mytest > help > Part 2. MM4XL Tools > 1. Strategic Tools > McKinsey Matrix > Introduction

McKinsey Portfolio Analysis

Introduction

In the mid 70's the management of the multinational company, General Electric, recognized the utility of mapping product portfolios on a grid matrix, and asked the consulting company McKinsey to develop a tool to overcome the limits of the BCG. The result was the Market Attractiveness / Competitive Advantage Portfolio Analysis.

The main advantage of this tool is that it also allows for analysis of products not yet on the market. At the same time, it is flexible for the analyst, who can choose from among several factors influencing the competitive environment. This model is designed to maximize earnings in the near future and allocate the company's resources in appealing markets.

There are two main groups of influencing factors:

  • Macro-environmental
  • Micro-environmental

The former are external, and the company has no control over them, e. g. political situations, pollution, market dimension and tendency, technological evolution, and so on. The latter are internal and can be controlled, e. g. research and development, employee training, investments, ability of management, and others.

The chosen factors are weighted and produce two scores for each product: one for the Market Attractiveness and one for the Competitive Advantage. The scores are placed on a grid split in nine quadrants. Each quadrant has a peculiar strategic meaning.

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