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General Electric Multi Factoral Analysis Matrix
LMC explains General Electric Multi Factoral Analysis Matrix
This is a strategic management tool allowing businesses to analyse their current portfolio and assess the potential viability for making changes. The tool simultaneously compares the internal and external business / industry factors alongside market size and share. The ‘matrix’ comprises 9 squares in a grid format with the ‘Y’ axis measuring industry attractiveness against the ‘X’ axis which measures business strengths.
Industry attractiveness
This might be determined by such factors as the rate of industry growth, the number of competitors in an industry, and the weakness of competitors.
Business strengthts
This might be determined by such factors as a company’s core competencies, financial position, bargaining position or level of technology use.
Grid layout
The grid can broadly be analysed as three areas:
- Top left segment: Here the business is very strong and the market very attractive. If the business falls in this area, the company should focus its resources here.
- Middle three squares: Here the business and the market attractiveness are neither too strong nor too weak. Discussion is needed to decide whether renewed investment should be injected to boost business, moving the business into a better area of the grid, or resources should be withdrawn and reinvested in other more profitable areas.
- Bottom right segment: Here business and market attractiveness are both weak. In this situation, the company should try to reposition its business quickly or withdraw resources to reinvest elsewhere.
By analysing business in this way, the strategic planner is able to assess a large amount of information and make an informed decision on investment, brand marketing, product management or any major change initiative. The GE matrix is a development of an earlier model known as the 'Boston Box'.
