The general electric Matrix was developed by GE with the assistance of the consulting firm McKinsey & Company. The model identifies the market position and profitability of different business units based on their market attractiveness and business unit strength. This is more advanced form of Growth matrix model compared to BCG Matrix.
The main aims for GE Model
Here the two dimensions used are Market Attractiveness and Business Unit Strength. The market attractiveness refers to the attractiveness of the market or the industry in which the business units operate.
Factors affecting the Market Attractiveness
Business Unit Strength refers to the competitive position of each of the business units. It specifies the strength, market share, market position of the Business units.
Factors affecting the Business Unit Strength
Based on these two dimensions, one 3×3 matrix is formed to be used as a GE Model. The matrix is shown below with the respective strategic decisions.
It leads to four strategic decisions based on the outcome of this model.
Investment is made in the market on the basis of the existing market attractiveness in terms of growth. Also it is affected by the respective market share of an organization.
Protect condition refers to the situation where a business doesn’t want fresh investment rather it is willing to have the security of the given investment. So that it does not result in losses.
Harvest refers to the situation where the business wants to generate cash out of the given investment (i.e. it does not want stock accumulation).
Divest refers to the condition where a business organization has finally decided to sale an undertaking or a part of its undertaking. Divestment is the last option which a business organization can undertake.