The horizontal and vertical axes of "GE Nine Cell Matrix" are:

Question

Accepted Answer

The correct option is 4:
Business Unit Strength and Industry Attractiveness

The GE Nine-Cell Matrix, which was developed by the consulting firm McKinsey & Company for General Electric in the 1970s, is a sophisticated strategic planning tool used for portfolio management. This matrix is structured as a 3x3 grid, allowing for a more nuanced and detailed assessment of a corporation’s various Strategic Business Units (SBUs) compared to simpler models. The two fundamental dimensions that form the axes of this grid are **Business Unit Strength** and **Industry Attractiveness**. **Industry Attractiveness** is typically plotted on the vertical (Y) axis, measuring the external market potential based on factors like market size, growth rate, and profitability. **Business Unit Strength** is plotted on the horizontal (X) axis, assessing the internal competitive capability of the SBU through metrics like market share, brand equity, and operational efficiency. By evaluating an SBU across these two weighted, multi-factor dimensions, management can determine the optimal strategy, ranging from 'Invest and Grow' to 'Harvest or Divest'.

The incorrect option is 1:
Economic Feasibility and Price Changes are not the two main, comprehensive axes of the GE Nine-Cell Matrix. While they are important business considerations, they represent highly specific or general ideas that do not capture the strategic breadth of the model. "Economic Feasibility" is an outcome of an SBU's position on the matrix, not a criterion used to determine that position. Similarly, "Price Changes" is a narrow factor that would only be one component of the much broader **Industry Attractiveness** or **Business Unit Strength** axes. The axes must be high-level, multi-factor composites to provide a robust strategic overview.

The incorrect option is 2:
Business Unit Strength and Economic Feasibility is an incorrect combination because while **Business Unit Strength** is one of the correct axes (the horizontal axis), the second term, "Economic Feasibility," is incorrect. The vertical axis must be **Industry Attractiveness**, which is a far more robust and comprehensive measure of the external environment than a general measure of feasibility. The GE Matrix requires a thorough evaluation of external market conditions and growth potential, which the term 'Industry Attractiveness' fully encompasses.

The incorrect option is 3:
Economic Attractiveness and Strategic Business Unit is incorrect because one of the terms does not represent an axis. **Economic Attractiveness** is a synonym or a key component of the correct vertical axis, **Industry Attractiveness**. However, the second term, **Strategic Business Unit** (SBU), is the *subject* being evaluated and plotted *on* the matrix, not one of the two dimensions of the matrix itself. The matrix plots the SBU's position based on its **Strength** within an **Attractive** industry, making SBU a descriptive term for the item being placed, not a dimension of the grid.