This tool is very similar to the BCG Matrix and you can actually view the GE or McKinsey Matrix is a kind of extension of the BCG Matrix (the multifactor portfolio analysis tool).
The main difference is that the GE Matrix compares different products or businesses on “Business Strength” and “Market Attractiveness” variables and in addition the size of the bubbles represents the market size instead of the business sales or revenue used in the BCG Matrix and the share of the market or business sales vs. market size is represented as a pie chart inside the bubbles.
GE Matrix Excel Chart Template
This allows the business user to easily analyze and compare business strength, market attractiveness, market size, and market share for different strategic business units (SBUs) or different product offerings. This strategic portfolio analysis tool has been initially developed by GE and McKinsey.
GE Matrix Positions and Strategy
The GE / McKinsey Matrix is actually divided into nine cells. These 9 cells represent the nine alternatives for positioning of any SBU or product / service offering. Based on the strength of the business and its market attractiveness each SBU will have a different position in the matrix. Further, the market size and the current sales will distinguish each SBU. Based on clear understanding of all of these factors decision makers are able to develop effective strategies.
The nine cells in the matrix can be grouped into three major segments:
Segment 1: This is mostly the best segment. The business in this position is strong and the market is attractive.
In this case the company should allocate resources in this business and focus on growing the business and increase its current market share.
Segment 2: The business is either strong but the market is not attractive or the market is strong and the business is not strong enough to pursue potential opportunities.
Decision makers should make judgment on how to further deal with these SBUs or products. Some of them may consume to much resources and are not really promising any strong potential while others may need additional resources and better strategy for growth.
Segment 3: This is the worst positioning segment. Businesses or products and services in this segment are very weak and their market is not attractive.
Decision makers should consider either repositioning these SBUs into a different market segment, develop better cost-effective offering, or get rid of these SBUs and invest the resources into more promising and attractive SBUs.