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The General Electric (G.E.) Model

A SBU's appropriate strategy cannot be determined solely by its position in the B.C.G. growth-share matrix. If additional factors are considered, then the growth- share matrix can be seen as a special case of a multi-factor portfolio matrix that General Electric (GE) pioneered.

Each business is rated in terms of two major dimensions - Market Attractiveness and Business Strength. If one of these factors is missing, then the business will not produce outstanding results. Neither a strong company operating in an unattractive market, nor a weak company operating in an attractive market will do very well.

In order to arrive at the data, the management rates each factor from 1 (unattractive) to 5 (attractive). These ratings are then multiplied by weights reflecting the factors to arrive at the values, which are summed for each dimension.

The GE matrix is divided into nine cells, which in turn fall into three zones. The three cells in the upper-left corner (Green) indicate the strong SBUs in which the company should grow/invest. The diagonal cells stretching from the lower left to the upper right (Orange) indicate SBUs that are medium in overall attractiveness. The ones in the bottom right corner (Red) are the weak SBUs and the company should give a serious thought to harvesting/divesting these companies. Because of its colours, resembling a traffic light, the G.E. Matrix is also called the Stoplight Matrix.

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