How to Use the GE Business Planning Matrix for Effective Decision Making

Introduction:

The world of business planning can be a complicated one, with numerous models and matrices available for executives to use in their decision-making processes. Among these models, the GE Business Planning Matrix is an especially powerful tool that can help businesses identify new opportunities, evaluate their strengths and weaknesses, and overcome the challenges they face. In this article, we will explore how to use the GE Business Planning Matrix for effective decision making, and discuss the various benefits it can offer to organizations of all sizes and industries.

Body:

What is the GE Business Planning Matrix?

The GE Business Planning Matrix, also known as the GE/McKinsey Matrix, is a strategic planning tool that helps businesses evaluate their various business units based on their market attractiveness and internal strengths. It was first developed by McKinsey & Company in the 1970s, and was later popularized by General Electric (GE) as a way to evaluate their businesses’ performances.

The GE Business Planning Matrix works by plotting each of a company’s business units on a two-dimensional grid, with the vertical axis representing market attractiveness, and the horizontal axis representing the company’s internal strengths. The matrix is divided into three levels of market attractiveness and four levels of internal strength, and each business unit is assigned a score based on where it falls on the grid.

How to use the GE Business Planning Matrix:

Step 1: Identify Your Business Units

The first step in using the GE Business Planning Matrix is to identify your business units. These may be product lines, services, or even entire business divisions. Once you have identified your business units, you can begin to evaluate them.

Step 2: Evaluate Market Attractiveness

The next step is to evaluate the market attractiveness of each business unit. This should take into account factors such as market growth potential, customer demand, competitive intensity, and regulatory factors. Each business unit should be assigned a score based on its level of market attractiveness, with high potential units receiving a higher score than those with low potential.

Step 3: Evaluate Internal Strengths

The third step is to evaluate the internal strengths of each business unit. This includes factors such as product quality, brand reputation, cost structure, and management effectiveness. Each business unit should be assigned a score based on its level of internal strength, with strong units receiving a higher score than those with weaknesses.

Step 4: Plot Business Units on the Matrix

The final step is to plot each business unit on the GE Business Planning Matrix. This will give you a clear visual representation of where each unit falls in terms of market attractiveness and internal strength. Units that fall in the upper right quadrant of the matrix (high market attractiveness and strong internal strength) are considered to be most attractive, while those in the lower left quadrant (low market attractiveness and weak internal strength) are considered to be least attractive.

Conclusion:

In conclusion, the GE Business Planning Matrix is a powerful tool that can help businesses make informed decisions about their various business units. By evaluating each unit’s market attractiveness and internal strength, companies can identify opportunities for growth, allocate resources more effectively, and mitigate risks. By following the four-step process outlined in this article, any business can use the matrix to better understand their competitive landscape and improve their decision-making processes. With careful analysis and attention to detail, the GE Business Planning Matrix can serve as a valuable asset for any organization looking to stay ahead in a dynamic marketplace.

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