Competitive strategy and Innovation Case Study General Electric

Table of Contents

Executive summary

Introduction

GE core competencies and capabilities:

Strategic options for GE over the next five years from the date of the case:

Evaluating Leading in the global market using Kaplan’s balanced score card

Comparison between a Jeff Immelt’s management and his predecessor Jack Welch’s:

References:

Competitive strategy and innovation-GE

Executive summary

GE one of the most successful companies all over the world and it is managers factory. GE working in many fields, the main reason of its success the management way and the high innovative technology used in its products also, it is offering a high level of customer service for its high quality products as they are customer driven company GE give more interest to the customer’s needs and working on solving their problems. GE not only working in the US but it is working in many countries around the world; it entered the global markets to find solutions to the local market’s problems by its initiative products. Core competencies for GE are Technology & innovation, brilliant customer service, Product quality, Global presence. GE has many strategic plans for the future like superior technology and leading in the developing markets. GE was leaded many great CEO’s but most people affected its performance were Jack Welch and Jeff Immelt they have two different strategies and different leadership style, but both of them added too much to the company.

Introduction

General Electric Company founded in 1892 as a result of the merge between Thomas Edison’s business interests and Charles Coffin’s Thomson- Houston Electric Company; there are more than 300,000 employees in more than 100 countries working with GE (Chesbrough, H. 2012). GE’s vision “We bring good things to life” and its mission is to build, move, power and cure the world by its technology and advanced solutions to seek solutions to their customers and society.

GE core competencies and capabilities:

Core competencies for GE are Technology & innovation, brilliant customer service, Product quality, Global presence. The essay will explain each one of these competencies, and to confirm that its core competencies each of them will be tested each of them using Barney’s VRIN model.

Technology and innovation:

GE leaders were very convinced that the technology is the most important aspect to the company growth, they allocated the funds needed to the researches and building research centers in many regions like Niskayuna, New York, Shanghai, Munich and Rio de Janeiro also, they were claimed to have 37000 technologists working in the business. As a result, for that GE launched advanced technology programs in molecular imaging, nanotechnology, energy conversion, advanced propulsion and sustainable energy. GE under Immelt supported the projects that offered large-scale market potential like Imagination breakthroughs, which included Evolution hybrid locomotive, the smart grid and Sodium batteries also, the ecomagination program that credited with generating 21 billion dollars of clean energy revenue.

Technology and innovation VRIN test:

As per Barney’s VRIN model if the strength point achieve Valuable, Rare, Inimitable and Non substitutable aspects we can consider it from the core competencies if we apply this on technology and innovation for GE case, we can found that it is very valuable for the company and consumers as it added value for both of them. In addition, it is not a common aspect for the most of the competitors so it is rare and from the projects resulted from that direction we can easily recognize that it is inimitable and non-substitutable.

Customer focus and brilliant customer service:

GE with Immelt gave more focus for the customer’s needs and brilliant customer service to attract the customers and increase their loyalty, they gave more time to the customers and working hardly to solve their problems also, they expand the types of services to include technical, financial, training and other forms of customer support. They increased investment in the marketing and focused to hire high talent people to meet the customer’s needs As a part of gaining customer trust GE give very big attention to the products quality and focused on the quality more than quantity.

Customer focus and brilliant customer service VRIN test:

The customer focus Philosophy and service offered from GE met all the conditions of VRIN test from valuable as it is added value and give competitive advantage to the company. With the unique customer, service that offers the product with all the services, related to this product. It is also rare, excessive customer care proof that it is inimitable and non-substitutable.

Global Presence:

GE with Immelt believed that they have to compete in the growing countries to increase GE’s success and to open other markets, especially in the industrial growth regions like China, India, the Middle East and Brazil. As a part of this project Immelt’s assigned the international growth to Johan Rice who appointed in 2011 for this purpose, GE worked on finding initiative solutions to the problems which this region suffered from, and developed its products to meet the local market needs with simpler and lower cost products. In addition, they gave the freedom to the local teams to adapt innovating products for their own markets and these products also achieving success in other markets, for example a low cost, a portable battery operated ultrasound machine designed to work in India and China, but it also, became a commercial success in the US markets. GE announced also, company to country strategy that let GE worked direct with governments to meet the local needs

Global Presence and VRIN test:

Valuable competence for the company as it introduced GE to the world and resulted revenues with the rare ideas which resulted initiative solutions to the local markets which GE worked in and also, inimitable and non-substitutable as it is unique solutions from GE.

GE’s External Analysis:

Analyzing external analysis is important to any strategists to understand the external environment in which a firm operates, this essay will analyze the macro environment for GE to identify GE’s business environment, and this will be through using PESTLE analysis.

Political:

GE faces many political challenge as a result of its business extension in many countries, some counties policies supports the business but the others present difficult regulations for business survival and growth.

Economic:

Exchange rate fluctuation because of the economic situation for the countries which General Electric works in it also, the interest rates affect strongly GE’s profitability and productivity. In some countries we can see profit growth but in another countries we can see decrease in profits due to the economic situation and the product cost.

Social:

Working with different cultures, religions and social Customs and traditions put GE in many challenges like how to adapt its policies with the new cultures, the employees treatment and management way in addition the product types and the way to offer its products, as a multinational company GE dealt with this challenges effectively.

Technology:

Technology and innovative products is the GE’s winner. Offering new and innovative products which matching with the people needs and solving their daily problems. Investment in R&D among the countries supports GE to stand in the wired competition in the market and gave it the opportunity to extend its products in many countries.

Legal:

Legal challenges facing GE in many countries as the regulation change from country to another one GE should change its policies to match the change in the legal regulations in each country.

Ecological:

GE doing the best to Goes with environmental protection.

Strategic options for GE over the next five years from the date of the case:

This section will discuss the strategic options for GE. These options selected as per GE’s annual report for the year of 2012 and 2013, GE web site and from the researches for GE news.

Superior technology and development for initiative solutions

One of the most important strategies which leading GE to the future is the superior technology and development for initiative solutions. GE gives more interest to the technology development by investing from 5% to 6% from its total revenue every year to create new products. Because of this investment, GE transferred from a company producing one engine in the last decade to produce one engine per year. Actually, it is not only the new product which GE searches for but also, these products should be initiative economical and also, give initiative solutions to the existing problems which the society suffering from (GE, 2014). Hiring initiative people capable of achieving these targets and give them sufficient training to enhance their skills this direction gives GE advantage more than any other company as it is not only focusing on the product quality, but it puts its fingerprint on the products. As example, in the care business GE sold only three products in the late 90’s in the 2013 they succeed to sell more with differentiated customer benefits this not only because they knew how to deliver the technology for their customers but also, they knew how to deliver it at every price point with high margins. GE also spread its ideas through its six global research centers which providing it not only new ideas, but also ideas to help the local market which it is working in. The investment in technology gives high advantage to GE, which resulted this increment in revenues and the stability facing the market requirements change. As an example for using technology, the published news in the Financial Times, that GE technology saves 130 million liters of water annually by using the chemical advanced treatment solutions for the water in Heathrow airport (FT, 2016). From the health care department, the innovation ideas which used in the Rio De Janiro 2016 Olympic Games. Through GE’s innovative software, GE has supplied the international Olympic committee with innovative health data management to create Electronic medical records for all athletes and patients who visit the Polyclinic in the Olympic Village. This medical solution supports the doctors to know the medical history and because of that, they can plan and get the best outcome (Business wire, 2016).

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