Sustained profits come from building a competitive advantage. This advantage can
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Question
Sustained profits come from building a competitive advantage. This advantage can be accomplished not only through good financial return on a specific process but also through the correct capacity decisions that must be integrated into the organization’s mission and strategy. Jack Welch, former CEO of General Electric (GE), understood this better than anyone else. Although GE was a profitable and respected company when Welch took over, its financial results during the1970s were troubling to both its investors and senior management. Welch immediately made changes to the company’s structure and management practices. From the beginning, he stressed the importance of being one of the top players in the industry. He told his colleagues that GE should always be number one or number two in all its businesses; if it was not, then their only options would be to fix, sell, or shut down. Because of this strategic direction, GE today usually dominates the markets in which it participates; and if it does not, then it divests. A major part of GE’s strategy is to be the first or second in every market. As you review the module readings for this week, consider the complexity of GE’s products and its emphasis on vertical integration and capacity planning. GE’s Profile The General Electric Company, or GE, is a diversified company that offers infostructure, media and finance products and services. The company was originally founded by electrical innovator Thomas Edison. It is also listed as one of the most admired companies, ranking as number one in electronics and 16th overall according to Fortune Magazine. For the company's innovation focus, it was ranked as one of the world's most innovative companies by Business Week. GE’s Reach The General Electric Company is organized into 5 divisions including “’NBC Universal", "Technology Infrastructure", "Consumer & Industrial", "Energy Infrastructure" and "Capital Finance". The company functions in over 100 countries and has over 300,000 employees. For 2009, the company achieved $11.2 billion in earnings and an industrial cash flow of $16.6 billion. Effective January 1, 2011, it reorganized the Technology Infrastructure segment into three segments: Aviation, Healthcare and Transportation. Services Chemicals, Petrochemicals, and Fertilizers Food & Beverage Government & Public Administration Metals and Metals Fabrication Mining (Coal, Minerals, Metals) Oil & Gas Upstream Power Generation GE. (2013). The History of General Electric. Retrieved from http://www.ge.com/about-us/history/1878-1904. GE. (2013). GE fact sheet. Retrieved from http://www.ge.com/pdf/news/GE-Fact-Sheet.pdf Using the information above, the module readings, Argosy University online library resources, and the Internet, respond to the following: How does GE’s framework give it the opportunity to be at the forefront of the markets in which it participates? Examine your own firm or a firm you would like to work for in the light of GE’s framework and respond to the following: Does this firm have the means to execute like GE? Which type of resources would the firm require? How could GE’s lessons be applied to this firm? By the due date assigned, post your response to the appropriate Discussion Area. Through the end of the module, review and comment on at least two peers’ responses related to their firm of choice.
Explanation / Answer
General Electric Company (GE) indeed effectively observes a generic strategy which eventually facilitates to attain competitive advantage thus ultimately along with intensive growth strategies helps to ascertain business growth in international markets. Michael Porter’s generic strategies are efficiently used to develop and maintain firms’ competitive advantage.
GE utilizes generic strategy to attain competitive advantage in its energy, oil and gas, transportation, healthcare etc. business. Company’s intensive growth strategies are effectively established to support and maintain business growth. Thus effectively facilitates management to determine the appropriateness of tactics and operational approaches. Furthermore product differentiation is GE’s foremost generic strategy which eventually helps in attaining competitive advantage.
Company’s main goal and objective is to attract target consumers towards products that are special and unique build through effective research and development process. Furthermore it eventually also supports product uniqueness which indeed is essential for detaining and preserving consumers in GE’s target markets.
Furthermore it’s also very crucial and significant to effectively strengthen company’s presence in market segments. Thus product development is indeed the principal intensive growth strategy of GE which is eventually attained through new products that facilitates to effectively increase business sales and revenues.
The differentiation generic competitive strategy necessitates that product development indeed must focus on product uniqueness. Furthermore the strategic objective based on product development indeed requires to effectively incorporate latest technologies in every new product that GE develops.
GE implements market penetration as its secondary intensive growth strategy wherein the company grows by increasing its consumer base in present markets. Furthermore diversification is indeed regarded as supporting intensive growth strategy in GE business operations.
In diversification growth happens through new businesses. GE’s differentiation generic competitive strategy is applied every time when diversification takes place for instance when company develops new products upon adding a new industry to its portfolio. Furthermore the strategic objective based on diversification is indeed to effectively spread risk across various industries and markets.
PESTLE analysis of GE does effectively facilitate to elucidate that various sectors indeed develop business opportunities based on technological advancement. In diversification GE continuously searches for such opportunities in industries where it presently does not function. GE implements market development as a supporting intensive growth strategy where company grows by establishing new applications, markets or segments for its existing products.
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