McKinsey matrix Essay
McKinsey Matrix (The GE multi factoral)
With the help of McKinsey and Company, a leading consulting group, the General Electric Company (GE) developed a popular business portfolio analysis tool called the GE Multifactor Portfolio Matrix. This tool helps managers develop organizational strategy that is based primarily on market attractiveness and business strengths.
Industry attractiveness might be determined by such factors as the rate of industry growth, the number of competitors in an industry, and the weakness of competitors within an industry. Business strengths might be determined by such factors as a company’s core competencies and capabilities, financially solid position, its good bargaining position over suppliers, and its high level of technology use.
The Boston Consulting Group portfolio matrix
is a chart that had been created by Bruce D. Henderson for the Boston Consulting Group in 1970 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.
Cash Cow – a business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business
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Michael Porter’s “Five Forces
Porters model of competitive forces assumes that there are five competitive forces that identifies the competitive power in a business situation. These five competitive forces identified by the Michael Porter are: Threat of substitute products
Threat of new entrants
Intense rivalry among existing players
Bargaining power of suppliers
Bargaining power of Buyers
ABC analysis is another form of Pareto (80:20) rule. It is defined as a method of classifying clients, events, inventory, items or activities according to their relative significance and deciding upon this fact that on the extent of importance, consideration and control one should put on this analysis under such classifications. One should use it for selection of a restricted number of tasks or clients because it produces significant overall result or profit. It basically uses the idea that by doing 20% of effort, 80% of the gain of doing the entire work can be generated. For many events, about 80% of the things come from 20% of the causes.