General Electric screen matrix (the General Electric (GE) business screen) The GE screen matrix is essentially a derivation of the Boston Consulting Group’s Boston growth matrix. It was developed by McKinsey and Co. for General Electric as it had been recognized that the Boston Consulting Group matrix was not flexible enough to take broader issues into account. The GE matrix cross-references market attractiveness and business position using three criteria for each – high, medium and low. The market attractiveness considers variables relating to the market itself, including the rate of market growth, market size, potential barriers to entering the market, the number and size of competitors, the actual profit margins currently enjoyed, and the technological implications of involvement in the market. The business position criteria look at the business’s strengths and weaknesses in a variety of fields. These include its position in relation to its competitors, and the business’s ability to handle product research, development and ultimate production. It also considers how well placed the management is to deploy these resources. The matrix differs in its complexity compared with the Boston Consulting Group matrix. Superimposed on the basic diagram are a number of circles. These circles are of variable size (see Figure 22). The size of each represents the size of each market. Within each circle is a clearly defined segment which represents the business’s market share within that market. The larger the circle, the larger the market, and the larger the segment, the larger the market share.
The term ‘general environment’ refers to the broad macro-environment in which a business operates. Broadly speaking, it can be identified as having four key elements, as outlined in Table 10.
Key Concepts in Strategic Management
Business position High Invest heavily for growth High Medium Invest selectively and build Low Develop for income
Invest selectively and build
Develop selectively for income
Harvest or divest
Develop selectively and build on strengths
The General Electric (GE) matrix
Elements of the general environment Political/legal Potential/actual changes in regulations/legislation Foreign trade regulations Environmental protection Changes in government (local/regional/national)
Technological New development inside and outside the industry New product development Technological projects in the industry Industry (and government) spending on research and development
Economic GNP growth Finance/market trends Inflation Interest rates Money supply Employment/unemployment Energy issues
Socio-cultural Population trends Age distribution Regional movement of population Demographics of the family Lifestyle Consumerism
The most rapid of these trends in the general environment are technological and political/legal. The slowest moving are the economic and the socio-cultural.
The organizational structure of a major business could be based purely on geographical regions. This could reflect the following possibilities:
• • •
that the market is sufficiently remote to warrant a replication of the organizational structure in its geographical region; that the factors of production are sufficiently attractive to set up a geographically-based structure; that the market requires specific support that can only be delivered in the geographical region and not from the remote central headquarters of the organization.
Global area structure
A global area structure configures the organization along the main areas (geographically) in which it operates. Typically, the globe would be split up into a series of general areas such that the business can assume that all functions can be carried out by a centralized headquarters within each...