Which axes are used in the GE/McKinsey matrix to evaluate business units?

• A. Market size and growth rate
• B. Industry attractiveness and business strength
• C. Competitive intensity and volatility
• D. Customer satisfaction and loyalty

Answer: (B)

The main idea is that the GE/McKinsey matrix evaluates each business unit by looking at two dimensions: industry attractiveness and the unit’s business strength. Industry attractiveness captures external opportunities and risks in the market—growth rate, market size, profitability, entry barriers, and competitive dynamics. Business strength looks at internal capabilities—relative market share, brand power, product quality, distribution reach, and cost position. Because strategic decisions about where to invest resources depend on both how attractive the external market is and how well the unit can compete, this two-axis framework helps you decide where to invest, where to selectively invest or develop, and where to divest or harvest.

Other options don’t fit because they don’t reflect the full two-axis structure of this matrix. Market size and growth rate are part of industry attractiveness but don’t by themselves define the two axes. Competitive intensity and volatility are external factors but not the defining pair. Customer satisfaction and loyalty are internal indicators, not the axes used here.