NINE CELL NINE CELL MATRIXMATRIX

Attractiveness-Competitive Attractiveness-Competitive StrengthStrength

THE MATRIXTHE MATRIX

• The x-axis is of The x-axis is of competitivenesscompetitiveness

• The y-axis is of The y-axis is of attractivenessattractiveness

HighHigh

MedMed

LowLow

StronStrongg

AveraAveragege

WeakWeak

TH DIFFERENT TH DIFFERENT GROUPINGSGROUPINGS

• Businesses of scores of 6.7 or more are Businesses of scores of 6.7 or more are rated having High Attractiveness, rated having High Attractiveness, between 3.3 & 6.7 Average, below 3.3 between 3.3 & 6.7 Average, below 3.3 weakweak

• In the top three cells on the upper left are In the top three cells on the upper left are long term attractiveness and competitive long term attractiveness and competitive strength are favourablestrength are favourable

• In the diagonal cells are given medium In the diagonal cells are given medium prioritypriority

• In the bottom right cells are businesses In the bottom right cells are businesses are least attractive and competitive are least attractive and competitive

DECISIONS ON DIFFERENT DECISIONS ON DIFFERENT GROUPSGROUPS

• In the first group the strategy is to In the first group the strategy is to row and buildrow and build

• In the second group the strategy is In the second group the strategy is selective reinvestmentselective reinvestment

• In the third group the strategy is In the third group the strategy is “harvest or divest”“harvest or divest”

GENERAL ELECTRIC GENERAL ELECTRIC APPROACHAPPROACH

• The whole thrust of corporate The whole thrust of corporate resource allocation has been to put resource allocation has been to put GE’s businesses in the No 1 or No 2 GE’s businesses in the No 1 or No 2 positions in the industrypositions in the industry

• Be No 1 or No 2 or fix, sell or closeBe No 1 or No 2 or fix, sell or close• GE Business portfolio of 250 business GE Business portfolio of 250 business

divisions/companies grouped into 10 divisions/companies grouped into 10 businesses circa 2001businesses circa 2001

VARIOUS GE VARIOUS GE BUSINESSESBUSINESSES

• Aircraft engines-the world’s largest Aircraft engines-the world’s largest producer of large and small jet producer of large and small jet engines attracting more than 50% of engines attracting more than 50% of orders in the 90sorders in the 90s

• Appliances- one of the largest Appliances- one of the largest producers of fridges, freezers, producers of fridges, freezers, ovens, ranges, microwave ovens, ovens, ranges, microwave ovens, washes, dryers, air conditionerswashes, dryers, air conditioners

VARIOUS GE VARIOUS GE BUSINESSESBUSINESSES

• GE Capital- one of the largest financial GE Capital- one of the largest financial institutions in the world called the institutions in the world called the growth engine of GE by Jack Welchgrowth engine of GE by Jack Welch

• Industrial Systems- electrical Industrial Systems- electrical implements for commercial and implements for commercial and industrial applicationsindustrial applications

• Lighting- all devices of illuminationLighting- all devices of illumination• Medical Systems- CT scanners, X-Ray Medical Systems- CT scanners, X-Ray

machines, MRI etc.machines, MRI etc.

VARIOUS GE VARIOUS GE BUSINESSESBUSINESSES

• NBC- broadcast networkNBC- broadcast network• Plastics- high performance Plastics- high performance

engineered plastics for industrial engineered plastics for industrial applicationsapplications

• Power Systems- gas, steam and hydro Power Systems- gas, steam and hydro electric turbines and generatorselectric turbines and generators

• Real Estate- office buildings, rental Real Estate- office buildings, rental apartments, shopping centres etc. apartments, shopping centres etc.

SOME CHOICES BY GESOME CHOICES BY GE

• Selling of the Air Conditioning Selling of the Air Conditioning business held as a sacred cow till business held as a sacred cow till Welch came alongWelch came along

• Selling of the Utah Industries- Selling of the Utah Industries- suppliers of metallurgical coal to the suppliers of metallurgical coal to the Japanese Steel industryJapanese Steel industry

• Buying of RCA and through that of Buying of RCA and through that of NBC- some sort of protection from NBC- some sort of protection from Japanese competitionJapanese competition