GE-McKinsey Matrix
9-box matrix for evaluating business units by market attractiveness and competitive strength.
PURPOSE
The BCG Matrix is too simplistic for some portfolio decisions because it uses only two dimensions. The GE-McKinsey Matrix offers a more differentiated assessment by considering multiple factors of market attractiveness and competitive strength. It enables more nuanced prioritization decisions for complex portfolios with many business units.
HOW TO USE
For each business unit, market attractiveness (market size, growth, profitability, competitive intensity) and competitive strength (market share, brand awareness, technology competence, cost position) are evaluated using weighted criteria. The results are positioned on a 3x3 matrix. Depending on position, strategies emerge: invest and grow, selectively invest, or harvest and divest.
WHAT IT IS
The GE-McKinsey Matrix is a strategic portfolio analysis tool developed in the 1970s by McKinsey for General Electric. It uses a 9-box matrix with market attractiveness and competitive strength as axes, each divided into three levels. Compared to the BCG Matrix, it allows a more differentiated assessment through the integration of multiple evaluation factors.
EXAMPLE
Example: The BCG Matrix of your industrial conglomerate was too simplified for the board because relative market share alone does not sufficiently describe the competitive position. You use the GE-McKinsey Matrix to evaluate each business unit in a differentiated manner using multiple factors — market attractiveness and competitive strength — in a 9-box matrix.