In this narrated animation—one in a series of interactive presentations—a former leader of McKinsey’s strategy practice explains the thinking behind the GE–McKinsey nine-box matrix, a framework that helps multibusiness corporations allocate resources across divisions. Developed in the early 1970s, the matrix rates the prospects of each unit by two factors: its competitive strength within an industry (the horizontal axis) and the attractiveness of the industry itself (the vertical axis).
The position of business units within the matrix provides a way to analyze and manage them. A growth strategy is appropriate if they lie above the diagonal; those along it may be candidates for selective investment, those below for sale, liquidation, or milking. Although criteria for assessing the attractiveness of industries and the strength of units have become more sophisticated, most large companies that model their businesses formally still use the nine-box matrix or one of its offspring.
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