Ge and Mckinsey Matrix (Ge Business screen)

GE/Mckinsey Matrix

With the introduction of the Bcg Growth share matrix,Ge was fascinated with the concept and liked the visual approach depicting the positioning of a firm's businesses on the matrix and they were also looking at concepts and techniques for strategic planning. So they asked Mckinsey and company,a consulting company in the USA,to develop a portfolio approach with a wider dimension than the BCG Matrix. The GE Business screen is a 9cell matrix an is considered an improvement over the BCG Growth matrix because it is a multi-factor portfolio model and it considers many more variables and does not lead to simplistic conclusions like the BCG.

The GE Business Screen recognizes that the attractiveness of an industry can be assessed in many different ways (other than simply using growth rate), and also the market share is included in the factors that affect the business strength and not seen as the only factor that determines a company's competitive position like the BCG Matrix.

Factors that affect industry attractiveness include:

a) Industry size

b) Market profitability

c) Industry growth

d) Pricing trend

e) Overall risk and returns in the industry

f) Opportunity to differentiate products and services

g) Distribution structure

h) Competition intensity

Factors that affect business strength/ Competitive position include:

a) Strengths of assets and competencies

b) Market share

c) Customer loyalty

d) Relative cost position

e) Distribution Strength

f) Customer loyalty

g) Access to finance and other investment resources.

The GE business screen is considered an improvement over the BCG growth share matrix,but it however has its own shortcomings which are:

a) It can get quite complicated and cumbersome

b) It cannot effectively depict the positions of new products or business units In developing industries

c) The numerical estimates of Industry attractiveness and business strengths gives an appearance of objectivity, but they are ij reality subjective judgements that may vary from one person to another.