Ge9 Matrix

Topics: Microsoft Word, Industry, Strategic management Pages: 6 (1062 words) Published: May 15, 2011
GE-M C K INSEY M ATRIX
MS-Excel & MS-Word Templates User Guide

The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio analysis as a step in the strategic planning process. The template allows the user to generate the matrix using MS-Excel. The MSWord template allows the user to tabulate and present the results of portfolio analysis in a Word document.

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GE-MCKINSEY MATRIX
MS-Excel & MS-Word Templates User Guide

1 1.1 INTRODUCTION
The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio analysis as a step in the strategic planning process. The GE/McKinsey Matrix identifies the optimum business portfolio as one that fits perfectly to the company's strengths and helps to exploit the most attractive industry sectors or markets. Thus, the objective of the analysis is to position each SBU on the chart depending on the SBU's Strength and the Attractiveness of the Industry Sector or Market on which it is focused. Each axis is divided into Low, Medium and High, giving the nine-cell matrix as depicted below.

SBUs are portrayed as a circle plotted on the GE/McKinsey Matrix, where the size of the circle represents a factor such as Market Size. The GE/McKinsey Matrix differs from other tools, like the Boston Consulting Group Matrix, in that multiple factors are used to define Industry Attractiveness and Business Unit Strength.

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Each factor can be given a different weighting in calculating the overall attractiveness of a particular industry. Typically: Industry Attractiveness = Attractiveness Factor 1 Value by Factor 1 weighting + Attractiveness Factor 2 Value by Factor 2 weighting, etc. Business Unit Strength = Strength Factor 1 Value by Factor 1 weighting + Strength Factor 2 Value by Factor 2 weighting, etc. This template allows the user to define up to 10 SBUs to be plotted. Up to 10 different factors can be used to define Industry Attractiveness, Typical factors would be Market Size, Market Growth Rate, Industry Profitability, Competitive Rivalry, etc. Up to 10 factors can also be used to define SBU Strength. Typical factors are Market Share, Distribution Channel Access, Financial Resources, R&D Capability, etc The factors and their relative weightings are selected. The rating values for each factor are entered for each SBU and Industry. The SBU Strength and Industry Sector Attractiveness are calculated and the GE/McKinsey Matrix is automatically produced. The format used to produce the Matrix is a MS-Excel Bubble Chart. Industry Attractiveness and Business Strength are plotted on the X and Y axes. The size of the Bubble allows a further factor to be depicted on the chart. The default factor used is Market Size. However, a Dropdown list is available allowing the user to dynamically select any of the Industry Attractiveness factors as an alternative.

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2 1.2 USER INSTRUCTIONS MS-EXCEL
The MS-Excel model has a simple Push Button Menu system at the top of the Workbook in cell B2. (see figure 1) The following general guidelines should be followed. Cells in Green are intended for User Input. Cells in Black are calculated and should not be altered by the user. On first use it is recommended that the Menu Options be used in the sequence in which they are numbered, 1, 2, 3, etc. On subsequent use the options can be selected as required to make amendments to the data originally entered.

Figure 1

2.1 Step by Step
1. Enter the Business Unit Names.
Up to 10 Business Units may be entered (see figure 1)

2. Enter the Industry Sector Names.
Each Industry sector should correspond to a Business Unit. Thus, Industry Sector 1 should correspond to Business Unit 1, etc....
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