The GE-McKinsey Matrix in strategic business unit assessment

GE-McKinsey Matrix

The GE matrix is a very important toll in business and organizational level strategy (Berries and Hoare,2008). The tool was developed by McKinsey for General Electric due to the fact that Boston Consulting Group matrix showed signs of inflexibility when it comes to taking into account the broader aspect of issues. The GE matrix tool is very important in cross-referencing market attractiveness as well as business position by means of three very important criteria for- high, medium and low.

The market attractiveness takes into account variables that relates to the market itself such as the market growth rate, size of market, number as well as size of competitors, barriers to market entry, profit margins as well as the technological implications of the given market. The business position criterion on the other hand examines the business strength as well as weaknesses in various areas. These include the position of an organization to its competitors as well as the ability of the business to carry out market research, development as well as production. The GE matrix also makes consideration of how well as given company's management is in the deployment of various resources within its reach. The GE matrix is shown below

Source (Ward,2005).

The difference between the GE matrix and the Boston Consulting Group matrix is in the level of complexity (Ward,2005). The GE/McKinsey Matrix is a special model that is built to help in the assessment of Strategic Business Units (SBU). It is built on account of two main variables; market attractiveness and the competitive strength of a given organization in order to provide a satellite view. The main differences however are;