DATE: November 9th, 2015
SUBJECT: Business Analysis
General Electric (GE) is an American company that was, arguably, the most successful company in the 20th century. The success the company achieved transcended a variety of factors, such as, business infrastructure and business development. The economic breakdown in the last decade affected the GE Capital branch of the company, leading to a major financial situation at General Electric. Coincidentally, the company had also been taken over by the current CEO, Jeff Immelt. Jeff has overseen the most turbulent times the company has ever experienced. In fact the company had its credit rating re-evaluated from triple A to AA+..
The main decision that has seen General Electric withstand the most turbulent period since its establishment is a long term strategy instigated by the CEO, Jeff Immelt. The competitive advantage that the company had prior to the September 11 terrorist attacks had focused on financial services business through the General Capital subsidiary. However, getting through the tough economic period was made possible by the decision to refocus the competitive advantage to a business portfolio that could be anchored on infrastructure and specialty financial services.
External analysis: use the Five Forces of Industry Analysis.
Porter’s framework will be used to analyze the position of the company in the industry in which it operates. These factors include; competition from substitutes, the threat from new entrants into the industry, industrial rivalry, the threat posed by substitutes, buyer power as well as supplier power.
In refocusing its competitive advantage to focus on specialty financial services as well as infrastructure, the company realized that it enjoyed competitive advantage in a number of fields that did not have much industrial competition. It refocused its competitive advantage towards sectors such as Aviation, Rail Transportation, Oil exploration, water and gas production.
Internal analysis: – The Value Chain Analysis (which activities are the main primary and
An internal evaluation reveals that General Electric has its own internal culture that has enabled the company to succeed over the years. Most of the company’s cultural values were developed and inspired by Jack Welch, the former CEO. He had a personal approach of management and demanded high performance from his managers. In fact, he was known to set high departmental and personal targets for unit managers. Though Immelt has curved a different image from that of Jack Welch who led by intimidation, Immelt has developed a friendlier and ‘regular-guy’ approach to management.
The Organizational Building Blocks of Advantage (Efficiency/Quality/Innovation/Customer responsiveness which is/are the most important advantages for this company)
The main competitive advantage that is setting General Electric apart from its competitors and that has helped it grow is the insistence on quality products. Jeff Immelt believes that quality products are Key to growth and expansion. To this end, he has invested in research and advanced technology.
The VRIO analysis is an important aspect in the analysis of any company. The VRIO analysis stands for Value, Rarity, Imitability and Organization. With Value, the company ability to exploit an opportunity is analyzed. With rarity, the resource availability is determined. With Imitability, the ability of the firm to imitate the resource is determined while with Organization, the company’s internal organization is used analyze the effectiveness of the structures put in place by the business.
Strategy analysis: – 5 Ps of Strategy
Plan, Pattern, Ploy, Position and perspective are the five P’s of strategy. For instance, GE planned a long term strategy that was anchored on ne innovation and technology. The company’s positioning was also good regarding some fields in the industry that it could refocus its attention towards.
Culture Facture/Types of Culture
The company has business services approach in the industry. The company, though Immelt has also been focusing on customer focus.
Change/ Leadership/Organization Structure/Management Style
The company’s too leadership was changed when the former CEO, Jack Welch retired in 2001 .Immelt Jeff took over. Immelt has curved a friendly look and unite managers are more at ease with him compared to the treatment they could have received from Welch. The ample working environment has enabled the company to withstand the turbulent times the company faced in the last 11 years.
Options and their Pros & Cons
GE enjoys a number of options in the industry in which it operates. Focusing growth internationally has been central to the company’s expansion ambitions with a greater focus on high growth markets. Focusing on such markets guarantees the company increased revenue. However, turbulence in political environments and changing dynamics in the international market will remain an issue as the company seeks to expand its global influence.
I would recommend that the company also looks at growing markets in Africa. While the Middle East has had growing economies in the recent past, the future is poised to revolve around Africa with its massive energy potential. Africa has massive resource potential, largely untapped and moving into such an environment will place the company strategically for the future.
The case of General Electric is used in developing the assignment above. In the Case Study, the company has been identified for its achievements, its problems and the various economic factors that the company has faced in the past and continues to face. The history of the company identities the company as the only company to have remained in the Dow and Jones Index listing since the index was established in 1896. The company has also had legendary managers. The list of its manger overachievers is epitomized by the most recent ex-CEO, Jack Welch. After retirement, Jack has since received an award as the best manager of the 20th century. Jack wielded a lot of power and led by intimidation and strict adherence to his policies. However, the company had to eventually find a successor to Jack Welch. Jeff Immelt was identified from within the company and took over the company. Even though everyone expected Jeff to have a tough time filling the gigantic shoes left behind by Jack Welch, nobody anticipated the huge financial crisis that would hit the company in the coming years. The September 11 Twin terrorist attacks and subsequent economic crunches in the United States forced the company to endure tough times. However, Jeff Immelt has steered the company from turbulence and the company poses admirable figures once again with active expansion programs already underway throughout the world. The main tactic behind the company’s survival through the turbulent times is a refocusing from the initial financial services businesses into a competitive advantage that was anchored on two Key aspects (Specialty financial services and Infrastructure).
Porter’s Five Forces of Competition
Competition is always present in any given industry and it determines a number of issues for companies involved. General Electric is no different and the different environmental forces have shaped its growth and activities over the years of its expansion. The most recent growth and survival of the company in the harsh economic times that hit the company hard in the earlier parts of the new millennium were pegged on advances in technology. The threat of substitutes is a competitive force that often shapes an industry and often leads to either growth of a company or death of a company depending on how the company adapts to the pressure. Apparently, Jeff Immelt, the CEO is focused on ensuring that advanced technology coupled with quality products should help in selling its products and making their products relevant to the market.
The Capital requirements needed by firms to enter into the field of energy exploration and research are huge. This factor has often worked for the company as it faces little competition from companies in its area of specialty.
Internal and External Business Analysis
Businesses have both the internal and external environments. Both of these environments affect the company and it is crucial that businesses adhere to rules and signals from these factors in creating policies, and in planning their own activities. Internally, a number of factors such as leadership, organizational structure, work policies, recruitment policies, and motivational programs affect the expected yield of a business. Externally, competition from rival firms, the political and legal environment, as well as advancements in technology also determine the activities of a given business. Therefore, in evaluating a business, both of these issues must be considered in detail.
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