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GE Nine (9) Cell Matrix - MHA Study Guide

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77 views4 pages

GE Nine (9) Cell Matrix - MHA Study Guide

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Pratham Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MHA Study Guide

Sharing the resources for study of MHA

GE Nine(9) Cell Matrix


GE nine-box matrix is a strategy tool that offers a systematic approach for the
multi business enterprises to prioritize their investments among the various
business units. It is a framework that evaluates business portfolio and provides
further strategic implications.

Each business is appraised in terms of two major dimensions – Market


Attractiveness and Business Strength. If one of these factors is missing, then the
business will not produce desired results. Neither a strong company operating
in an unattractive market, nor a weak company operating in an attractive mar-
ket will do very well
The vertical axis denotes:

Industry attractiveness indicates how hard or easy it will be for a company to


compete in the market and earn profits. The more profitable the industry is the
more attractive it becomes. When evaluating the industry attractiveness, ana-
lysts should look how an industry will change in the long run rather than in the
near future, because the investments needed for the product usually require
long lasting commitment.

Long run growth rate


Industry size
Industry profitability: entry barriers, exit barriers, supplier power, buyer power,
threat of substitutes and available complements (use Porter’s Five Forces analysis
to determine this)
Industry structure (use Structure-Conduct-Performance framework to determine
this)
Product life cycle changes
Changes in demand
Trend of prices
Macro environment factors (use PEST or PESTEL for this)
Seasonality
Availability of labor
Market segmentation

Horizontal axis represent:

Along the X axis, the matrix measures how strong, in terms of competition, a
particular business unit is against its rivals. In other words, managers try to de-
termine whether a business unit has a sustainable competitive advantage (or at
least temporary competitive advantage) or not.

Total market share


Market share growth compared to rivals
Brand strength (use brand value for this)
Profitability of the company
Customer loyalty
VRIO resources or capabilities (use VRIO framework to determine this)
Your business unit strength in meeting industry’s critical success factors
(use Competitive Profile Matrix to determine this)
Strength of a value chain (use Value Chain Analysis and Benchmarking to deter-
mine this)
Level of product differentiation
Production flexibility
Green zone

Suggests you to ‘go ahead’, to grow and build, pushing you through expansion
strategies. Businesses in the green zone attract major investment.

Yellow zone

Cautions you to ‘wait and see’ indicating hold and maintain type of strategies
aimed at stability.

Red zone

Indicates that you have to adopt turnover strategies of divestment and liquida-
tion or rebuilding approach.

Advantages

· Helps to prioritize the limited resources in order to achieve the best


returns.

· The performance of products or business units becomes evident.

· It’s more sophisticated business portfolio framework than the BCG matrix.

· Determines the strategic steps the company needs to adopt to improve the
performance of its business portfolio.

Disadvantages

· Needs a consultant or an expert to determine industry’s attractiveness and


business unit strength as accurately as possible.

· It is expensive to conduct.
· It doesn’t take into account the harmony that could exist between two or
more business units.

 March 5, 2018  debnjn  STRATEGY  GE, GE9cell, management, matrix, nine cell matrix,
STRATEGY

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