In my part I want to direct your attention to the GE Market Attractiveness Competitive Position model. On the surface it appears to be very similar to the BCG matrix, but a bit more complex and detailed. The model was developed by GE with the assistance of consulting firm of McKinsey & Company in 1970.
Management can use the GE model to classify strategic business units on two factors: 1. Market attractiveness criteria
* Market size and growth rate
* Market entry barriers
* Number and types of competitor
2. Competitive strength criteria (Business Position)
* Market share and knowledge
* Distribution capability
* Service quality
* Innovation Capability
* Cost advantage
As you can see on the slide, the matrix is separated ...view middle of the document...
With units above the diagonal, a company may pursue strategies of investment and growth; those along the diagonal may be candidates for selective investment; those below the diagonal might be best sold or liquidated.
On the next slide we have prepared a table, showing the overlaps and differences between Unilever`s business model and the GE model.
The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Unilever saw big opportunity in “healthy-living” brands. They achieved high quality of the product, full satisfaction of the product purchase among customers and low prices. Building a market share growth by brand extensions was the next goal of Unilever.
On the other hand, the GE model can offer also a projection of the future product prospects and flexibility. This can be useful if investing in emerging markets. In general this model is used for more technical products and since Unilever has focused mainly on essential products, applying it could be difficult and inefficient.
Now I will give you a brief overview of the advantages and disadvantages that Unilever could face if choosing the GE model. Use of the GE-McKinsey matrix is recommended if an organisation is made up of many business units or product lines, like in the Unilever`s case. It also allows an organisation to focus on the strengths and weaknesses of the business units or products (new markets, more innovations, higher sales revenues).
Some of the disadvantages of the GE model are related to the factors weighting method. Some critics are that the factors of business strength and some of the industry attractiveness factors cannot be measured. The matrix also can not reflect currency fluctuations, inflation or distribution problems. It is also too complicated and pays too little attention to the business environment.