Difference between bcg and ge matrices with comparison. However the ge matrix is considered by many to be an extension, and even an improvement of that model. Dodiya, slideshare, 20 this helps the organization. The business portfolio is the collection of businesses and products that make up the company.
Ge asked mckinsey and company, a consulting company in the usa, to develop a portfolio approach with a wider dimension than the bcg matrix. They created this company screen for general electric in order to distinguish the chance of upcoming revenue within each one of the 43 business units. The ge mckinsey matrix is a business portfolio matrix showing relative business. The recommendations here include marketing investment to increase market share. When the product eventually evolves into the mature stage of the. The ge mckinsey matrix this is a form of portfolio analysis used for classifying product lines or strategic business units within a large company it was developed by mckinsey for the us general electric company it assesses areas of the business in terms of two criteria. These individual businesses are often referred to as strategic business units sbus. The exact measure for relative market share is the focal companys share relative to its largest competitor. It is conceptually similar to bcg analysis, but somewhat more complicated.
General electricmckinsey matrix, fashion marketing, luxury brands, business strengths, industry attractiveness, productportfolio analysis, competitive marketing 1. Many people have trouble in understanding the difference between bcg and ge matrices. Portfolio analysis for cocacola company using ge matrix. The company has perfected its product mix over the years according to whats working and whats not. Ge mckinsey matrix mckinsey model ge matrix youtube. Bcg matrix can be understood as the growth share model, that reflects growth of business and the market share possessed by the firm. Each product, brand, service, or potential product is mapped in. Ge multifactor portfolio matrix management innovations. Here are the four quadrants of pepsicos growthshare matrix. They wanted this tool to enable them to better analyze their sbus so they could make better investment decisions. Also known as the directional policy matrix, the ge multifactor model was first developed by general electric in. Comparison and usage of the boston consulting portfolio and the.
Like in bcg analysis, a twodimensional portfolio matrix is created. The composition of the portfolio can be critical tothe growth and success of the company. A perfect example to demonstrate bcg matrix could be the bcg matrix of pepsico. This chart was created with the purpose of helping companies analyze their different.
The internalexternal ie matrix is similar to the bcg matrix in that both tools involve plotting organization divisions in a schematic diagram. General electric mckinsey matrix, fashion marketing, luxury brands, business strengths, industry attractiveness, product portfolio analysis, competitive marketing 1. Strategic analysis through the general electricmckinsey. But one can learn to use it by following the five steps given below. Quality tools tools of the trade the ge portfolio matrix. In response, management thinkers developed frameworks to address this new complexity. The ge matrix is an alternative technique used in brand marketing and product management to help a company decide what products to add to its product portfolio, and which market opportunities are worthy of continued investment. Introduction it is well known that the traditional transactional marketing has been replaced by the relational marketing cf. The bcg matrix considers two variables, namely x market growth rate.
Also, the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both. For example, should the funds go to research and development. With the rise of multibusiness enterprises in the 20th century, companies began to struggle with managing a number of business units profitably. The mckinsey model is a matrix which can help a business decide where to invest when it owns a number of strategic business units sbus. The cartesian xy graph format is splendid for many situations, but when you want to display multiple variables then it gets a bit tricky. The gemckinsey matrix identifies the optimum businessportfolio as one that fits perfectly to the companys strengthsand helps to explore the most attractive industry sectors ormarkets. The cola beverage industry serves a good example here. Find the typical variations and how to create these templates using powerpoint. An example of a product that can be classified as star in the bcg matrix is the led lamp from philips. Portfolio analysis for cocacola company using ge matrix stratigy.
Another name for this type of analysis is portfolio analysis. General electric ge matrix, which itself focuses on two aspects namely. So if samsung has a 20 percent market share in the mobile phone industry and apple its largest competitor has 60 percent so. Matrix bcg this technique is particularly useful for multidivisional or multiproduct companies. For example, business unit 1 generates 20% revenue and. In the 1970s, general electric company was an umbrella corporation managing a wide array of complex and unrelated. For example, we developed this matrix as an example of how a brand might evaluate its investment in various marketing channels.
Ge inquired mckinsey to build up some sort of portfolio strategy using a broader way of measuring compared to the bcg matrix. The ge mckinsey matrix has also many points in common with the maba analysis. Gemckinsey matrix explained with an example the mckinsey matrix, because of its higher sophistication, is a little more difficult than the bcg matrix to put into practice. In 1970s, ge was unsatisfied with the returns on investments. The ge matrix helps a strategic business unit evaluate its overall strength. For example, should the funds go to research and development, marketing, value chain development or customer development examples ge and the matrix development. Mckinsey, to develop a portfolio management model that would suit it needs.
The bcgmatrix was developed by the boston consulting group in the late 1960s and the early. August 7, 20 when working with large portfolios, the algebra of representing portfolio expected returns and variances becomes cumbersome. How to use the bcg matrix smart insights digital marketing. The gemckinsey matrix is a nine cell 3 by 3 matrix used to perform business portfolio analysis as a step in the. Using the boston consulting group portfolio matrix to. Ge mckinsey matrix is a very similar portfolio evaluation framework to bcg matrix.
If a program has a good market share in a growth industry, it is classified as a star. Both matrices are used to analyze companys product or business unit portfolio and facilitate the investment decisions. In 1971 mckinsey and co developed the business screen for general electric to differentiate the potential for future profit in each of the 43 strategic business units. Dogs bcg matrix example the dogs in the bcg matrix are products at the end of the product lifecycle, or products that have had to compete against the competition. This matrix was created by mckinsey consulting company for ge. The portfolios of businesses consist of all combinations of products and or services that are offered to the market target groups. On the other hand, ge matrix is also termed as multifactor portfolio matrix, which businesses use in making strategic choices for product. The ge mckinsey matrix ge mckinsey model nine box matrix. Ge multifactor portfolio matrix is a tools that helps managers develop organizational strategy that is based primarily on market attractiveness and business strengths. That helped analyze portfolio of the strategic business unit sbu of the corporation.
A business portfolio is the collection of all the business units within a corporation and a large corporation has normally many sbus. Visit our marketing theories page to see more of our marketing buzzword busting blogs you will have most likely heard of the boston consulting group matrix or bcg matrix, if not you can read about it in our bcg blog. While designed to assist in the gemckinsey approach to portfolio management, this model can be used for any situation where a certain number of items are ranked on two sets of weighted factors. Bcg matrix is a useful strategic planning model developed by boston consulting group in 1970s. This is because each product will have its own demands and requirements. The following is an example of such a representation.
This simple framework is a powerful marketing strategy and product management portfolio analysis tool. This matrix or ge matrix is a variant of the boston consulting group bcg portfolio analysis. One that arose in the early 1970s was the gemckinsey ninebox framework, following on the heels of the boston consulting groups. When you have a complex product portfolio, then it is difficult for you to take decisions. Product portfolio with mckinsey matrix design examples.
Ge matrix or mckinsey matrix is a strategic tool for portfolio analysis. The software runs from within microsoft excel and only with data contained in an. Ge mckinsey matrix smi strategic management insight. Bcg matrix template variations presentation process. The ge multifactor portfolio was deliberately designed to be more complete than the bcg growth share matrix. This is also known as the growth market share matrix by plotting these factors it is possible to identify which products or brandsunits a company should invest further in, and. The use of matrix linear algebra can greatly simplify many of the computations.
Bcg matrix was a framework originally devised by boston consulting group to strategically measure the potential growth rate of a company within its industry versus its relative market share. The ge mckinsey matrix is a product portfolio analysis matrix. The divisions or products compromise the organisations business portfolio. A common problem when displaying data is how to get more than two variables onto a twodimensional page. The ge mckinsey matrix is a ninebox matrix which is used as a strategy tool. The analysis begins as a twodimensional portfolio matrix but the dimensions. In this article, we will look at 1 what is the bcg matrix, 2 understanding the bcg matrix, 3 how to apply bcg matrix to your company, and 4 some examples. The gemckinsey matrix is a ninecell 3 by 3 matrix and it is primary used to perform business portfolio analysis on the strategic business units sbu of a corporation. The optimal business portfolio is one that fits perfectly to the companys strengths and helps to exploit the most attractive industries or. The medium is different, but the strategy remains the same milk the cows, dont waste money on the dogs, invest in the stars and give the question marks some experimental funds to see if they can become stars. The ge matrix helps a business, each of which is called a strategic business unit by ge, to evaluate its overall strength.
Bcg is only a four cell matrix, while ge mckinsey is a nine cell matrix. The best business portfolio is one that fits the companys strengths. The creator of the bcg matrix used this variable to actually measure a companys competitiveness. Ge multifactoral analysis is a technique used in brand marketing and product management to help a company decide what products to add to its product portfolio and which opportunities in the market they should continue to invest in. An important tool for the strategic management is the portfolio. As an example of a business portfolio, consider hilton hotels. Multiplying the factor ratings by the weights produces a position for each business on the strengthattractiveness matrix.
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