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Portfolio Analysis

GE Tool for Analyzing


Opportunities & Ability to Compete

GE Portfolio Analysis
Classification of SBUs/products into nine
cell matrix based on
Market Attractiveness
Multiple Indicators

Business Strength
Multiple Indicators

Steps In Developing GE Matrix


1. Select Factors & Indicators.
2. Assign each indicator a weight (total = 1)
based on its importance.
3. Rate the industry on industry indicators
and company on business indicators on
scale of 1(weak) 5 (strong).
4. Multiply weight times rating and total for
summary measures.

GE Portfolio Analysis
Sample Industry/Market Indicators
Market Factors

Size
Growth Rate
Cyclicality
Seasonality

Competition
Type of competitors
Degree of Concentration

Financial & Economic


Contribution Margins
Barriers to Entry or Exit

GE Portfolio Analysis
Industry/Market Indicators
Technological
Patents & copyrights
Will it become obsolete

Sociopolitical
Social attitudes & trends
Laws & government regulations

GE Portfolio Analysis
Business Strength Indicators
Market
Companys Market Share
Companys Sales or Share Growth Rate

Competition
Strength of product, promotion, price, distribution,
financial resources, management relative to
competition

Financial & Economic


Companys Margins
Economies of scale

GE Portfolio Analysis
Business Strength Indicators
Technological
Companys ability to cope with change
Technological skills
Patent Protection

Sociopolitical
Companys responsiveness & flexibility

GE Portfolio Example
Market Factor

Weight

Rating (1- 5)

Value

Size

.33

1.65

Growth

.33

.99

Profit Margins

.34

.68
3.32

Market Share

.33

.33

Product Quality

.33

1.65

Distribution Net

.34

.68
2.66

Business

GE Portfolio Analysis
Business
High
High
Market Medium
Low

Medium

Low

Market

Competitive

Position

Strong

Medium

Weak

Maintain Leadership
Invest to Grow

Challenge Leader

Overcome Weakness,
Find Niche or Quit

Attractiveness

High
Medium

Low

Concentrate on
Maintaining Strength

Invest to Build
Selectively
Reinforce Strengths

Challenge Leader/Build
Selectively

Manage for
Earnings

In most attractive markets


Or counter competition
Emphasize profitability by
raising productivity

Protect existing
programs
Concentrate on
profitable, less risky
segments

Generate Cash

Harvest

Divest

Manage for current


earnings
Concentrate on attractive
Segments
Defend Strengths

Minimize Investment
Protect positions in
most profitable
segments

Sell at time that will


maximize cash value
Cut fixed costs and
avoid investment

Build Selectively

Harvest (Gradual
Withdrawal) or
Limited Expansion
Look ways to expand
without high risk
Or Minimize investment

Business
Strength
Mediu

Hig
5

Low

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