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STRATEGY & ANALYSIS EDUCATION SERIES

The BCG Matrix vs. The GE McKinsey Matrix

Welcome to the fourteenth lesson in Cipher’s Strategy & Analysis Education Series. In every lesson, we’ll cover a key framework or methodology used by leading strategy consultants.

Today, we’re exploring two of the most popular product management frameworks: the BCG Matrix and the GE McKinsey Matrix. Both frameworks are widely applied in corporate strategy, and enable organizations to manage their product portfolios more effectively.

About the Strategy & Analysis Education Series

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BCG Matrix

Divides an organization’s product portfolio into four categories on the basis of potential growth and current market shares. Products are either classed as Stars, Cash Cows, Question Marks, or Dogs.

GE McKinsey Matrix

Classifies an organization’s product portfolio based upon two factors, the attractiveness of the industry and the competitive strength of the business unit. Products fall under one of three categories: Invest, Protect, or Divest.

About the Matrices

The BCG Matrix and the GE McKinsey Matrix are strategy frameworks that help organizations better manage their product portfolio, business units, and investment strategies. 

The BCG Matrix, also known as the Growth Share Matrix, categorizes products into four categories: Stars, Cash Cows, Question Marks, and Dogs. The categories are organized by growth potential and market share. For success, organizations should invest profits from Cash Cows into Question Marks, transforming them into Stars. Over time, Stars mature into Cash Cows. This loop should be continued in perpetuity, delivering consistent, long-term growth. 

bcg-matrix

The GE McKinsey Matrix enables organizations to prioritize investments across its portfolio. Business units are categorized according to the competitive strength of that business unit and the attractiveness of the industry. Highly competitive business units in attractive industries should be prioritized for investment, whereas weaker business units in unattractive industries should be divested from. Business units that fall in the middle should be protected.

mkinsey-matrix

 

Continue Learning

Interested in learning more?

This article from BCG explores the BCG Matrix:

Read the Article

This article from McKinsey explains the GE McKinsey Matrix:

Read the Article

Your Next Steps

Yes, we are actually assigning you homework! Now that you've learned about this, your next steps are to...

Step 1

Using the images provided above, apply both models to your product or service. [Time required: 1-2 hours]

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Step 2

Determine where you sit on the BCG matrix and review suggested strategies you should follow.

Step 3

Determine where you sit on the GE McKinsey Matrix and review suggested strategies you should follow.

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