Free GE-McKinsey Matrix PowerPoint Template

Understanding the GE-McKinsey 9-Box Matrix

The GE-McKinsey matrix emerged in the 1970s when General Electric asked McKinsey to develop a more sophisticated alternative to the BCG matrix. With over 150 business units at the time, GE needed a framework that could capture the complexity of portfolio decisions better than two simple metrics.

The result is a 9-box grid that plots business units on two composite dimensions: market attractiveness on the vertical axis and business unit competitive strength on the horizontal axis. Each axis represents a weighted score derived from multiple factors rather than a single metric.

This is not the McKinsey 7S model, which analyzes organizational alignment across seven internal elements. The GE-McKinsey matrix is strictly a portfolio prioritization tool for multi-business companies.

The Two Axes: Composite Factor Scores

Unlike the BCG matrix where each axis is a single measurable metric, the GE-McKinsey axes require judgment and weighting.

Market Attractiveness Factors The vertical axis captures how attractive a market is for any competitor, not just your company. Common factors include:

• Market size and projected growth rate
• Industry profitability and margin structure
• Competitive intensity and concentration
• Technological change and disruption risk
• Regulatory environment and barriers to entry
• Cyclicality and demand stability

Business Unit Strength Factors The horizontal axis measures your competitive position relative to rivals in that specific market:

• Relative market share
• Brand strength and customer loyalty
• Cost position and operational efficiency
• Technology capability and innovation track record
• Distribution reach and channel relationships
• Management quality and organizational capability

Most analyses use 5-8 factors per axis. The key is selecting factors that genuinely differentiate outcomes in your specific industry, then weighting them based on strategic importance.

Scoring and Weighting the Factors

The scoring process distinguishes rigorous analysis from superficial plotting.

For each factor, assign weights that sum to 100% per axis. A technology company might weight innovation capability at 25% and brand strength at 10%. A consumer goods company might reverse those weights. The weights should reflect what actually drives success in your industry.

Score each business unit on each factor using a consistent scale, typically 1-5 or 1-10. Multiply score by weight and sum across factors to get the composite score for each axis.

A practical approach:

1. Gather a cross-functional team familiar with each business unit
2. Define factors and weights before scoring any units (prevents gaming)
3. Score independently first, then discuss and reconcile outliers
4. Document the rationale for contested scores
5. Plot the final composite scores on the 9-box grid

The process matters as much as the output. Forcing explicit factor selection and weighting surfaces strategic assumptions that often go unexamined.

The Three Investment Zones

The nine boxes cluster into three investment priority zones, typically color-coded for quick interpretation.

Green Zone: Invest/Grow The upper-right region includes boxes where market attractiveness is high and business strength is medium-to-strong, or where business strength is high and market attractiveness is medium-to-high. These are priority investments. Allocate resources aggressively, pursue market share gains, and consider acquisitions to strengthen position.

Specific boxes: High/Strong, High/Medium, Medium/Strong.

Yellow Zone: Selectivity/Earnings The diagonal from upper-left to lower-right represents mixed positions. These units warrant selective investment based on specific circumstances. Look for segments within the market where you can win, or invest in capability improvements that would shift you toward the green zone.

Specific boxes: High/Weak, Medium/Medium, Low/Strong.

Red Zone: Harvest/Divest The lower-left region includes boxes where both dimensions are unfavorable. Minimize new investment, manage for cash flow, and consider divestiture if strategic value is limited. Not every red-zone unit should be sold immediately, but none should receive growth investment.

Specific boxes: Medium/Weak, Low/Medium, Low/Weak.

GE-McKinsey vs. BCG Matrix: When to Use Which

The BCG matrix works well when market growth rate genuinely captures attractiveness and when relative market share genuinely captures competitive strength. It is fast, objective, and easily communicated.

The GE-McKinsey matrix is superior when:

• Market attractiveness depends on factors beyond growth (regulation, technology cycles, competitive dynamics)
• Competitive strength involves capabilities beyond market share (brand, technology, distribution)
• You need to differentiate between units that would fall in the same BCG quadrant
• Leadership requires more nuanced guidance than four quadrants provide

The tradeoff is subjectivity. Two teams scoring the same business unit on the same factors can reach different conclusions. The BCG matrix may oversimplify, but it cannot be gamed. The GE-McKinsey matrix can be manipulated by adjusting factor weights or scores.

For most strategic planning purposes, start with the GE-McKinsey matrix for internal analysis, then translate key insights into BCG-style simplicity for board presentations.

Building the 9-Box Visualization

The consulting-grade approach adds data density to the basic grid:

1. Plot bubbles sized by revenue at the intersection of each unit's composite scores
2. Add a third dimension through bubble color (profitability, strategic importance, or segment)
3. Include factor tables showing the weights and scores that produced each position
4. Show movement over time with arrows from prior-year position to current position
5. Annotate strategic implications for units at decision points

The grid itself communicates zone membership. The bubbles communicate relative financial scale. The supporting tables communicate the analytical rigor behind the positions.

Avoiding Common Pitfalls

Factor selection bias: Teams often select factors where their preferred units score well. Define factors before any scoring, and ensure the factor set would be credible to an outside analyst.

False precision: A composite score of 3.7 versus 3.5 does not meaningfully distinguish two units. Focus on clear zone membership rather than decimal-point differences.

Static analysis: Markets evolve. A unit in the green zone today may face declining attractiveness if technology shifts or new competitors enter. Update the analysis annually and track trajectory.

Ignoring interdependencies: Some red-zone units provide shared services, supply components, or complete a product portfolio. Pure zone-based decisions can destroy value. Assess each unit's role in the broader portfolio before divesting.

Mechanical decision-making: The matrix informs decisions; it does not make them. A red-zone unit in a market about to inflect deserves different treatment than one in terminal decline. Use judgment.

For a deeper dive into scoring, weighting, and applying the framework, see our GE-McKinsey Matrix Guide.

For portfolio analysis frameworks, explore our BCG matrix template for simpler two-dimensional analysis, Ansoff matrix template for growth strategy options, and competitive analysis template for detailed competitor assessment.