A 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.
This is a strategy tool that offers a systematic approach for the multi business enterprises.
It helps them 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.
They are:
It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below:
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 green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion strategies. Businesses in the green zone attract major investment.
Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach.
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