General Electric Strategic Case Analysis
Executive Summary
General Electric is a global, multimillion digital company in the United States. The company offers its consumers a variety of products such as aircraft engines, power generations, financial and industrial products, as well as oil and gases, among other products and services. The 20th century has proved that GE is a great company, with remarkable technological and styles of management. When Jeff Immelt acquired the company in 2001, he made considerable changes and transformations to the company, by developing a new strategy to run the company as well as adopting the management essence of his predecessor, by analyzing the global trends. Strategic planning and management are essential in ensuring the success of global entities like GE; therefore, managers need to have the knowledge and a deeper understanding of corporate strategies, and their contributions towards competitive advantage and general sustainability of a company through R&D development and focus of outside market segmentations.
Introduction
GE Company is a global entity, famous in offering products and services to a worldwide base consumer niche. It is an industry that is known for leading technological brands and business operations in eight broad segments. The 20th century led to the changing dynamics in the business world. Hence, when Jeff Immelt took over from Jack Welch as a CEO in 2001, he transformed the company’s strategic development suit the competitive environment and matched with the global trends. Therefore, he thought that it was wise to develop a corporate level strategy, to curb the then changing dynamics as well as the future uncertainties. Thus, GE has pushed through to remain competitive and gain a competitive advantage, more reliable than its competitors, hence helps the company to generate more profits and revenues.
Background
GE was formed in 1892, through a merger of three prominent companies such as Edison General Electric Company, the New York and Thompson-Houston electric company. The company’s first products were transportation, lighting, power transmission, and medical equipment, among other products and services. During WW2, the US military benefited from GE supplies of equipment and executives. After the war, homemakers in America helped from appliances produced and supplied by GE. In the 1980s, when Jack Welch was the CEO at GE, he expanded the company into both media and Wall Street and built a house that grew the company from $25 billion to a $100 billion conglomerate that was boundary-free. However, during the 2008 Great Recession, the conglomerate became wounded, hindering it from borrowing. That is how Jeff Immelt developed strategic management policies, that helped the company to shed off the monetary unit bulk, and stepped back to its roots in manufacturing. These events are essential for this case analysis because they provide an overview of the strategic developments that led to the current face of GE, under strategic management and leadership styles.
Problem Definition
From a global perspective, the field of business is dynamically changing, and the competitive advantage is also becoming stiff as time goes by. Therefore, companies and company managers should be aware of the changing demographics in terms of innovations controls around the business world. Thus, strategic analysis in global and digital companies like GE is essential to maintain a competitive advantage in the highly innovative business world.
Top Management Team
The current CEO at GE is H. Lawrence Culp, JR. He was made the CEO in 2018, after working in the board of directors for six months. His credentials include an MBA from Harvard School of Business and a BA in economics from Washington College. Vic Abate was appointed as the vice president and the CTO at GE. Since he joined GE in 1990, he has great skills and management roles to play in the company. He has a bachelor’s degree in mechanical engineering from Rensselaer polytechnic, an MBA from Union College, and another one from RPI. Lind Boff is the (CMCO) Chief Marketing and Communication officer and has a BA in political science. Alec Burger is the senior VP and president/CEO of GE capital and GECAS. He has a degree in mechanical engineering from Trinity College and an MBA from Northeastern University. Those are some of the top management personnel and their academic qualifications essential in strategic planning and management at GE Company.
Competitors
Through his brand and portfolio, GE faces stiff competition in the electric world. Some of its stiff competitors include but not limited to Siemens, 3M, Hitachi, and Emerson, among other competitors. Siemens is known for the production of automation, power generation tech, and medical tech and firearms. Its strong advertising and marketing plan (lifestyle and sports), increases its brand value, thus competing with GE. 3M, Hitachi, and Emerson have brand values and products that are similar to GE, hence creating a competitive nature with GE products and services.
Discussion of the Strategic Analysis
- SWOT
- Strengths
Global marketing strategy: since its incorporation in 1892, GE has continuously grown in terms of technology and services offered. Therefore, that is why today, its market and customer base has expanded, with its offices in almost 180-200 countries in the world, with over 300000 workforces across these offices. More so, due to the advanced technology, GE has been known as a leading innovative company, offering innovative solutions globally. Besides, its aviation and transportation have changed the face of many countries like Iraq, which has witnessed the restoration of electricity. Technology advancements strengthen the competitive advantage at GE, like when it produced the CFM engine with 141 sensors. Furthermore, its business portfolio is essential since the company operates in fields like power, aviation, transport, and healthcare, among other areas. Financial strongholds and investments are other strengths of GE Company
- Weaknesses
There are low revenues in some business segments, like lighting, power, and transportation. This emanates from stiff competition from its competitors who are doing better in the segments mentioned. Also, the pension-related liabilities are higher; for instance, in 2017, GE’s Pension Plan dropped due to certain factors, hence causing low rates of discounts and pension liabilities.
- Opportunities
New business segments, expansion through mergers, and expansion in the Middle East and Asian markets mark some of the opportunities for GE.
- Threats
Competitive pressure is a threat to GE. There is a rapid rise in the digital world, innovative technology, and disruptions that have created new innovative competitions. Geopolitical changes, higher tax liabilities, and legal pressures are also some of the potential threats at GE Company.
- PESTEL
PESTEL is an acronym that entails the political, economic, social, technological, environmental, and legal aspects influencing GE business. Politically, tax regimes and trade policies have an effect on GE business. Governments have imposed control measures on businesses across the European Union and Asia. The economic factors have an effect on the customer’s purchasing power. For instance, during the Great Recession, consumers cut down their costs, today due to the COVID-19 cases, customers have cut down their costs, and businesses are closed.
Socially, since GE operates from a geographical perspective, variations in societies and cultures have an impact on GE’s business. Technological aspects are vital for GE operations since they are tech-savvy. More so, investing in R&D is crucial for GE to innovate, advance, and grow its competitive advantage. Environmental factors are vital because GE strategically strives to meet the societal needs of its consumers while minimizing environmental impacts and upholding advancements for social development. Thus, sustainability is paramount at GE Company. Legal aspects follow the changing legal framework governing each business segment to ensure productivity according to the legal standards.
- Porter’s five forces
There is low bargaining power of suppliers at GE, with the higher bargaining power of buyers in the 21st century. Due to higher investment barriers, there are fewer or no threats from new entrants, and also, the large size and innovative brand image have helped GE to beat the substitute products’ threat. But the competition from rivals is high because, marketing, research, and development capabilities of GE’s competitors are also high.
- VRIO
Resources and capabilities of GE emanate from its global presence in more than 100 countries, brand image as well equity that has built consumer loyalty and trust technological capabilities, HRM culture, and customer loyalty due to high-quality products and service offers.
- Financial analysis
In 2017, GE’s industrial revenues were static because the industrial segment revenues increased. The $3.3 billion industrial revenue increase was due to an increase in gas, oil, renewable energy, and healthcare, among other segments, offset by a decline in power, lighting, and transportation. Baker Hughes was acquired at $6.0 billion, which offset by a weaker US dollar and a $3.4 billion appliance disposition.
Actions Taken By GE
The firm decided to strengthen its presence in the essential markets and segments, to ensure it is back to its feet.
Results of Overall Analysis and Interpretation of Results
GE has the potential to grow through new business investments and technological advancements. It has excellent, strong technology capable of growing faster, especially with its focus on innovation. A strong portfolio, global presence, and financial strength help GE to navigate through the challenges.
Recommendations
Since most of GE’s revenue is realized from outside the US, it should strengthen its outside market segments to earn more revenue. More so, it should invest more in R&D to expand faster to curb the derail that occurred in 2017. These recommendations are feasible and will help GE increase its market presence, competitive advantage, and revenues in general.
Conclusions
GE is a growing entity that has strategic planning and qualified management leadership, that will propel the company through the competitive business world. Due to its strategic arrangement through SWOT, PESTEL, VRIO, and financial analysis, GE is headed towards generating more revenues than the past few years. Its focus on technological advancements, global presence, and brand innovations is ideal in keeping its pace in the competitive world. Besides, the 2017 decline in revenue generation worked as a benchmark for GE, to work hard and address the areas that led to fluctuations in its business. GE is headed towards higher returns after incorporating R&D for faster expansion.
References
Grant, R. M., & Grant, R. M. (2008). Cases to accompany contemporary strategy analysis. Malden, MA: Blackwell.
Berthelot, M. J., Lasensky, N., & Somers, P. (2019). The Board’s Role in Monitoring Strategy: Lessons Learned from General Electric.