General Electrics (GE) Matrix Genxeral electric,an American multinational company,developed a nine cell strategic business screen in terms

of two dimension-industry attractiveness and business strength.Each of these two dimensions is further analysed in a number of factors that contribute to each dimension.

Industry/market attractiveness factors Market size Growth rate Competitive diversity Profit margin Technological requirements Social and legal impacts

Business strength factors Relative market share Price competitiveness Product quality Brand reputation Distribution networks Promotional effectiveness Unit costs

M a r k e t A t t r a c t i v e n e s

GE believe that the factors mentioned under each dimension are a key to determining the return on investment of strategic business units and its portfolio classification system is below:GREEN ZONE GREEN ZONE High YELLOW ZONE

GREEN ZONE YELLOW ZONE

YEL LOW ZONE RED ZONE

RED ZONE

Medium

RED ZONE Low Business Strength

Strong Average Weak Steps 1.the vertical axis represents the industry/market attractiveness dimension.Each of factors contributing to the attractiveness dimension is given certain weight,a procedure that yields in classifying a particular industry/market as high, mediumor low. 2.the horizontal axis represents business strength of the strategic business unit or its ability to compete in the industry/market.Each industry/market has certain success

requirements which must be matched with the SBU having the required competence.Hence,business strength is a weighted rating of such factors.it has been classified as strong , average, and weak. 3.the screen has been divided into three zones-green,yellow and red. The green zone consists of the three cells at the upper left indicating favourable industry/market attractiveness and business strength.It suggests that the company has the green signal to invest and grow.the yellow zone consists of the diagonal (three) cells stretching from the lower left to upper right and it indicates that the industry/market and business are medium in over all attractiveness.so,the company may decide to maintain the SBUS SHARE.The red zone consists of the three cells in the lower left indicate that industries/markets are low in attractiveness.Hence,the firm may give serious consideration for harvesting or divesting. 4.there are circles in green zone,yellowzone and red zone. The area of each circle is proportional to the size of the industry/market in which the SBU competes.the pie slice within the circles represents each SBUs market share. GEs matrix has used several factors under two broad dimensions to asses the SBUs.It has also used return on investment rather than cash flow and it makes an improvement over the BCGs approach. However,GEs matrix also has some limitations.For example,it has failed to indicate precisely how to calculate weighted scores on the various factors contributing to market attractiveness and business strength.