Archive for October 26th, 2011

Strategy: The GE–McKinsey nine-box matrix

October 26, 2011

Excerpted from McKinsey Online: “Enduring ideas: The GE–McKinsey nine-box matrix”, September 2008

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The GE–McKinsey nine-box matrix, a framework that offers a systematic approach for the multibusiness corporation to prioritize its investments among its business units.

Below is a summary of the article, a link to the full article, and a link to an online presentation on the topic.

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With the rise of multibusiness enterprises in the 20th century, companies began to struggle with managing a number of business units profitably. In response, management thinkers developed frameworks to address this new complexity. One that arose in the early 1970s was the GE–McKinsey nine-box framework, following on the heels of the Boston Consulting Group’s well-known growth share matrix.

The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Rather than rely on each business unit’s projections of its future prospects, the company can judge a unit by two factors that will determine whether it’s going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry.

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Placement of business units within the matrix provides an analytic map for managing them.

With units above the diagonal, a company may pursue strategies of investment and growth; those along the diagonal may be candidates for selective investment; those below the diagonal might be best sold, liquidated, or run purely for cash.

Sorting units into these three categories is an essential starting point for the analysis, but judgment is required to weigh the trade-offs involved. For example, a strong unit in a weak industry is in a very different situation than a weak unit in a highly attractive industry.

The criteria for assessing industry attractiveness and competitive strength have grown more sophisticated over the years.

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Full article
Online presentation with interactive matrix
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Aiming for the 1%, MBAs still flock to Wall Street…

October 26, 2011

So what if Wall Street firms almost caused the world economy to implode.

So what if a couple of the biggest firms cratered and bonuses have been slashed.

So, what is the Feds and protesters have the evil bankers in their sites.

Sill, according to the WSJ, MBA grads are heading to Wall Street – if they can land offers.

Financial-services industry hiring at the big Master of Business Administration programs hit a post financial-crisis high this year.

Employers such as banks, hedge funds, investment managers, private equity and venture capital firms hired 39% of job-seeking 2011 graduates at Harvard Business School and the Yale School of Management, 36% at the Stanford Graduate School of Business and 51% at Columbia Business School.

Even in an age of heavy layoffs, shrinking bonus pools and noisy antibank protests, it is no mystery why M.B.A. students keep entering the revolving door that is Wall Street. It pays well and carries considerable prestige.

But those getting jobs in finance will be entering an industry undergoing a massive belt-tightening, as investors flee banks hammered by a weak economy, tumultuous markets and tightening regulation.

“You’re vulnerable if you’re in that five-, seven- or nine-year range. You’re expensive and you don’t have clients.”

Investment bankers with about five years of experience can command compensation of close to $400,000.

New hires from business schools can expect about one-third as much.

Have to admit that I’m surprised that interest in finance careers hasn’t slowed a bit.

I guess there’s nothing like the smell of money.

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