Home Management The GE Matrix



The GE Matrix
Posted on: December 22, 2012 at 12:00 AM
Advertisement
The GE matrix was developed by Mckinsey in 1970s for General Electric in order to overcome the various disadvantages associated with the BCG matrix. GE Matrix has been successfully deployed as an alternative in marketing for brand marketing, product management. GE Matrix, also popular as 'Directional Policy Matrix,' helps a company decide what products the company should add in its product portfolio.

The GE matrix was developed by Mckinsey in 1970s for General Electric in order to overcome the various disadvantages associated with the BCG matrix. Since then, GE Matrix has been successfully deployed as an alternative in marketing for brand marketing, product management and decided the business portfolio of an organisation.

GE Matrix, also popular as 'Directional Policy Matrix,' helps a company decide what products the company should add in its product portfolio and explore the market opportunities for making investments by studying and analysing various factors affecting Market Attractiveness and Competitive Strength.

GE matrix follows the same concept as of BCG matrix but with some improvements. As market growth of BCG matrix is replaced by market attractiveness covering a broader range of attributes. Secondly, the market share is replaced by competitive/business strength.

The matrix has been plotted in a two dimensional grid i.e. X and Y-axis, where the Y- axis represents the Market attractiveness and X- axis indicates Competitive strength.

Each of the products, brand, services and potential business sources are displayed in a pie-chart under specific range of market attractiveness and competitive/business strength space.

According to the GE Matrix, the diameter of each pie chart is directly proportional to the increase in volume or revenue through each opportunity.

  • The company should only invest on the opportunities appearing to the top let of the matrix means the opportunities that are both attractive and contains some amount of competitive strength.
  • Objects or opportunities appearing on the extreme bottom right of the matrix are neither attractive nor do have competitive strength.
  • Opportunities appearing in between need a good strategic planning and strategic decision before investment.

GE Matrix Diagram of Marketing

GE Matrix helps the strategic decision makers to take the best decisions after analysing various factors affecting market attractiveness and competitive strength. Some of them are:

Factors that Affect Market Attractiveness

Factors affecting Market Attractiveness

  • Market Size
  • Market growth
  • Market profitability
  • Pricing trends
  • Competitive intensity
  • Overall risk of returns in the industry
  • Opportunity to differentiate products and services
  • Segmentation
  • Distribution structure

Factors affecting Competitive Strength

  • Strength of assets and competencies
  • Relative brand strength
  • Market share
  • Customer loyalty
  • Relative cost position
  • Distribution strength
  • Record of technological or other innovation
  • Access to financial and other investment resources
Advertisement

Related Tags for The GE Matrix:


Ask Questions?    Discuss: The GE Matrix  

Post your Comment


Your Name (*) :
Your Email :
Subject (*):
Your Comment (*):
  Reload Image
 
 
Advertisements Advertisements
 

 

 

DMCA.com