Advantages And Disadvantages Of Nestle

GE MATRIX

“GE-McKinsey nine-box matrix used in multi business corporation for its investments among its business units”.

Nestle also developed its General Electric matrix to analyse products growth and to understand strategies they need to develop for products.

The nine-box matrix plots the Business Units on 9 cells which indicate whether the company should invest in a product, harvest or divest it or do a further analysis on the product and invest in it if there are still some resources left.

The business units are evaluated on two axes they are industry attractiveness and a competitive strength of a unit.

Industry attractiveness indicates how hard or easy it will be for a company to earn profits. Factors which affects is size, pricing market

Along the X axis, the matrix measures how strong, in terms of competition. Or we can say, managers determine whether a business unit has a sustainable competitive advantage or not.

ADVANTAGES:

1. Helps in prioritizing the limited resources for achieving the best returns.

2. It gives more sophisticated business portfolio framework than the BCG matrix.

Difference between GE McKinsey and BCG matrixes

The main differences:

• Visual difference. BCG is four cell matrix and GE McKinsey is a nine cell. It also separates the invest/grow cells from harvest/divest cells that are much similar to each other in the BCG matrix and may confuse investment decisions to make.

• Comparison: In BCG matrix, competitive strength of a BU is same as relative market share, which assumes that the larger the market share a business has a better position to compete in the market and industry attractiveness that is the only measure of market growth rate in BCG. It is very common that GE with its complex business portfolio needs something more comprehensive than that.

NESTLE GE MATRIX

Invest/Grow Selectivity/Earnings

Eg: Geographically, new age groups etc.

Product Development

In product development strategy, a company tries to create new products and services targeted at its existing markets to achieve growth

This involves extending the product range available to the firm's existing markets. These products may be obtained by: (i) Investing in research and development of additional products; (ii) Acquisition of rights to produce someone else's product; (iii) Buying in the product and "branding" it; (iv) Joint development with ownership of another product who need access to the firm's distribution channels or brands.

Diversification

In diversification an organization tries to grow their market share by introducing new offerings in new markets. It is the most risky strategy because both product and market is new.

ANSOFF MATRIX FOR