The GE McKinsey Matrix is a useful tool for strategic planning.
Organizations use the GE 9 Cell Matrix to determine their position in the market and then analyze strategies for growth.
Developed by McKinsey for its client GE, the GE McKinsey Matrix helps business strategists analyze three factors: products and markets, competitors and organizational structure.
Why The GE McKinsey Matrix Works
Let’s consider a GE 9 Cell Matrix example to understand the concept. Think of how large conglomerates, such as PepsiCo, or indeed GE, are structured. Large global corporations have within them dozens or even hundreds of different products and product categories. Each of these portfolios is called a strategic business unit (SBU). How do organizations decide which of these to invest in or exit from? The GE 9 cell matrix is a way of structuring an organization’s strategy into manageable segments.
The GE 9 Cell Model is a process of establishing the organization’s current position in the market. It can then evaluate each of its strategies and choose a course of action to take.
The McKinsey Matrix is a way of solving business problems by showing all strategies in a two-dimensional chart, arranging the strategies according to their relative competitive strength. This helps organizations use finite resources better.
The GE Matrix In Strategic Management
The analysis for the GE 9 Cell Model begins with establishing the organizational goals and objectives. Each SBU’s role within the organization and competitive strengths and weaknesses are then assessed. On this basis, businesses are separated into three categories:
Grow means continuing the same strategy with an upward trajectory of investment. Efforts toward product innovations, new markets and increased production should continue. These businesses help maintain and enhance the organization’s position in the industry.
In the matrix, hold means no changes. The organization should work to keep its position in these markets and business. It has a secure position in their existing market niche and they should work to hold on to it.
Sell means removing oneself from the market. The organization stops producing the product or service. This strategy is used when there’s an oversupply in the market, as well as a low market demand.
Each of the nine cells in the McKinsey Matrix is structured to help evaluate existing opportunities and determine which has the best chance of success. In this way, the GE Nine Cell Matrix is an effective framework for decision-making.
How Organizations Can Benefit From The GE 9 Cell Matrix Example
The Nine Cell Matrix can be used in many ways. Let’s break down the benefits:
- The organization will determine its competition and understand their strategic strengths and weaknesses. This will give them an advantage in identifying opportunities
- The matrix helps the organization choose from among the different options available by presenting information in a simple, easy-to-understand way
- The analysis of each alternative provides valuable information from which the organization can make decisions about its strategies
These are some reasons the McKinsey Matrix is so useful. It can also be used as a planning tool very early on in the product life cycle.
How Organizations Can Use The GE 9 Cell Matrix To Analyze The Market
Competition can be used as a predictor of future success. By charting the industry attractiveness against the business unit strength, it’s possible to determine which business units will perform the best. This is what an analysis using the GE Nine Cell Model can reveal:
- Which organizations in a sector have the most competitive strength?
- Which have the most competitive weaknesses?
- Which industry segments do people most desire?
- Which has the best ability to meet customers’ needs?
How does competition affect an organization’s decisions and strategies? Knowing this at the outset can help businesses focus their efforts in the best way possible.
What Is the McKinsey 9 Box Talent Matrix?
The McKinsey 9 Box Talent Matrix can also be used to analyze the workforce in an organization. It helps plot potential against performance and it’s an effective tool to separate the underperformers from the future leaders.
Tools such as the McKinsey 9 Cell Talent Matrix or GE 9 Cell Model are essential for future leaders to master. With Harappa’s High Performing Leaders program, managers will learn to navigate complex decisions. Big picture thinking, catalyzing change and cultivating foresight are a few of the Thrive Skills that this program tackles head on. Tools and frameworks, such as the McKinsey 9 Box Matrix, can help traverse uncertainty in highly competitive markets. It’s possible to master the art of handling the unknown. Find out how with Harappa!
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