GE McKinsey Matrix

Introduction

The GE McKinsey Matrix (also called the GE Nine-Cell Matrix) was developed by McKinsey for General Electric in the 1970s. It's a more sophisticated alternative to the BCG Matrix, using multiple factors to assess industry attractiveness and competitive strength.

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The Two Dimensions

Industry Attractiveness (Y-axis)

Composite measure of external factors:

• Market size and growth rate
• Industry profitability
• Competitive intensity
• Technological requirements
• Environmental/regulatory factors
• Entry barriers

Competitive Strength (X-axis)

Composite measure of internal capabilities:

• Market share
• Brand strength
• Production capacity
• Profit margins relative to competitors
• Technological capability
• Management strength

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The Nine Cells

	Strong	Medium	Weak
High Attractiveness	Invest/Grow	Invest/Grow	Selectivity
Medium Attractiveness	Invest/Grow	Selectivity	Harvest/Divest
Low Attractiveness	Selectivity	Harvest/Divest	Harvest/Divest

Strategic Implications

• Invest/Grow (Green): Priority for investment—strong position in attractive industry
• Selectivity (Yellow): Selective investment—strengthen or exit
• Harvest/Divest (Red): Minimize investment—extract cash or divest

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Constructing the Matrix

Step 1: Define Factors

Identify relevant factors for each dimension

Step 2: Assign Weights

Weight factors by importance (must sum to 1.0)

Step 3: Rate Each SBU

Score each factor 1-5 for each business unit

Step 4: Calculate Scores

Weighted score = Σ(weight × rating)

Step 5: Plot on Matrix

Position each SBU; circle size = revenue

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GE Matrix vs BCG Matrix

Feature	BCG Matrix	GE McKinsey
Dimensions	2 (growth, share)	2 (composite measures)
Cells	4	9
Factors	Single factor per axis	Multiple weighted factors
Flexibility	Limited	Customizable
Complexity	Simple	More complex

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Conclusion