The horizontal of this matrix – Competitive Strength – is divided into High, Medium and Low. Finally, if the business has a sustainable competitive advantage, determine the duration that it can leverage its position in the industry. If the business has a competitive edge, consider whether its competitiveness is sustainable in the long-term or only temporary. Some factors that can help a business assess its competitive advantage in an industry are: When evaluating a business unit along this dimension, consider how it fares relative to its competitors within the industry. When evaluating industry attractiveness, evaluate how an industry will change in the long run rather than in the short-term. An industry’s profitability is affected by the current level of competition and future changes in the competitive landscape. The higher the profit potential, the more attractive is the industry. Industry attractiveness represents the profit potential of the industry for a business to enter and compete in that industry. The vertical axis of this matrix – Industry Attractiveness – is divided into High, Medium and Low. This is because investments require a long-term, rather than a short-term, commitment. It is important to consider all these dimensions, focusing on the distant future. In addition, consider your product or service, how they change over time, pricing and labor requirements. Furthermore, evaluate the power of suppliers and buyers as well as any other environmental factors that could influence industry attractiveness. When evaluating the business along this dimension, consider the long term growth potential, industry size, industry profitability, entry and exit barriers, etc. This factor refers to the ease with which the business unit will be able to accrue profit in the industry. Unlike the BCG Matrix The BCG Matrix has been criticized a lot on its use of only one single dimension for analysis., the GE-McKinsey Matrix uses multiple variables to determine the two dimensions: McKinsey (not GE) created this framework to help GE cope with its strategic decisions on a corporate level. In 1970, General Electric (GE) engaged McKinsey & Company to consult GE in managing its large and complex portfolio of strategic business units. It can then determine where to invest, to hold their position, harvest or divest. Correspondingly, a business can direct its business units. This matrix combines two dimensions: industry attractiveness and the competitive strength of a business unit into a matrix. GE Matrix, General Electric Matrix, Nine-box matrix) is a portfolio analysis tool used in corporate strategy to analyze strategic business units or product lines.
0 kommentar(er)
