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The GE McKinsey 9-Box Matrix is a tool that can be used by an organization to prioritize investment among business units. More specifically, the GE McKinsey 9-Box Matrix offers a systematic approach to evaluate the strengths and weaknesses of a business unit along two dimensions: how attractive the unit is and the unit’s competitive strength within the industry. The location of the business unit on the matrix will indicate to the organization which unit has the greatest long-term potential and is worth more investment.
Description of GE McKinsey 9-Box Matrix
The GE McKinsey 9-Box Matrix requires that business units are assessed by their appeal in the industry as well as their competitive strength. Business units located above the matrix diagonal are selected for investment, whereas those below are not. This tool is useful to managers because it provides a simple way to identify how well a business unit is doing as well as clearly prioritizing the areas in which the company should invest its limited funds.
Business units are typically evaluated in this order to generate the Nine Box Model:
Industry Attractiveness: This dimension refers to the ease with which the business unit will be able to accrue profit in the industry. When evaluating the business unit along this dimension, consider how much potential the unit has to grow in the long term, the size of the industry, industry conditions such as how profitable the industry is expected to be, barriers to entry or exit from the industry, how much power is in the hands of the supplier versus the buyer, as well as any other environmental factors that could influence the attractiveness of the unit. Additionally, consider the product or service that the unit offers and how that product will change over time, the price of the product or service being offered, how much labor is required to make the product as well as how many individuals are in the unit. It is important that all of these dimensions are considered with a lens toward the distant future because investments require a long-term, rather than a short-term, commitment.
Competitive Strength: When evaluating a business unit along this dimension, consider how it fares relative to its competitors within the industry. Some factors that can be used to assess competitive advantage are the percent of the market that it occupies, the potential to grow its market occupancy, brand awareness, the amount of profit brought in to the company through the unit, customer loyalty and satisfaction, the uniqueness of the products or services being offered, and how adaptable product production is. If the business unit has a competitive edge, consider whether or not that advantage is sustainable in the long-term or if it is only temporary. Finally, if the unit does have a sustainable competitive advantage, determine the length of time that its position in the industry can be leveraged.
Praxie's Online GE McKinsey 9-Box Matrix Tools & Templates
Business Leaders use the new online GE McKinsey 9-Box Matrix Model template from Praxie to look at how effective their business unit is at accomplishing a certain task, producing a certain product, or capitalizing on a specific opportunity, while at the same time measuring the attractiveness of the industry as a whole. The 9-Box Matrix Model can take many forms and be implemented using a variety of tools, from drawings on white boards to PowerPoint templates to online software. Other templates that can be used to assist your team when building out the GE McKinsey 9-Box Matrix are Porter’s Five Forces or a PEST analysis. These templates can be utilized to gain a better sense of the industry and the environment in which it operates.
Fill out the Matrix with your various business units (Green is Strongest/Most Attractive and Orange is Weakest/Least Attractive). Define specific business strategies for each based on current maturity and position in the market. Get started with our GE McKinsey 9-Box Matrix Model template.
How to use it:
- List your business units and assign High, Medium, or Low to their Industry Attractiveness and Business Unit Strength.
- Based on your assessment, complete the 9 Box Matrix by entering the business unit names in each of the relevant boxes.
- Create an action plan focused on creating and implementing your 9 Box Matrix.
Unlike most traditional GE McKinsey 9 Box Matrix Model techniques, Praxie’s online collaboration tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.