G. E. multi factoral analysis

The McKinsey - Portfolio (including market attractiveness - competitive strengths portfolio or Nine-Field - portfolio ) is a portfolio for the strategic management of companies and was developed by the consulting firm McKinsey in collaboration with General Electric.

Since there are a variety of considerations for the interpretation of the McKinsey matrix, the particular advantage of this model lies in its variability and versatility. Basically, it is a further development of the BCG matrix. In contrast to this, the McKinsey portfolio takes into account both quantitative and qualitative factors. In addition, more than just two success factors can be considered in this portfolio.

Portfolio construction

The McKinsey portfolio consists of nine fields, making precise statements can be made as in the classic four -field matrix ( s.BCG matrix).

The dimensions are defined by the market attractiveness (ordinate, the business environment ) and the relative competitive advantage (abscissa, the Company). However, you may be named something else.

The market attractiveness can be represented by the following main criteria:

  • Market growth and market size
  • Market quality (profitability, number and strength of competitors)
  • Supply of energy and raw materials
  • Environmental situation ( economic, legislative, public)
  • Barriers to market entry

To determine the relative competitive advantage with regard to the strongest competitor, considering eg the following main criteria:

  • Relative market position / market share / relative financial strength
  • Relative production potential
  • Relative R & D potential
  • Relative qualifications of managers and employees
  • Financial situation.

For a breakdown of the portfolio dividing lines must be found. They are to be put in as well.

Standard strategies

The products or parts of an organization are now assigned to one of the nine fields based on their coordinates. Each field embodies a so-called standard strategy. You should give a recommendation on how to proceed.

Said matrix is ​​divided into nine regions:

  • Expand ( zone of commitment, here in green ): Here, the strategic business units are determined by a medium to high market attractiveness and by medium to high competitive advantages. An investment and growth strategy is recommended.
  • For business in the central region of the matrix must be weighed and selected (in this case dark blue). Here, different selective strategies is divided into three: Attacking strategies, defensive strategies and transition strategies. Whichever strategy you choose depends on whether a position improvement of the various strategic business units can be realized or not.
  • Skimming (zone of release of funds, in gray - blue): These are strategic business units with low or medium market attractiveness and small to medium competitive advantages. Strategy recommendation: levy and disinvestment.

In addition to the standard strategies for individual strategic business units ( SBUs ) and the complete portfolio of the company must be considered. This means in particular that the high capital requirements of SBU 's with the standard strategy " Expand" by SBU 's in the " skimming " can be financed. If this is not possible, the company is dependent on external capital and could quickly get into financial difficulties due to a failure of an SBU.

Criticism

First, the aggregation of different indicators, and on the other the one-sided view of the satisfaction degrees with unpredictable relative references and bad to be derived from objective formulations can be regarded as critical. Furthermore, critical to look at is the subjective selection and evaluation of qualitative factors and the presence of a mean dimension value, which is not useful for a scoring method. There is no homogeneous and heterogeneous with each other strategic business units. In addition, any new competitors and the constant technological development are not considered.

McKinsey & Company Growth–share matrix
560330
de