input their own data and analyze their portfolio using the nine-cell matrix.

The template includes a pre-built nine-cell matrix, with industry / market attractiveness and competitve strength axes clearly labeled.

Each cell is color-coded to indicate its strategic importance, making it easy for businesses to identify their most attractive and least attractive business units.

The template also includes customizable text boxes for businesses to input their own data and analysis, as well as pre-designed icons and graphics to illustrate key points and data.

Overall, this template provides businesses with a powerful and flexible tool for analyzing their business portfolio and making strategic decisions based on objective analysis.

With its user-friendly design and customizable features, businesses can easily tailor the template to their specific needs and goals.

GE-McKinsey 9 Nine-Field Matrix - Slide Deck Preview

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