GE Multifactor Portfolio Matrix:-GE Multifactor Portfolio Matrix is a tools that helps managers develop organizational strategy that is based primarily on market attractiveness and business strengths. The GE multifactor was first developed by General Electric in the 1970s.The GE Multifactor Portfolio was deliberately designed to be more complete than the BCG Growth Share Matrix. Each of the organizations SBUs are plotted on a 2 dimensional matrix of Industry Attractiveness and Business Strength. Each of these 2 dimensions are a composite of a variety of factors that each firm must determine for itself, given its own unique situation.Eachproduct,brand,service, or potential product is mapped in this industry attractiveness/business strength space. The GE Matrix however, attempts to improve upon the BCG matrix in the following two ways:- The GE matrix generalizes the axes as Industry Attractiveness and Business Unit Strength whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and the relative market share as a proxy for the strength of the business unit. The GE matrix has nine cells v/s four ells in the BCG matrix.

Strategy FormulationGE Multifactor Business Portfolio MatrixSelective InvestmentInvest / GrowInvest / Grow

Harvest / DivestSelective InvestmentInvest / Grow

Harvest / DivestHarvest / DivestSelective Investment

HIGH

BUSINESS STRENGHT

MEDIUM

LOW

LOWMEDIUM HIGH

INDUSTRY ATTRACTIVENESS

Industry Attractiveness:-

The horizontal Axis of the GE Matrix is Industry attractiveness which is determined by factors such as the following:-

Market Growth Rate Market Size Demand Variability Industry Profitability Industry Variability Global Opportunities Macro-environmental FactorsBusiness Unit Strength:-The vertical axis of the GE matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:- Market Share Growth in market share Brand Equity Distribution channel access Production capacity Profit margins relative to competitorsStrategic Implications:-Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows:Grow strong business units in attractive industries, average business in attractive industries, and strong business units in average industries.Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industriesHarvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.

CISCO MULTIFACTOR PORTFOLIO MATRIX

Strategy FormulationCisco Multifactor Business Portfolio MatrixRoutingWireless LANSwitching,Web Conference, IT Security

TelepresenceVoice Service,Storage Area Network

Blade Server

HIGHBUSINESS STRENGHT

MEDIUM

LOW

LOWMEDIUM HIGH

INDUSTRY ATTRACTIVENESSInference:-The routing and Wireless LAN strategic business units of Cisco has a high market share of around 51% and 50% respectively and the industry is growing at a 10% CAGR for both the units. So, there is a potential of growth for the company and it should invest wisely in these units.The Switching, Web Conference and IT Security business units of Cisco are leaders in terms of market share which stands at 66%, 41% and 32% respectively. The industry growth fortune of these units are very encouraging and hence Cisco should target and keep a focussed approach on these business units in times to come. They resembles to STARS in the BCG matrix.Though Cisco leads in terms of market share at 44% for Telepresence unit but the industry fortunes are negative with decline in the growth. Hence we would advise that with time the company should divest the business unit.With high market share of around 35% (position 1) and 41% (position 2) in Voice Service and Storage Area Networks respectively and the high industry attractiveness due to the powerful cloud computing technology, these two business units are poised to witness a positive growth with the growth of industry and hence the company can efficiently deploy their resources (Financial, human resource etc.) to remain the market leader in this vertical.With low market share of around 26% and low industry growth prospects, the Blade Server unit can be considered as DOG as per the BCG matrix and it would be difficult in times to come to generate profit from this business. So it should be divested and the resources from these units must be utilized in other business units which are high performing.