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GE Nine Cell Matrix

GE Nine Cell Matrix
GE NINE CELL MATRIX Another popular “Corporate Portfolio Analysis” technique is the result of pioneering effort of General Electric Company along with McKinsey Consultants which is known as the GE NINE CELL MATRIX. GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises to prioritize their investments among the various business units. It is a framework that evaluates business portfolio and  provides further strategic implications. Each business is appraised in terms of two major dimensions – Market Attractiveness and Business Strength. If one of these factors is missing, then the business will not produce desired results. Neither a strong company operating in an unattractive market, nor a weak company operating in an attractive market will do very well. The vertical axis denotes industry attractiveness, which is a weighted composite rating based on eight different factors. They are: Market size and growth rate Industry profit margins Intensity of Competition Seasonality Product Life Cycle Changes Economies of scale Technology Social, Environmental, Legal and Human Impacts PORTFOLIO ANALYSIS-BCG MATRIX What does the horizontal axis represent? It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below: Relative market share Profit margins Ability to compete on price and quality Knowledge of customer and market Competitive strength and weakness Technological capability Caliber of management The two composite values for industry attractiveness and competitive position are plotted for each strategic business unit (SBU) in a COMPANY’S PORTFOLIO. The PIE chart (circles) denotes the proportional size of the industry and the dark segments denote the company’s respective market share. The nine cells of the GE matrix are grouped on the basis of low to high industry attractiveness, and weak to strong business strength. Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors. So it is also called ‘Stoplight Strategy Matrix’, similar to the traffic signal. The green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion strategies. Businesses in the green zone attract major investment. Yellow cautions you to ‘wait and see’ indicating hold and maintain type of strategies aimed at stability. Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach. This matrix offers some advantages over BCG matrix in that, it offers intermediate classification of medium and average ratings. It also integrates a larger variety of strategic variables like the market share and industry size. Advantages Helps to prioritize the limited resources in order to achieve the best returns. The performance of  products or business units becomes evident. It’s more sophisticated business portfolio framework than the BCG matrix. Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio. Disadvantages Needs a consultant or an expert to determine industry’s attractiveness and business unit strength as accurately as possible. It is expensive to conduct. It doesn’t take into account the harmony that could exist between two or more business units. PORTER’S FIVE FORCES-INDUSTRY...
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Market Research for Product Line

Market Research for Product Line
Market Research for Product Line Management Business firms, whether involved in the manufacture of goods or delivery of services, have to understand the importance of marketing research that would give a fair idea about their territory of operations and the scope for development. Sell Right: 13 Effective Techniques to Boost your Sales Let me first clarify the obvious difference between a market research and marketing research. While market research is confined to only a market which comprises of its potential and actual buyers, a marketing research delves deep into and further beyond, covering all areas of marketing including the market. Identification of Consumer Needs: Identification of consumer needs and satisfying them is vital for the emergence of a buyers market. Although firms manufacture goods that are competitive in terms of quality and price, it is the middlemen, the linking factor between the manufacturer and the wholesaler or retailer, that have a commanding grip on distribution, affecting sales volumes. Extensive marketing research will help firms to solve such problems of middlemen and distribution, to cater to the needs of the ever expanding market. Preference of People: People’s preference always changes resulting in a sea change of market conditions. In order to anticipate and meet any such changes, a firm needs to analyze the market conditions on a day to day basis. Also improving the product design helps a firm to retain its customer base. How does a firm survive in the market without knowing the elemental changes that are happening in its immediate environment? Pricing is one of the crucial factors that determine the acceptance ratio of a product or range of products. A separate department is maintained by some top corporate firms to collect relevant information about the pricing strategies of rival companies that helps them to take the market lead, by quoting competitive prices comparatively. Such secret agendas are a need of the hour to outsmart your rivals. Sales Promotion and Advertisement Campaigns: Another component of the research planning is sales promotion and advertisement campaigns. Sales promotion is solely dependent upon the sales force and the marketing manager has to play a key role in integrating their functions to bring out their strengths. The activities of the sales personnel should be oriented towards targets and a mission without a target is like travelling without knowing the destination. When we talk about advertisements, they not only sell tangible products but also intangible things like morals, values, love etc., So, it becomes even more important for the advertisers to follow some built in standards that does not affect the ethical values of the society concerned and also they should make it a point not to make women a mere object of attraction. The market research that is a part of marketing research includes the study of the following: Market size Market potential Market share Market segments Market trends and seasonal trends Sales forecasting Consumer profile Consumer preference Competitor analysis Measuring the price elasticity of demand and much more. Such marketing research helps a firm to develop a comprehensive plan regarding effective training programmes, sales force management, research and development programmers and effective control mechanisms. It also facilitates efficient decision making and the operational tasks of marketing management, thereby contributing to customer satisfaction and efficiency of the...
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Theory of Demand and Supply

Theory of Demand and Supply
Demand and Supply in Different Markets Demand Criteria Since the analysis of a business firm is central to managerial economics, we are primarily interested in the demand for a #commodity faced by a firm. The demand for a commodity faced by a firm depends on the size of the market, industry demand for the commodity, the form in which the market is organized and the number of firms in the industry vying for the same set of resources and customers. Demand Curve The #market demand curve for a commodity shows the various quantities of the commodity demanded in the market per time period at various alternative prices of the commodity, while holding everything else constant. The curve is negatively sloped, indicating that #price and #quantity are inversely related. The things held constant in drawing a market demand curve for a #product are the number of customers in the market, consumer’s income, the prices of related commodities and tastes. Types of Markets #Monopoly and #Perfect Competition Coming back to the form of a business firm, at one end there exist the monopolist (the sole producer of a commodity for which there are no good substitutes), and at the other end, perfect competition, where there are a large number of firms producing a homogenous product and each firm is too small to affect the price of the commodity by its own actions. In such a case, each firm is a price taker unlike the monopolist who is a price maker thanks to the product exclusivity factor. #Oligopoly In oligopoly there are only a few firms in the industry producing either a homogenous or differentiated product. Since there are only a few firms, the pricing, advertising and other promotional behavior of each firm greatly affect the other firms in the industry and evoke imitation or duplication. We witness many industrial giants fighting for their market share in the respective industrial domains. #Monopolistic In monopolistic competition, there are many firms selling a differentiated product. As the name implies, monopolistic competition has elements of both competition and monopoly. The monopoly element arises because each firm’s product is somewhat different from other firm’s products that facilitate the firms to have some degree of control over the price. Although we try to establish an inverse relationship between price and demand, the other side of the coin shows a different picture in that, as the income levels of a consumer is on an increasing trend, his or her purchasing power increases. Consumers tend to purchase more of most commodities like automobiles, housing, travel and so on, when the income rises. There are some goods, however of which the consumer purchases decline as income rises- for example, maize and similar cheap foods as the consumer has the power to buy goods with better quality and there is no need for a compromise. Demand is one of the most important aspects of managerial economics, since a firm would not be established or survive if a sufficient demand for its product did not exist or could not be created. A firm could have the most efficient production techniques and the most effective #management, but still without a demand for its product that is sufficient to cover all production and selling costs over the long run, it simply could not survive. Demand is thus essential for the creation, survival and profitability of a...
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