General Electric (GE) - Assignment Example

 General Electric (GE) Core competencies and capabilities of GE General Electric (GE) is a renowned multinational company of American origin. The company was found in New York in the year 1857. The company belongs to the conglomerate industry. As of 2015, the vast conglomerate operates through various verticals and segments including oil and gas, power and water, appliances, aviation, healthcare, energy management, capital and transportation. The capital segment of the company can be further sub categorised into the business of home appliances, medical devices, financial services, software development, automotive, life sciences, engineering and pharmaceutical industry products and services. As of 2011, GE was listed as the 26 largest company in the United States by gross revenue in the Fortune 500 list of the largest firms in the US. Also, the company was ranked as the 14th most profitable conglomerates operating form the US. In 2012, GE was ranked as the fourth largest companies in the world by the Forbes Global 2000 list. The stocks of GE are listed in the largest stock exchange of the world, the New York Stock Exchange (NYSE) and are traded as premium, high value and high return bearing investment options in the country. There are numerous core competencies and capabilities of the company which act as the major drivers of success and sustainability of the business in the global corporate segment. The success of General Electric has been rooted to the use of effective corporate and strategic management systems in the business. The company has also been revitalised from time to time through the induction of adopting and self-confidence tools like Change Acceleration Process (CAP) to different types of business units in the various industries of operation for the segments of the conglomerate (Chaffee, 2005). General Electric was the first ever company in the global frontier which systematically applied multiple strategic and corporate management concepts and strategies simultaneously within the business verticals. The success and strong performance of GE has also been driven by other factors like strong corporate portfolio management functions, management of talent and movement of ideas (Cameron, 2012). The adoption of three key companywide performed and growth initiatives including Six Sigma Quality, services and globalization have enabled GE to integrate higher levels of sustainability in the business. Another core capability of the company is that many of the large business segments of the business are able to differentiate their outputs with the production of high quality goods and services while at the same time controlling the costs of operations incurred for per unit of the produced goods. The advantages of globalization adoption in the company is reflected in the fact that the total consolidated revenues of GE have increased 17% in the global business as compared to the 6% increase in the domestic market from 2008 to 2009 (Kvint, 2009). GE has embedded quality thinking and process thinking in every level of operations and business units. This has been done through the adoption of the Six Sigma Quality management standards. The adoption of the Six Sigma Quality in the manufacturing and production processes has equipped GE to radically alter the measures of operational and manufacturing efficiency in the company. The core capabilities of the conglomerate lies in the ability to enter into value adding business alliances through diversification, strategic alliances, retrenchments, ,mergers, vertical and horizontal integrations and partnerships (Moncrieff, 2002). Strategic options to be considered by GE over the next five years The General Electric Company (GE) has emerged as a one of the most successful conglomerates of the 20th century. The strategic management of GE has continued to be robust and effective over the years of its operation (Besanko, Dranove, Schaefer and Shanley, 2012). The history of the company is marked with continuous success and growth coupled with milestone achievements. However, in order to maintain its leadership position and to ensure continued success and sustainable competitive advantage, the management of the company has to plan and implement the strategic management functions of the business in the most realistic, flexible, value adding and effective ways of corporate and business management (Mintzberg, 2007). The Kaplan and Norton Balanced scorecard model can be used to analyse the strategic management position and functions of GE. The balanced scorecard is a strategic management and planning tool that analyses a business from four perspectives viz. financial, customer, internal business processes and learning and growth (Bernard, 2010). The balanced scorecard for General Electric is formulated for four different levels of the organization including the frontline employees, business divisions, the company as a corporate entity and the factories of the business. This balanced scorecard for General Electric is given in the Table below. Figure 1: Balanced scorecard analysis of General Electric (Source: Prahalad and Hamel, 2009) Financial perspective: The financial position of General Electric was impressively strong till 2009. The company is still in a dominant position in a wide variety of business segments as measured from financial and operational efficiency and performance metrics. The main financial goals of the company in the future years of operations would be to improve the profit margins of the different business segments and units, optimize the cost of operations without compromising on the yields, increase production rates and efficiency, increase yields ratio and labour productivity all of which are direct and indirect contributors to the financial performances of General Electric. Customer perspective: Maintaining and improving the customer service levels provided by General Electric are major concerns in the business and as such, the management of the company including the Chairman and CEO have focused on the provision of impressive levels of customer service for the internal as well as external clients of the company (Gronroos, 2004.). The main goals of the company from the perspective of the customer should be the enhancement of customer satisfaction levels; reduction in the customer complaint numbers, implementation of faster complains resolution procedures and shorter customer order delivery cycle timings. Internal business processes: The internal business processes of General Electric are adequately streamlined and are efficient in terms of functioning in the current volatile, ambiguous, complex and competitive business environment (Vladimir, 2009). Nevertheless, the business has to develop more proficient and effective strategies to instigate higher levels of cooperation, collaboration and performance efficiency in terms of output and cost control so that sustainability and competiveness can be achieved in the long run as well. The common internal business process goals of General Electric should be the reduction of inventory, reduction of wastage in the production processes, the maintenance of superior quality of materials and the management of optimum inventory management cycles (Simons, 2004). Learning and growth: General Electric has been much proactive in the domain of enhancing the learning and growth of the employees of the company. The management of the company have consistently prioritised its internal stakeholder groups and as a result of this, the employee groups of the company are much satisfied and motivated. But the management of GE should concentrate on developing newer strategies to increase the levels of employee efficiency, development, involvement and motivation. Based on the balanced scorecard analysis, it can be inferred that the management of General Electric should consider focusing on the customer perspective and internal business processes. Since, the company is much strong in the financial and learning and growth prospects, therefore, in order to generate higher success potential and sustainable competitive advantage, General Electric has to contemplate and implement strategic management in the direction of increased operational efficiency, internal business management and customer service delivery (General Electric, 2009). Some key strategies should be employed in the future operations of the company so as to ensure higher competitiveness, sustainability, enhanced performance and growth of the business. The main strategies that should be taken up by General Electric in the next five years should be to take up the opportunities presented by the advent of globalization and entering into the electronic commerce segments for widening the markets of operations, reach of the company and customer base of the business (Muralidharan, 2004). Entering into the foray of electronic commerce would enable General Electric to enhance its market reach and widen the customer base. Also it would create the scope for taping in the enraging market segments and the growth and diversification of the business can act as a new buffer for the conglomerate. Comparison of the management approaches of Jeff Immelt and Jack Welch Jack Welch is considered to be one of the most successful and greatest CEOs of all time. He has attained a legendary position in the corporate world due to his extremely innovative and capable management of the company, General Electric. During his tenure of more than 20 years as the CEO of General Electric, John Welch has shown immense strategic capabilities, foresightedness and flexibility in managing the company in the difficult times as well as in fostering continuous growth and improvement in the multinational business. The most noticeable achievement of Jack Welch as the CEO of GE can be identified to be the radical increase in the value of the company and the shares of GE soon after Mr. welch was appointed as the CEO of the global business. Hen Welch took over the company in the year 1997, the valuation of GE was approximately USD 12 billion which was increased to a total estimated value of USD 505 billion in 2000, during the time before the retirement of Welch was announced. At this time GE was ranked as the second largest company in the world with respect to market capitalization, preceded only by Microsoft Incorporation. The management style of Welch is characterised by uniqueness, risk taking, result orientation and effectiveness. The CEO has incorporated a flexible and situation specific strategic management style. Under his leadership, a number if profitable strategic alliances and business acquisitions were performed by GE which can be noted to be some of the key drivers of the present day success and leadership position of the company in the global markets. The numerous strategic acquisitions helped the business to climb to the peak of the business world driven by more than 10% earnings growth in many consecutive quarters. One of the specific lucrative strategic alliances done under the guidance of Welch is the USD 6.4 billion acquisition of Radio Corporation of the United States of America. The management and leadership of Jack Welch has made the period of Jack Welch a milestone achievement period in the history of GE. The leadership of Jack Welsh was visionary and energetic. These factors coupled with the aggressive, innovative and strategic moves of the CEO helped to produce highly beneficial results for the company. Some of the strategies used by Welch like acquisition of profitable companies to terminate competition, selling off the troubled and weak business segments of the giant conglomerate and the termination of managers and employees who consistently performed below expectation etc. represented the visionary management and leadership style of Welch. Welch also used ruthless and brutal managerial strategies as and when required in the course of the business. The result oriented and aggressive approach of the CEO in the management of GE has contributed positively to the managerial innovation, collaborative actions, focus on results and creation of value for the stakeholder groups in GE. Welch had applied a simple to follow and implement strategic managerial philosophy in GE during his tenure in the company. This philosophy included a five step approach to strategic management which are embracing and managing change in the company as well as in the external environment of the company, leading the company in a proactive manner without getting into the lines of over managing the business and the people, recruit , develop and retain efficient managers who can excite, energize ,motivate and at the same time control people , tasks and situations alike, acknowledge the existing business and industry specific facts including opportunities and limitations and proceed with the aim of exploring them or leveraging on them, for the purpose of business advantage creation or elimination of the negative impacts of these factors on the success and growth of the company and managing the company in a detail oriented and focused manner with specific monitoring and review techniques being applied in every detail of the business operations and management policies. Jeff Immelt has been appointed as the ninth Chairman and CEO of GE on September 7, 2001. Jeffrey R. Immelt is an extremely renowned business executive who has been appointed as the predecessor of Jack Welch in GE. However, the management and leadership strategies of Jeff Immelt are significantly different from that of Jack Welch. While Welch believed in aggressive inorganic growth through the use of strategic alliances and business partnerships, Immelt is a strong believer in developing success and sustainability through organic and in house growth. The governance of Immelt is different from that of Welch in terms of substance, style and strategy formulation and implementation. Immelt is more of a careful manager who designs and implements business strategies by adequately evaluating the pros and cons of the strategies with respect to the requirements of the situation. On the other hand, Welch has always been an active and enthusiastic manner who is known for taking strategic calculated risks in the business and corporate decisions (Gronroos, 2004). In the contemporary competitive and intensely volatile corporate environment, the management approach of Jack Welch seems to be more relevant and effective as compared to the new CEO of GE, Jeff Immelt because of the considerations made by the Jack Welch regarding the challenges and issues faced by the company as well as the enhancement of the strategic functioning, productivity, efficiency and the overall performance of the business. The management styles and strategies of Jack Welch can be identified to be more comprehensive and tailored to suit the challenges, complexities and volatilities associated with functioning in the global business world. Since, GE operates as an enormous conglomerate; therefore, the company has to be managed through the use of radical, innovative, comprehensive and highly effective management styles and strategies. In overall, it can be inferred that the period of Jack Welch is considered to be the golden period of GE because of the intense success, increase in performance, productivity, firm value as well as the stock prices in the NYSE. These factors suggest that the management of Jack Welch has upped the expectations of the stakeholders regarding the management of the conglomerate which would make it necessary for Immelt to prove his managerial worth through the use of as good management techniques as those of Welsh if not better (Mulcaster, 2009). References Bernard, C. S., 2010.  Innovation as a Social Process: Elihu Thomson and the Rise of General Electric, 1870–1900. Cambridge: Cambridge University Press. Besanko, D., Dranove, D., Schaefer, S. & Shanley, M., 2012.  Economics of Strategy. 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