Question
General Electric (GE) is a prime example of a company that has successfully used the GE/McKinsey matrix for their investment decisions. The matrix was actually developed by McKinsey for GE in the 1970s. At that time, GE had many unrelated products and was not achieving the desired returns from its investments. They consulted McKinsey, and the resulting directional policy matrix was created. This matrix evaluates opportunities based on industry attractiveness and competitive capability, helping GE to make more informed and strategic investment decisions.
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When it comes to investments, businesses are faced with the challenge of limited resources but also many possibilities. For diversified businesses, deciding which products to invest in is even more difficult. This issue was addressed by the GE/McKinsey matrix. At that time, General Electric had many unrelated products and didn't have the desired returns from its investments. They consulted McKinsey, and the resulting directional policy matrix was created. It evaluates opportunities based on industry attractiveness and competitive capability.
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