General Electric and McKinsey combined together to develop a more sophisticated model called the multifactor matrix. This uses nine cells and makes a serious attempt at quantifying the situation on the basis of following two variables;
⦁ Competitive strength factors (such as) Size, growth, market share, brand equity, profitability, customer loyalty, etc.
⦁ Industry attractiveness (such as) Price levels, competitive intensity, Govt. regulations, technological level.
In this model market attractiveness is measured against competitive position and both axes are quantified as in following Figure.
9 Cell Figure
The cells in the diagram are numbered only in order to be able to identify them in the following discussion. The general strategic principles illustrated are:
Cells 1, 2 and4 - invest
Cells 3, 5 and7 - manage selectively for earnings
Cells 6, 8 and 9 - either harvest or divest