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GE Multifactor Portfolio Matrix:-
GE Multifactor Portfolio Matrix is a tools that helps managers develop organizational
strategy that is based primarily on market attractiveness and business strengths. The GE
multifactor was first developed by General Electric in the 1970s.
The GE Multifactor Portfolio was deliberately designed to be more complete than the BCG
Growth Share Matrix. Each of the organizations SBUs are plotted on a 2 dimensional matrix
of Industry Attractiveness and Business Strength. Each of these 2 dimensions are a composite
of a variety of factors that each firm must determine for itself, given its own unique situation.
Each product, brand, service, or potential product is mapped in this industry
attractiveness/business strength space.
The GE Matrix however, attempts to improve upon the BCG matrix in the following two
ways:-
The GE matrix generalizes the axes as Industry Attractiveness and Business Unit
Strength whereas the BCG matrix uses the market growth rate as a proxy for industry
attractiveness and the relative market share as a proxy for the strength of the business unit.
The GE matrix has nine cells v/s four ells in the BCG matrix.


Strategy Formulation
GE Multifactor Business Portfolio Matrix


HIGH



MEDIUM



LOW



LOW MEDIUM HIGH


INDUSTRY ATTRACTIVENESS



Selective
Investment
Invest /
Grow
Invest /
Grow
Harvest /
Divest
Selective
Investment
Invest /
Grow
Harvest /
Divest
Harvest /
Divest
Selective
Investment

Industry Attractiveness:-

The horizontal Axis of the GE Matrix is Industry attractiveness which is determined by
factors such as the following:-

Market Growth Rate
Market Size
Demand Variability
Industry Profitability
Industry Variability
Global Opportunities
Macro-environmental Factors
Business Unit Strength:-
The vertical axis of the GE matrix is the strength of the business unit. Some factors that can
be used to determine business unit strength include:-
Market Share
Growth in market share
Brand Equity
Distribution channel access
Production capacity
Profit margins relative to competitors
Strategic Implications:-
Resource allocation recommendations can be made to grow, hold, or harvest a strategic
business unit based on its position on the matrix as follows:
Grow strong business units in attractive industries, average business in attractive industries,
and strong business units in average industries.
Hold average businesses in average industries, strong businesses in weak industries, and
weak business in attractive industries
Harvest weak business units in unattractive industries, average business units in unattractive
industries, and weak business units in average industries.
There are strategy variations within these three groups. For example, within the harvest group
the firm would be inclined to quickly divest itself of a weak business in an unattractive
industry, whereas it might perform a phased harvest of an average business unit in the same
industry.




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CISCO MULTIFACTOR PORTFOLIO MATRIX

Strategy Formulation
Cisco Multifactor Business Portfolio Matrix


HIGH



MEDIUM



LOW



LOW MEDIUM HIGH

INDUSTRY ATTRACTIVENESS
Inference:-
The routing and Wireless LAN strategic business units of Cisco has a high market share of
around 51% and 50% respectively and the industry is growing at a 10% CAGR for both the
units. So, there is a potential of growth for the company and it should invest wisely in these
units.
The Switching, Web Conference and IT Security business units of Cisco are leaders in terms
of market share which stands at 66%, 41% and 32% respectively. The industry growth
fortune of these units are very encouraging and hence Cisco should target and keep a
focussed approach on these business units in times to come. They resembles to STARS in the
BCG matrix.
Though Cisco leads in terms of market share at 44% for Telepresence unit but the industry
fortunes are negative with decline in the growth. Hence we would advise that with time the
company should divest the business unit.
With high market share of around 35% (position 1) and 41% (position 2) in Voice Service
and Storage Area Networks respectively and the high industry attractiveness due to the
powerful cloud computing technology, these two business units are poised to witness a
positive growth with the growth of industry and hence the company can efficiently deploy
their resources (Financial, human resource etc.) to remain the market leader in this vertical.

Routing
Wireless
LAN
Switching,
Web
Conference,
IT Security
Telepresence
Voice
Service,
Storage Area
Network
Blade Server
With low market share of around 26% and low industry growth prospects, the Blade Server
unit can be considered as DOG as per the BCG matrix and it would be difficult in times to
come to generate profit from this business. So it should be divested and the resources from
these units must be utilized in other business units which are high performing.