The Concepts of the BCG Matrix and GE Matrix that are used to Determine Organizational Strategy

TheConcepts of the BCG Matrix and GE Matrix that are used to DetermineOrganizational Strategy



TheConcepts of the BCG Matrix and GE Matrix that are used to DetermineOrganizational Strategy

TheBCG matrix is a concept that was developed with an aim of helpingorganizations or companies to allocate their resources efficientlyamong the various business units. Consequently, according toBerkowitz(2010),BCG matrix is popularly used when planning for a company portfolioit a tool that is used to analyze the business market, help instrategy development, and brand management. A portfolio is essentialin the company because it create long-term success in businessoperations when handling numerous services or products. Bold(2011)affirm that business portfolio must have a little growth andhigh-growth services or products to ensure commercial success. Thisis because the high-growth products are meant to help the companygenerate a lot of cash however, operations of high-growth goods andservices require massive amounts of money (Berkowitz,2010, p.67).On the other hand, low-growth services or products generate moreincome but require minimal investments. On the contrary, GE matrixwas developed as a derivation of the BCG.

Todetermine the business strategies, the BCG matrix concept is appliedin or organizations that deal with multiple units to determine thebusiness strength of each unit. Additionally, the model is used todetermine the course action required for every unit specified.Consequently, the concept of BCG matrix is to help organizationsunderstand their highest probability of winning their competitorsthe concept, therefore, creates a management strategy in business(Fleisher&amp Bensoussan, 2003).

Asa derivative of the BCG matrix, GE matrix is a three by three matrixthat is also used to analyze the business portfolio for strategicbusiness units in a Company. Consequently, Mikkola(2001) asserts that theBCG matrix help organizational managers to classify their products orbusiness units either as low or higher performing where they areeither classified as relative market share (RMS) or Market GrowthRate (MGR). The three-by-three matrix is used by decision-makers inbusiness to develop a stable, systematic, and effective system whendecentralizing investment decisions and developing managementstrategies for future units or products this is essential especiallywhen dealing with new entries in the business segments (Hillestad&amp Berkowitz, 2012).


Berkowitz,E. N. (2010). Essentialsof health care marketing.Jones &amp Bartlett Publishers.

Bold,E. O. (2011). Instruments and techniques used in the design andimplementation of change management. Journalof Advanced Research in Management (JARM),(3 (II), 5-13.

Fleisher,C. S., &amp Bensoussan, B. E. (2003). Strategicand competitive analysis: methods and techniques for analyzingbusiness competition(p. 457). Upper Saddle River, NJ: Prentice Hall.

Hillestad,S. G., &amp Berkowitz, E. N. (2012). Healthcare market strategy: from planning to action.Jones &amp Bartlett Publishers.

Mikkola,J. H. (2001). Portfolio management of R&ampD projects: implicationsfor innovation management. Technovation,21(7),423-435.