G. E. multi factoral analysis

GE multifactorial analysis is a technique used in brand marketing and product management to help a company decide what products to add to its portfolio and which opportunities in the market they should continue to invest in. It is conceptually similar to BCG analysis, but somewhat more complicated. Like in BCG analysis, a two-dimensional portfolio matrix is created. However, with the GE model the dimensions are multi factorial. One dimension comprises nine industry attractiveness measures; the other comprises twelve internal business strength measures. The GE matrix helps a strategic business unit evaluate its overall strength. Each product, brand, service, or potential product is mapped in this industry attractiveness/business strength space. The GE multi factorial was first developed by McKinsey for General Electric in the 1970s. Aims of the GE model This model aims to evaluate the existing portfolios of strategic business units and to develop strategies to achieve growth by addition of new products and businesses to this portfolio and further, to analyze which business units to invest in and which ones to sell off. Construction of the GE matrix The GE matrix is constructed in a 3x3 grid with Market Attractiveness plotted on the Y-axis and business strength on the X-axis, both being measured on a high, medium, or low score. Five steps must be considered in order to formulate the matrix; The range of products produced by the SBU (Strategic Business Unit) must be listed Factors which make the particular market attractive must be identified Evaluating where the SBU stands in this market Processes through which calculations about business strength and market attractiveness can be made Determining which category an SBU lies in; high, medium, or low.