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Definition: Business Assessment Array
Business Assessment Array is another name for McKinsey’s GE matrix used to assess business portfolio analysis for Strategic Business Units (SBU’s) of a corporation. It is a3*3 matrix having “Market attractiveness” and “Competitive strength” as its axis.
It is a function of the industry’s growth rate, size, profitability, opportunities.etc. Each of these factors is given a weightage as per the industry norms and the combined industry’s attractiveness is then determined as-
= factor1 * its weightage + factor 2 * weightage + ……………… etc.
The competitive strength of each SBU is determined and plotted on the matrix. It is a function of the SBU’s market share, growth in the market share, production capacity, its equity and its margins vis-à-vis its competitors. This metric is also the sum of the weighted average of its individual factors.
The location of a particular SBU on the matrix indicates what should be its recommended strategy as shown. the entire matrix forms the portfolio of the corporation and shows the health of the corporation as a whole.