Which statement best describes the purpose of the GE/McKinsey nine-cell portfolio model?

• A. Sets marketing budgets randomly
• B. Evaluates historical performance only
• C. Determines pricing only
• D. Guides resource allocation

Answer: (D)

The main idea here is how a diversified company decides where to put its scarce resources among its different business units by evaluating each unit’s position in terms of the market’s attractiveness and the unit’s own competitive strength. The GE/McKinsey nine-cell portfolio model provides a structured way to do that by plotting each business on a 3-by-3 grid across two axes: industry attractiveness and business-unit strength. The cell in which a unit lands signals the recommended level of resource commitment: invest aggressively in the attractive and strong cells, selectively invest or hold in moderate cells, and harvest or divest from the weak or unattractive cells. This framework is explicitly about guiding where to allocate capital, talent, and managerial attention across the portfolio rather than about setting budgets at random, evaluating only past performance, or determining pricing.