BCG Matrix Vs. GE Matrix

Business / By / November 14, 2023

Both are strategic frameworks developed to device a product development strategy. Through a model where companies look to prioritize products that can turn into high market shares and high margins businesses, the BCG does that. The GE Matrix focuses on prioritizing products with a high industry attractiveness and a high competitive strength of the business unit.

AspectBCG Matrix (Boston Consulting Group Matrix)GE Matrix (General Electric Matrix)
PurposeThe BCG Matrix is a strategic planning tool that helps companies analyze their product portfolio in terms of market growth rate and relative market share. This analysis helps identify where to allocate resources for maximum profitability.The GE Matrix, also known as the McKinsey Matrix, is a strategic tool used to evaluate business units or products based on two dimensions: industry attractiveness and business unit strength. Its purpose is to prioritize investment decisions.
ComponentsThe BCG Matrix categorizes products or business units into four categories: Stars, Cash Cows, Question Marks (or Problem Children), and Dogs. Each category represents a different stage in a product’s lifecycle and requires a specific strategy.The GE Matrix uses a 9-cell grid, with three levels of industry attractiveness (high, medium, and low) and three levels of business unit strength (strong, medium, and weak). Business units are positioned within this grid, resulting in nine possible cells.
FocusThe BCG Matrix primarily focuses on a company’s products and their position in the market. It emphasizes market share and market growth as the key factors for analysis.The GE Matrix takes a broader approach. In addition to assessing business unit strength, it considers industry attractiveness as a critical factor. This broader perspective allows for a more comprehensive evaluation.
Market Growth RateIn the BCG Matrix, market growth rate measures the industry’s potential for growth. High growth rates indicate opportunities, while low rates suggest maturity or decline.The GE Matrix assesses industry attractiveness to identify growth opportunities. Factors such as market size, market growth rate, and competitive intensity are considered.
Relative Market ShareThe BCG Matrix analyzes a product’s or business unit’s market share relative to its competitors. A high market share indicates a strong competitive position.The GE Matrix evaluates business unit strength, considering various factors like market share, profitability, technological capabilities, and competitive advantage.
Strategy ImplicationsThe BCG Matrix offers specific strategic recommendations for each category: – Stars: Invest heavily to maintain growth. – Cash Cows: Harvest profits and reinvest selectively. – Question Marks: Decide whether to invest for growth or divest. – Dogs: Consider divestiture or harvesting.The GE Matrix recommends different strategies for business units in various cells: – Invest: Allocate resources to business units in strong industry positions. – Build: Strengthen business units with the potential for future growth. – Hold: Maintain current positions with moderate investment. – Harvest: Maximize short-term cash flow from mature businesses. – Divest: Sell or liquidate business units with low potential.
LimitationsThe BCG Matrix has some limitations: – It may oversimplify complex business situations. – It focuses solely on market share and growth and neglects other critical factors. – It doesn’t provide guidance on how to assess industry attractiveness.The GE Matrix also has limitations: – It requires subjective assessments of industry attractiveness and business unit strength. – It can be resource-intensive to implement and maintain, especially for large organizations.
OriginsThe BCG Matrix was developed by the Boston Consulting Group in the early 1970s as a tool for managing a diversified portfolio of businesses.The GE Matrix, also known as the McKinsey Matrix, was developed by General Electric in the 1980s as part of its strategic planning process.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four categories: cash cows, pets (dogs), question marks, and stars.
bcg-matrix-success-sequence

GE McKinsey Matrix

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

Key Similarities between BCG Matrix and GE McKinsey Matrix:

  • Portfolio Analysis: Both BCG Matrix and GE McKinsey Matrix are portfolio analysis tools used to assess a company’s product portfolio or business units. They provide a structured approach for evaluating and prioritizing different elements within the portfolio.
  • Strategic Decision Making: Both frameworks aim to guide strategic decision making by helping companies allocate resources, identify growth opportunities, and determine the appropriate strategy for each product or business unit.
  • Growth Focus: Both matrices consider growth as a critical factor in assessing the potential of products or business units. They identify high-growth areas that may require more investment and low-growth areas that might need to be managed differently.
  • Market Share Consideration: Both models take market share into account when evaluating products or business units. Market share is an essential aspect of determining their current position and potential future performance.

Key Differences between BCG Matrix and GE McKinsey Matrix:

  • Origin and Creator: The BCG Matrix was developed by Bruce D. Henderson of the Boston Consulting Group, while the GE McKinsey Matrix was developed by McKinsey & Company for General Electric.
  • Factors for Assessment: The BCG Matrix assesses products based on their potential growth (market growth rate) and current market share, categorizing them into stars, cash cows, question marks, and dogs. In contrast, the GE McKinsey Matrix evaluates business units based on two factors: industry attractiveness (market growth rate, market size, profitability) and competitive strength (market share, brand strength, technological capabilities).
  • Application: The BCG Matrix is mainly used for product portfolio analysis, while the GE McKinsey Matrix is used for business unit portfolio analysis. The BCG Matrix focuses on individual products, while the GE McKinsey Matrix looks at business units as a whole.
  • Categories and Recommendations: The BCG Matrix categorizes products into four distinct categories (stars, cash cows, question marks, and dogs) with specific strategic recommendations for each category. The GE McKinsey Matrix categorizes business units into three scenarios (invest, protect, harvest/divest) with corresponding strategies for resource allocation and management.
  • Degree of Detail: The BCG Matrix provides a simpler, high-level view of the product portfolio, making it easier to understand and apply. The GE McKinsey Matrix offers a more comprehensive and nuanced analysis of business units, considering multiple factors that contribute to their attractiveness and competitive strength.

BCG Matrix Examples:

  • Apple Inc.
    • Stars: iPhone (High market growth rate, high market share)
    • Cash Cows: iPad (Low market growth rate, high market share)
    • Question Marks: Apple Watch (High market growth rate, low market share)
    • Dogs: iPod (Low market growth rate, low market share)
  • Coca-Cola Company:
    • Stars: Coca-Cola Zero Sugar
    • Cash Cows: Classic Coca-Cola
    • Question Marks: New flavored beverages or experimental products
    • Dogs: Tab (which they discontinued)
  • Microsoft:
    • Stars: Azure (Cloud Computing Services)
    • Cash Cows: Microsoft Office Suite
    • Question Marks: Newer software or experimental products
    • Dogs: Windows Phone

GE McKinsey Matrix Examples:

  • General Motors (Automobiles):
    • Invest: Electric vehicles (High industry attractiveness due to increasing demand, strong competitive strength due to technology and brand)
    • Protect: SUVs (Moderate industry attractiveness, strong competitive strength)
    • Harvest/Divest: Traditional Sedans (Low industry attractiveness due to declining market, weaker competitive strength)
  • Sony Corporation:
    • Invest: PlayStation gaming consoles (High industry attractiveness in the gaming market, strong competitive strength due to brand loyalty and technology)
    • Protect: Sony Pictures (Moderate industry attractiveness in the entertainment industry, moderate competitive strength)
    • Harvest/Divest: Older electronic gadgets or those with declining demand
  • Unilever (Consumer Goods):
    • Invest: Sustainable and organic personal care products (High industry attractiveness due to growing demand for green products, strong competitive strength because of R&D and branding)
    • Protect: Established brands like Dove and Axe (Moderate industry attractiveness, strong competitive strength due to brand recognition)
    • Harvest/Divest: Outdated product lines or those with declining consumer interest

Key Highlights:

  • Strategic Frameworks:
    • Both BCG and GE McKinsey Matrix are strategic frameworks to guide product development strategy.
    • BCG prioritizes products with potential for high market shares and margins.
    • GE McKinsey focuses on products with high industry attractiveness and business unit competitive strength.
  • BCG Matrix:
    • Developed in the 1970s by Bruce D. Henderson of the Boston Consulting Group.
    • Evaluates products based on potential growth and market shares.
    • Categories: cash cows, pets (dogs), question marks, and stars.
  • GE McKinsey Matrix:
    • Developed in the 1970s by McKinsey & Company for General Electric.
    • A strategy tool guiding corporations on business unit investment priorities.
    • Scenarios: invest, protect, harvest, and divest.
  • Similarities:
    • Portfolio Analysis: Both are tools for assessing a company’s portfolio (products or business units).
    • Strategic Decision Making: They guide companies in resource allocation, identifying growth opportunities, and strategizing.
    • Growth Focus: Both matrices consider growth essential in evaluating products/business units.
    • Market Share: Both models incorporate market share in their assessments.
  • Differences:
    • Origin and Creator: BCG Matrix was by Boston Consulting Group, while GE McKinsey was by McKinsey & Company for GE.
    • Factors for Assessment:
      • BCG: Potential growth and market share.
      • GE McKinsey: Industry attractiveness and business unit competitive strength.
    • Application:
      • BCG: Product portfolio analysis.
      • GE McKinsey: Business unit portfolio analysis.
    • Categories and Recommendations:
      • BCG: Four categories (stars, cash cows, question marks, dogs).
      • GE McKinsey: Three scenarios (invest, protect, harvest/divest).
    • Degree of Detail:
      • BCG: Simpler, high-level view.
      • GE McKinsey: More detailed, considering multiple factors.

Read Next: BCG Matrix, GE McKinsey Matrix.

Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Ansoff Matrix.

More Strategy Tools: Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework.

Connected Strategy Frameworks

ADKAR Model

adkar-model
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived from whether the market is new or existing, and whether the product is new or existing.

Business Model Canvas

business-model-canvas
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

lean-startup-canvas
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Balanced Scorecard

balanced-scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

GAP Analysis

gap-analysis
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

GE McKinsey Model

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

McKinsey’s Seven Degrees

mckinseys-seven-degrees
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

McKinsey Horizon Model

mckinsey-horizon-model
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis

Scenario Planning

scenario-planning
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

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About The Author

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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