Portfolio approach provides a useful tool for analyzing business performance. As a top manager of a multi-business firm, you apply such analytic skill to develop a GE multifactor portfolio matrix (exhibit 10-10) for your products/markets and based on the analysis, finally you have to report to the board the types of strategy you have made for your portfolio; ie., a matrix quadrant(s) (exhibit 10-15). However, the application of GE multifactor portfolio analysis has two levels: first at the SBU level to determine the strategic perspective of different products/markets. Finally, all SBU may be simultaneously positioned on the matrix to determine a corporate-wide portfolio.
The GE matrix has 5 steps:
One - Identify your products, brands, experiences, solutions, and SBU's within a chosen Corporation.
Two - Answer the question, what makes this market so attractive?
Three - Decide on the factors that position the business on the GE matrix.
Four - Determine the best ways to measure attractiveness and business position.
Five - Finally rank each SBU as either low, medium or high for business strength, or low, medium and high in relation to market attractiveness.