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.
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