Part 2. MM4XL Tools > 1. Strategic Tools > McKinsey Matrix > Strategic Implications

McKinsey Portfolio Analysis

Strategic Implications

Each quadrant of the grid suggests a widely differing way of handling products. Of course, given the flexibility of this analysis tool, different competitive environments can suggest slight, or even drastic, changes in the way products should be managed. Nevertheless, sticking strictly to some managerial paradigm can shrink the creativity and jeopardize the business. When interpreting your analysis, the following rules, as summarized in the illustration below, should be borne in mind.

McKinsey GE Matrix Software for Product Portfolio Analysis and Management

There are two major assumptions behind the Product Portfolio Analysis, which help to allocate resources whilst reducing risk:

  1. Investments on products in growing markets must be higher than investments in stagnant or recessive markets.
  2. The total cash flow of market leaders must be higher than cash flow of non-leaders.

Refer to the BCG help file in MM4XL to master this topic.

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