Otherwise, harvest the investment by streamlining operations.
Upgrade the most profitable product lines to maintain profits.
Invest to Build: Invest to strengthen market position by building on strengths.Protect Position: Invest to protect the market position and grow rapidly.Here is an explanation of what each option means: A more detailed breakdown is shown in the diagram below: The diagram above provides a very simplistic breakdown of the options available. Harvest: invest just enough in this business to keep it operating or divest.However, no investment should be made in this business until after investment in the “grow” SBUs has been confirmed. That’s not to say investments won’t be made in this business. Hold: the potential of this businesses isn’t obvious.Once the SBUs have been plotted onto the matrix we can create investment strategies based on where the SBU appears within the matrix:īroadly speaking, there are three options available for each strategic business unit: Note the industry attractiveness increases as you go from the bottom of the diagram to the top, but that business unit strength decreases as you move from left to right. It’s easy to overlook, but the direction of the arrows in the diagram is important. Whereas the competitive strength of the business unit (SBU) is shown on the x-axis. In the GE McKinsey Matrix, the attractiveness of a market is represented on the y-axis. They wanted this tool to enable them to better analyze their SBUs so they could make better investment decisions.Īn example GE McKinsey Matrix is shown below: The GE McKinsey Matrix came about in the 1970s when GE hired McKinsey & Company to develop a business portfolio analysis tool. Which products or SBUs should be divested.What new products or SBUs are needed in the business portfolio.