Competencies and Capabilities of General Electric (GE) - Case Study Example

Case: General Electric (GE) Contents Core Competencies and Capabilities 3 Strategic Options 5 Compare and Contrast of Strategic Management 8 References 11 Core Competencies and Capabilities General Electric or GE is an American manufacturing company incorporated in New York. Generally the company offers technology infrastructure, energy, electric motors, consumer electronics etc to the customers. The company’s core competencies help the organization to achieve competitive advantages in the market over the rival companies. GE’s CEO, Jack Welch maintained a fairly diversified portfolio in the business and focused on the limited number of fields from which potential growth for the business can be achieved. Promising performance was done on these focused sectors so that the business can earn more profit and can hold 1st or 2nd position in the market. He retained the less profitable businesses to maintain the diversified portfolio. This step gave the competitive advantages to the business for its diversified portfolio. His concept of acquisition in the business worked for the growth of the business and the company became one of the world’s leading financial services company (Thompson and Martin, 2010). Jack Welch proposed annual budget which was revised whenever the situation of competition altered. He also implemented boundary less organization for transfer of best learning and practices within organization and through this procedure the company enjoyed competitive advantage in the market. Jack Welch also used the share of knowledge and internal learning concepts for creating competitive work environment. The initiative of digitization discovered a wide spread opportunities for this company in the market. By using this process, customer services and internal knowledge management were improved (Saxena and Bharadwaj, 2009). Again boundary less organization broke all the hierarchical system within the organization and continued free flow of learning and sharing knowledge procedure. Staffs of the organization overcame all the constraints and became more competitive to provide their best performance. He also pushed the employees for more adoption, excellence and speed which helped GE to gain valuable core competencies. The company was offering quality products and services to its customers and for this reason customers did not find any reason to move from these products. As a result the company achieved high level of competitive advantages. Jack Welch took the initiative to coordinate all the available resources of organization to enhance its capabilities and for this reason he especially focused on the human resources of the company by improving reward system (Wetherly and Otter, 2014). When Jeff Immelt took the responsibilities of CEO then he focused for creating value for customers by providing customised and superior products and services especially in the high growth market. His two main strategies such as product development and market development strategies helped to increase the competitive advantages as well as capabilities of the organization in the market. He wanted to enhance the customer’s focus by providing innovative products and services and the company was marked different in the market for such kind of initiatives. Technical leadership of this company also helped to do some improved work. For example this can be said that in the health care sector the company has applied advanced and modern health care science by its research and development capabilities. The company has invented and applied nuclear medicine, 3D visualization and analysis solution, molecular imaging etc which were very much helpful for customers (Andersen, 2013). Competency models are those where a collection of competencies can be found which will provide competitive advantages to an organization. The company can adopt APICS Competency Models which indicate the skills of professionals and help to rank them according to their performance. This is an easy way to identify the areas where improvements and developments are necessary. From the above mentioned diagram it can be said that if the company can balance its strategic and competency hierarchy in a proper way then it can effectively achieve the target success in future. The company’s mission and corporate strategies should be planned properly by the CEO to gain the core competency level. Business strategy can meet the competency functional strategies and improve the capabilities of an organization. Capability maturity model also can be developed which indicates the optimization level of adopted processes by the organization. This will also help to develop maximum level of capabilities and increase the scopes of achieving growth by the business (Jeffs, 2008). Strategic Options The famous manufacturing company General Electric should adopt the following strategies for more capital efficient situation in the business and high margin growth. The major five strategies are customer focus, globalization, growth platform, improved services and technical leadership. General Electric is a famous commercial company which always focuses on the best quality customer services and through this step they achieve maximum percentage of market share. They direct their sales force to meet the customer’s demand and requirements. They also use six sigma method for their customers. ‘Six sigma’ method is nothing but the quantitative and comprehensive systems used for analyzing, improving, controlling, measuring and defining each and every aspect of the business processes (Sekhar, 2009). Apart from that providing excellent service to the global customers, developing world class marketing concept and applying them into business procedure will enhance the focus of customer services. Globalization will bring the maximum competitive advantages and increase the core competencies of the business in the market. The company already sold its products outside the US market for more than 100 years and earned one-third revenue from the international market. So the company needs to focus more for generating more percentage of revenue from the global market in future. Technical leadership is required to produce high margin products, to create new markets for expansion of business activities and to win the battle of competitiveness. So it should be at the heart of initiatives taken by the company (Hutt and Speh, 2012). The power turbines, locomotives, jet engines, medical devices etc of this company can provide high margin services and it should also concentrate to provide more profitable services to the customers. In case of energy market it can be said that company should build the level of asset optimization for improving the energy efficiency of customers and also for good performance in environmental issues. In health care sector the company should implement and install such kind of products which have broadband connections. So use of such kind of upgraded technology also enhances the quality of offered services to the customers and potential customers also will get attracted to gain such kind of benefits (Rao, Rao and Sivaramakrishna, 2009). The company needs to identify the trends and then they should develop some new ways for further growth than the present stage. Without maximizing or expanding the growth platform it will not be able to achieve the competitive advantages and also not be able to sustain in the battle of tough competition. All the rival companies are engaged to develop new creative ideas with the help of advanced technology. So to cope up with the competitors and the recent market trend, the company also has to develop and create new process, ideas etc to increase the financial strength and hold the stability in the global market (Duhaime, Stimpert, Chesley and Chesley, 2012). Merger and acquisition, market penetration etc are some other techniques for the said issue. The company also take some strategies which will help to fulfil the purpose of internal growth. Diversification, modernization and expansion are some strategies which can be applied by the company for the purpose of internal growth. Vertical integration and horizontal growth strategies also can be applied by the management which is very much effective in the competitive market. Most of the above mentioned strategies have already been applied by the two CEOs of this company. Jack Welch who was CEO from 1981 to 2001 has applied many corporate strategies for developing value of the available resources. He was finding some new ways to maximize the organization’s capabilities in the long run of business activities. His strategy was to develop efficiency and performance at all level of staffs to achieve targets. Self confidence, speed and simplicity were the main three words of his implemented strategies. He also applied the strategies of six sigma, technological advancement and globalization but he did not think about the market penetration, customer focus and growth platform strategies. So in future the above mentioned strategies will bring a new and successful era for this business (Feinberg, Kinnear and Taylor, 2012). Jeff Immelt took a strategy for long term profit growth of this business. As the share prices were fall after the year 2001 so he thought to increase transparency and develop trustworthiness among the shareholders. He took the initiative to implement the market expansion strategy and capturing new market strategy. He focused on the customer’s value, commercial excellence, globalization, growth leaders, innovation, advanced technology which are required for the growth in future days. Customer oriented program should be conducted for getting better benefits. Balanced score card is a tool used for computing strategy performance management. Managers of any organization generally use this tool for maintaining track records of the executed work and analyzing the performance level of each employee. This is example of a controller which can control all the activities at time of implementation of strategies. It monitors the performances against the strategic goals settled by the management. Here balanced score card can be used to implement the strategy of customer focus. This will help to find out the customer’s exact expectation from General Electric and the possible ways through which company can meet those expectations. The retention of customers, acquisition of more number of customers, increasing profitability, achieving more market share etc can be measured by the balanced score card. If the company develops a new product then possible sales volume can be anticipated by this particular tool and then management of the company can analyze the demand, acceptability and market trend of that product. According to these data they can develop a strategic plan which will help to generate revenue and profit from the customers and the industry (Newlands and Saee, 2012). Compare and Contrast of Strategic Management Jack Welch implemented corporate level strategies which helped to create value by coordinating all the business resources across all the business units. He was involved in finding the new ways to develop more organizational capabilities in the long term. But Jeff Immelt did not focus on this field. Jack Welch had a resource based view and this inward looking strategy helped to develop a stable and good reward system within the organization. This will also develop the short term based performance. But Jeff Immelt did not take any kind of initiative regarding internal strategies as well as reward system of the organization. But he was focused on the value of the customers which was not the matter of concern at the time of Jack Welch. He developed the cost effective advantages. So at that point of time GE got many opportunities to develop new market and to expand its existing market share than the competitors. Here chances of loss and risk factors were less for the product differentiation. At the time of Jack Welch, employees and managers of this company were concentrated on their year to year performance and internal efficiency. He could retain the number of employees by the structured reward model and net earnings were also increased at that point of time. So this can be said that he was able to improve staff performance and efficiency level. He was focused on the customer services with greater speed, safety, quality and simplicity. He used ‘six sigma’ method for producing more quality products. This strategy was not applied at the time of Jeff Immelt. Jack Welch highlighted more on the core competencies issue than Jeff Immelt. Jack Welch promoted competitive work environment, sharing of knowledge capital and internal learning. He engaged employees and line management in the administrative function and strategic planning. His boundary less organization strategy also helped in free flow of information and knowledge. Welch took diversification strategy which provides benefits regarding economies of scope. Sharing resource, knowledge and capabilities helped to maintain balance among different diversified products and services. At that time GE’s capital occupied all the segments of financial services market. Equipment management, consumer finance, speciality insurance etc all were included in the GE’s capital. So the company’s capital was one of the world’s most horizontally diversified integrated financial services company. In the year 2001, the company got maximum revenue and triple ‘A’ rating for its successful business. But Jeff Immelt did not intimidate others what was done by Jack Welch. Immelt motivated and encouraged others to provide their level best performance. Immelt’s friendly behaviour and simple leadership style created a different work environment which was far better than the Welch’s leadership style. So Immelt received more praise from his sub-ordinates. But at that time Immelt faced many troubles due to some financial scandals such as WorldCom, Enron etc. Corporate landscape was completely changed after those scandal incidents and price of shares drastically reduced. So GE faced problem to raise capital from the market as the confidence of share holders were not at the satisfactory level. At that time Immelt took strategy to increase the share holder’s confidence by managing not only the price of shares but also the growth of long term profits of this company. So it was a difficult task which he handled in an efficient way. He implemented many methods in the operational activities which also raised the confidence of share holders, suppliers, customers, government and society at large (Passenheim, 2010). Immelt was excellent to maintain good corporate governance and created more transparency within organizational activities. He disclosed more detailed financial statements to achieve the confidence of the share holders at the fluctuating time period. He continued the process to gain the long term profitability after managing all the external risk factors in an efficient way. Comparing the activities of both CEOs this can be said that Jeff Immelt was better than his previous CEO Jack Welch. Immelt showed his efficiency at the crisis period when many financial scandals took place and the market was very volatile in nature. So at that crisis period Immelt was able to gain the confidence of share holders and customers by using and applying his strategies. Undoubtedly Jack Welch was an excellent CEO who prepared the steady stage for this company but he managed all the business activities in pleasant situation. He never faced extreme crisis period in case of business like Immelt. Apart from that, Immelt also covered other aspects for the growth of business such as increase value for customers; maintain quality services, concept of globalization, implementing improved technology, excellent commercial marketing strategy etc. So at the end, it can be said that Immelt’s strategic management is ideal in complex, uncertain, volatile and ambiguous world. References Andersen, T. 2013. Short Introduction to Strategic Management. Cambridge: Cambridge University Press. Duhaime, I., Stimpert, L., Chesley, J. and Chesley, J. 2012. Strategic Thinking: Today’s Business Imperative. London: Routledge. Feinberg, F., Kinnear, T. and Taylor, J. 2012. Modern Marketing Research: Concepts, Methods, and Cases. Boston: Cengage Learning. Hutt, M. and Speh, T. 2012. Business Marketing Management: B2B. Boston: Cengage Learning. Jeffs, C. 2008. Strategic Management. Los Angeles: SAGE. Newlands, D. and Saee, J. 2012. 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