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
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.