The Mckinsey Matrix is used to evaluate the attractiveness between different markets in order to build an optimal business portfolio.
This tool is used to evaluate the positioning that takes a product or service in a certain market and to be able to verify the company if it is convenient or not to stay in that market, invest to grow or leave. Its origin was thanks to the international consultancy Mckinsey, which tried to develop an improved version of the BCG matrix.
Criteria for defining the McKinsey Matrix
It is governed by long-term market attractiveness, according to:
- Accessibility
- Gross margin
- Lifecycle
- Growth rate
- Competitors
- Differentiation existing
On the other hand, another of the axes that the matrix represents is made up of the competitiveness of the product or service in the market, according to:
- La market share on
- Brand image
- The price
- Distribution there
- Differentiators you have
Structure and decision making
On the horizontal axis the criterion of competitiveness; and in the vertical the attractiveness of the market. In turn, each criterion is divided into 3 levels: weak, medium and high. Hence, the matrix is subdivided into 9 cells.
The following cases may occur:
- Weak attractiveness + weak competitiveness: abandonment or divestment.
- Weak attractiveness + high competitiveness: maintain positioning without incurring large investments. Keep a low profile with what you already have.
- High attractiveness + low competitiveness: selective development; that is, look for profitable opportunities cautiously and invest.
- High attractiveness + high competitiveness: carry out a strong strategy to invest and grow.
- Other cells: an analysis is required to see what strategy to apply (stake out, develop, exit, etc).
Template for making the GE-Mckinsey matrix
The decision-making of a company will benefit from this tool. If you need to make your own McKinsey matrix, you can do so with the help of this excel template.