The McKinsey 9-Box Matrix (9-Box Matrix), is a tool commonly used in strategic planning to assess the performance of different business units or product lines within a company. This model helps in making decisions about where to focus resources and investments. Here’s a simplified breakdown:
Purpose: The McKinsey 9-Box Matrix is designed to evaluate and prioritize various units or aspects of a business based on two key dimensions: the attractiveness of the industry or market and the competitive strength of the unit.
Dimensions: The horizontal axis represents the competitive strength of the business unit, while the vertical axis represents the market attractiveness.
9-Box Matrix Summaries
- High Market Attractiveness, High Competitive Strength: Indicates strong market position and potential for growth. Investment and resource allocation are typically prioritized here.
- High Market Attractiveness, Medium Competitive Strength: Units with potential for growth but require improvements or changes in strategy to fully capitalize on market opportunities.
- High Market Attractiveness, Low Competitive Strength: Suggests the market has potential, but the unit is not well-positioned to exploit it. Strategic decisions are needed, like restructuring or finding a niche market.
- Medium Market Attractiveness, High Competitive Strength: Steady performers, often generating reliable profits. Investments may be maintained but monitored for market shifts.
- Medium Market Attractiveness, Medium Competitive Strength: Average performers with limited growth potential. These often require careful evaluation for resource allocation.
- Medium Market Attractiveness, Low Competitive Strength: Marginal units with challenging market positions. May require significant changes or divestment.
- Low Market Attractiveness, High Competitive Strength: Strong units in declining markets. Strategies may involve harvesting profits or reinvesting in more attractive markets.
- Low Market Attractiveness, Medium Competitive Strength: Weak units in unattractive markets. Often candidates for divestiture or exit unless they serve a strategic purpose.
- Low Market Attractiveness, Low Competitive Strength: Lowest priority, with limited potential for profit or growth. Often targeted for divestment or closure.
- SMARTACRE Goals: Advancing SMART goals into SMARTer goals.
- Eisenhower Matrix – 80/20 Rule: Perfecting Priorities.
- SWOT Analysis: Understanding strengths, weaknesses, opportunities, and threats.
- PESTEL Analysis: Examining macro-environmental factors that might impact business units.
- Porter’s Five Forces: Gaining insights into industry competitiveness and profitability potential.
- McKinsey 9-Box Matrix: gaining insights into market attractiveness and competitive strengths.