Product-market Evolution Matrix
The GE Business Screen is not without controversy. Some observes argue that there is too much subjectivity in the construction of the matrix.
According to Hofer and Schendel, "The Principal difficulty with GE Business Screen is that it does not depict as affectively at it might the positions of new businesses that are just starting to grow in new industries.
In such instances, it may be preferable to use a fifteen-cell matrix in which businesses are plotted in terms of their competitive position and their stage of product/market evolution". Thus, Hofer developed the Product/Market Evolution Portfolio Matrix, or Life Cycle Matrix.
Several useful ideas concerning the strategic alternatives available to each business unit emerge from an analysis of Figure 4-14.
-Business unit A would to be a developing winner. Its relatively large share of the market combined with its being at the development stage of product- market evolution and its potential for being in a strong competitive position make it a good candidate for receiving more corporate resources.
-Business unit B is somewhat similar to A. However, it has a relatively small share of the market given its strong competitive position. A strategy would have to be developed to overcome this low market share in order to justify more investments.
-Business unit C might be classified as a potential loser. A strategy must be developed to overcome the low market share and weak competitive position in order to justify future investments.
-Business unit D is in a shakeout period, has a relatively large share of the market, and is in a relatively strong position. Investment should be made to maintain that position.
-Business units E and F are cash cows and should be used for cash generation.
-Business unit G appears to be a dog. It should be managed to generate cash in the short run, if possible; however, the long-run strategy will more the likely be divestment or liquidation.
It has been suggested that most portfolios are variations of one of three ideal types: growth, profit, balanced.