Part 2. MM4XL Tools > 1. Strategic Tools > McKinsey Matrix > The Factors of the Analysis

McKinsey Portfolio Analysis

The Factors of the Analysis

Flexibility is probably the main advantage of the GE/McKinsey portfolio matrix. In fact, the analyst is left free to choose any factor he or she believes to be useful.

The following list of factors are available in MM4XL. Please keep the following in mind, while working with this application. Market Attractiveness and Competitive Advantage are referred as axes. These are made up of macro-factors, which in turn are made up of micro-factors.

McKinsey GE Matrix Software for Product Portfolio Analysis and Management

Using a broad range of micro-factors has the advantage of smoothing the effect of single items, requiring very high or low weighting. This method does require more effort, going through the complete list, but using a shorter number of micro-factors will help to save time. The latter method does however increase the risk of attributing too much importance to single items.

If the bubbles are not evenly spread on your map, either you have an unbalanced product portfolio, or the weights assigned are too high or too low. Try to be consistent when assigning weights. Avoid broad ranges of values, unless required, perhaps to differentiate products significantly from one another. A solid background of the company's portfolio and some practice in assigning weights will help you to run reliable analyses. Consistency in weighting is demonstrated with the following example: when assigning weight to the market dimension of multiple products, you could assign 100 to the product in the largest market, then assign weights to the other products using this formula:

(market size of product X / size of largest market in portfolio) x100

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