Ge matrix

Ge matrix..

1. GE-MATRIX By, KARAN CHHEDA MEKHALA LAUD PRIYANKA THAKUR

2. What is ge-matrix? It is a strategy tool that offers systematic approach for multi business corporations to identify market position and profitability and further prioritize its investments among its business units.

3. How it came into being? In 1970’ s , GE was unsatisfied with the returns on investments. It consulted with McKinsey & company and this resulted into a formation of a nine-box matrix. That helped analyze portfolio of the strategic business unit (SBU) of the corporation. Computation of this matrix allows business to take decision on whether to invest or to divest or carry a further res earch on the product .

4. Components of ge-matrix For the calculation process the company needs to evaluate following : Industry attractiveness. Competitive strength.

5. Industry Attractiveness Industry attractiveness indicates how hard or easy it will be for a company to compete in the market and earn profits. More profitable = More attractive . Factors used to determine Industry Attractiveness . Factors used to determine Industry Attractiveness. Long run growth rate Trend of prices Industry size Macro environment factors  Industry profitability Seasonality Industry structure Availability of labor Product life cycle changes Market segmentation Changes in demand

6. Competitive strength of a business unit or a product The matrix measures how strong, in terms of competition, a particular business unit is against its rivals.  If the company has a sustainable competitive advantage, the next question is: “For how long it will be sustained?” Factors used to determine Competitive strength of a business unit . Total market share. Customer loyalty. Market share growth compared to rivals. Strength of a value chain. Brand strength. Level of product differentiation. Profitability of the company. Production flexibility.

7. Industry Attractiveness. Competitive strength of a business unit or a product. How do we Calculate GE-Matrix?

8. Advantages Helps to prioritize the limited resources in order to achieve the best returns. Managers become more aware of how their products or business units perform. Identifies the strategic steps the company needs to make to improve the performance of its business portfolio.

9. Requires a consultant or a highly experienced person to determine industry’s attractiveness and business unit strength as accurately as possible. It is costly to conduct. It doesn’t take into account the synergies that could exist between two or more business units. Disadvantages