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McKinsey Portfolio Analysis

How to Interpret the Analysis

The GE/McKinsey grid splits up into four main areas and nine quadrants.

1. The lower right area: harvest / divest

The lower three quadrants on the right side suggest to divest or to maximize incoming cash. Placed here are products competing in unattractive industries, which have a weak competitive condition, when compared to the remaining products in the portfolio. The lower quadrant hosts the worst items, whilst the other two house weak products in medium attractive industries, and medium strong products in unattractive markets.

McKinsey GE Matrix Software for Product Portfolio Analysis and Management

2. The diagonal: selectivity

The three quadrants on the grid's diagonal (from the lower left corner towards the upper right one) must be handled with caution. The quadrant in the middle hosts medium competitive products in medium attractive industries. Unless the products prove to be more competitive or the industry more attractive, the strategic interest is hardly relevant (see also the chapter Strategic Implications). In the lower part of the diagonal we find products which are not at all competitive in very attractive markets. These items can either be very attractive or unattractive for the strategic portfolio management. In the upper part of the diagonal are plotted highly competitive products in very unattractive industries. Although they are performing well, the market unattractiveness can put in jeopardy their existence in the portfolio.

3. The upper left quadrant: invest & grow

This is the most interesting area of the grid. Here we find the strongest products in the portfolio competing in very attractive industries. These are however, products not always easy to manage. They produce cash and require high investments in order to keep growing at the same growth rate of the market they compete in. Managers should not be attracted by their cash flow only, and must remember to feed them, thus helping them to keep gaining market share.

4. Neighbors of the upper left quadrant: selective growth

Both quadrants located on the right and lower side of the upper left quadrant are interesting ones. It is suggested to manage products in both of these areas to favor their growth, while being aware that selective decisions may need to be made. Products placed in the right quadrant are very competitive and compete in moderately attractive industries. In the lower quadrant are placed medium strong products competing in very attractive industries.

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