Last week we began our exploration of tools to help manage your product portfolio with a discussion of the BCG Growth-Share Matrix. Today, we’re going to look at the GE-McKinsey Matrix. This is a tool that takes the value of the BCG Growth-Share Matrix and expands on it by developing the definitions of labels on each axis of the matrix.
The GE-McKinsey Matrix
The GE-McKinsey Matrix simply gives your organization more nuanced options for how products are categorized. Instead of just four boxes, the grid now includes nine. By replacing Market Growth (used on the BCG Growth-Share Matrix) with Industry Attractiveness, you have the option of weighting your decision based on such factors as:
- Size of the Market
• Intensity of the Competition
• Market Growth
The result often is a clearer view at your product mix and opportunities.
The GE-McKinsey Matrix Horizontal Axis
As with the vertical axis, the relabeling of the horizontal axis from Market Share to Competitive Position opens up new ways to examine your market. Now, you can factor in other corporate strengths such as:
- Brand Equity
- Your Company’s Core Competencies
- Distribution Strength
Nine Boxes Vs Four
With the GE-McKinsey grid, you have nine possible options of how to view products. Your alternatives now range from clear winners to invest and grow to products you need to phase out and cut loose.
Elements of a Good Product Portfolio Management Process
No matter which analysis method you choose, you need to be sure it includes the following:
- Allocation of resources that aligns with your corporate goals across multiple product activities
- A balance of product activities with diversity across products you currently have and what you’ll need to develop as tomorrow’s winners; current and future markets; and short-term versus long-term revenue sources
Next week my post will take a look at the SWOT Analysis and how it will help you gain a clearer view of your product’s current and prospective standing.