ITPEC FE Morning April 2018 Question 68
ITPEC FE Morning April 2018 — Question 68 of 80
GE-McKinsey Matrix — evaluating business position for resource allocation
The matrix in the figure has two axes: Attractiveness of business (market growth rate) on the vertical axis and Strength of business (market share) on the horizontal axis. This is the GE-McKinsey Matrix, a portfolio management tool.
Its purpose is to plot each business unit on the matrix and decide where to invest, hold, or divest based on the unit's position.
Why not others:
- a) Focuses on product quality improvement — an operational tactic, not portfolio-level analysis.
- b) Describes seasonal fluctuation and geographical distribution — a marketing analysis concern, unrelated to this matrix.
- c) Describes measuring competitor moves and promotion effects — competitive intelligence, not portfolio management.
- d) ✅ Evaluates the position of the company's business to set objectives and prioritize resource allocation — this is exactly what the GE-McKinsey Matrix does.
Key rule: GE-McKinsey Matrix = Attractiveness × Strength → prioritize resource allocation across business units.
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