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Contents
- Introduction.................................................................................................................................................
- Strategic position of the Company..............................................................................................................
- EVALUATION OF THE RESOURCES AND VALUE SYSTEMS OF THE COMPANY..............................................
- Resource Audit of GE Power....................................................................................................................
- Value Chain Analysis for GE-Power..........................................................................................................
- GE-Power SWOT Analysis........................................................................................................................
- ANALYSIS AND EVALUATION OF KEY FUTURE DIRECTIONS FOR STRATEGIC GROWTH................................
- Reference..................................................................................................................................................
Introduction
Strategic analysis consists of the evaluation of the prospective and current operational framework of a company. It also focuses on the evaluation of how the company’s strategy align with it long term objective. General Electric Co. (GE) which is a significant competitor in diverse industry in the world was incorporated in New York on 15th^ of April, 1892. General Electric Company (GE) is known widely to be the 20th^ century most successful corporation in the world (Bucifal, 2009). General electronic have business operation which cuts across eight business segments which include; healthcare, power, transportation, aviation, energy connection and lighting, capital, oil and gas and renewable energy. To generate increment in profit and a strong competitive advantage, GE has been able to continue to “push the line” in all this business segments (Pratap, 2018). GE power which is an SBU under General Electric also has its own sub sections which include: the Steam power, Nuclear power, gas power, software, services, hybrid power and industries & application. The major objective of GE Power is to make power more reliable, affordable, reliable, sustainable and accessible by providing digital offering and innovative solutions (https://www.ge.com/power/about). According to Pratap (2018) technology capacities, quality and human resources that are skilled are significant factors that are helping General Electric to have competitive advantage. By the end of 2017 GE employed 313,000 people together with its consolidated affiliates, out of which 106,000 are employed in US alone. This report is aimed at presenting a strategic analysis of a Strategic Business Unit (SBU) of General Electric (GE). To do this, this report has six sections in which different aspect of strategic analysis of GE power was covered. The first section which is the introduction gives the over view to the study while the second section reviews the Strategic position of GE Power with respect to Generic Strategy by Michael Porter. This was followed by the third section which evaluates the resources and value systems of GE power. This is done by reviewing the physical resources, leadership, talent management, technology innovation, diversified portfolio and customer care for GE power resource audit and Porter’s value chain analysis was used to evaluate the value system at GE power and then a SWOT analysis of GE Power was carried out. Fourth section evaluates Product/Service portfolio within GE power using BCG Matrix while the fifth section evaluation of KEY future directions for strategic growth and the last section discussed the conclusion and recommendation to the report which is based on the finding of the study.
Strategic position of the Company
The concept of “Strategic positions” can be linked the work by economists on organisation’s competitive position, structure of market and the concepts of competition among products and substitution also, product differentiation in marketing (Miquel, 1998). General Electric Company (GE) has a generic strategy (Michael Porter’s) which is used to maintain and develop competitive advantage of firms. They also have growth strategies that are intensive to ensure that they have a multinational growth in the market globally. This is been used in all their SBU including GE power to sustain and support growth in business (Thompson, 2017). Despite the challenges
significant hindrance to entry. For instance, all the relevant ability to build a nuclear power plant lie only with GE which is the only US based company to be able to do this (Bucifal, 2009). Jeffrey Immelt’s initiative style of leadership is been seen in various subsidiaries of GE likewise at the power section. According to GE (2016), during the period of Immelt, the employees in the GE Power were inspired to attend training for staffs which was financed solely by the organization. The motivational and democratic leadership style by Immelt has been adopted also by GE Power which has enabled them to be able to distinguish themselves from other companies and has brought about the innovational culture. The rain of Jack Welch between 1981-2001 been autocratic, had a way of main employees to be scared and in turn enacted an effective management (Grant, 2010). On the other hand, the inspiring quality of Immelt is to empower other and to relate at their level. Immelt’s leadership style has developed different atmosphere in all the General Electric SBUs. Physical Resources GE power has it operation in over 180 countries and they use their technology to produce one third of the electricity in the world. Also, all over the world, GE power equip about 90% of the power transmission utilities and over 40% of the world’s energy is been managed by their software. This makes GE power to be leader in providing energy to the world (https://www.ge.com/power/about). The intent GE power is generating power by using industrial application and producer of independent power. GE power has been able to create steam and gas power turbines which are significant physical resources of GE Power all over the world.
Talent management
GE is committed to learning, not just learning by their employees but also as a service to people around them this example can be seen in Nigeria where they created a “Garage program” in 2012 so as to strengthen the interest of America in innovation, manufacturing and invention. This program went global in 2014 and till take about 600 Nigeria and more people from other countries have been trained on the use of advance manufacturing technology (https://www.ge.com/africa/content/nigeria). To reflect the training and learning processes in GE, Bucifal (2009, p.7) said that “the Boundaryless Organisation initiative facilitated the flow of information and assisted learning across the organisation by providing a safe forum for the open expression of opinion. This would have helped staff overcome their competitive motives and assisted knowledge transfer”. This implies that GE is committed to the skill education and training of all their employees. It has also proved the GE power employee the required functional skills and knowledge.
Technology and innovation
It is a well-known fact that technology and innovation is a norm for every organization to have a competitive advantage just as it is with GE. Technology and innovation are at the heart of General Electric’s initiatives. Technical leadership produces high-margin products, wins competitive battles and creates new markets.
According to Pratap (2018) GE has continued to make great investment towards technological advancement and innovation in all there subsidiaries. The advanced technological capabilities of General Electric are also important factors behind its financial performance over the last several years remaining so consistent. There has been reduction in costs, an improvement to the market access, improvement in the value delivered to customers and quality of product improvement through the investment of GE into technological development (Bucifal, 2009). Diversified portfolios Generally, GE as a diverse portfolio which has brought about their diverse subsidiaries or unit. This is also the case with GE power with is also subdivided into Steam power, Nuclear power, gas power, software, services, hybrid power and industries & application (https://www.ge.com/power/about). In 2018 GE divided their power unit into two units: GE Gas Power (Portfolio: Power Services division and Gas power system) and GE power (Portfolio: Power Conversion operations, Power’s Steam, GE Hitachi Nuclear and Grid Solutions) (Kellner, 2018). Therefore the company has been able to leverage on the portfolio diversification through their use of synergic strategy.
Customer care
The main goal of every organization like GE power is to satisfy their customers. That is why GE has invested into creation of new innovation and technology, diversification and even acquisition among other things as stated above. This is aimed at creating new product and enter new markets that satisfying their customers and meeting their customer needs. GE has a new theory that is changing the way of doing their business called “GE Advantage” where GE is pride on driving consistency, operational excellence, and enhanced customer value. For this reason, the company is placing some big bets on 40 high impact projects that will help increase its speed to market, improve the quality of its products and services, significantly reduce costs, and drive competitive advantage for its customers and the company. Value Chain Analysis for GE-Power It was asserted by Graber and Kilpatrick (2008) that the values of an organization are the significant part of an organization which makes a meaningful contribution to the huge success and culture of the organization. In addition to this, it was argued by Buchko (2007) that culture which is brought about by the values that been shared is the only way through which an organizations can build brands for themselves such that the value of the organization becomes the employees’ standard. Value chain was defined by Michael Porter as “a representation of a firm’s value-adding activities, based on its pricing
Outbound logistics: Outbound logistics include the activities that deliver the
product to the customer by passing through different intermediaries. To achieve the
objective in business growth and source of competitive advantage exploration, the outbound
logistic can be optimised and analysed by GE (Byrne, 2018). For instance, Oracle
Transportation Management which is a web based solution which is been used for
transportation management and logistics is used by GE Power to support their evaluation,
execution, measurement and planning for global logistics (GE, 2018).
Marketing and Sales
At this stage, General Electric will highlight the benefits and differentiation points of offered
products to persuade the customers that its offering is better than competitors. Cate
Gutowski (Vice president GE GE Commercial Sales & digitalTHREAD) said that “… because
we are undergoing the transformation from an Industrial company to a Digital Industrial one. We
recognize that in order to sell digital, we have to be digital. To achieve this goal, we all have to
work together and put the customer first in everything that we do.” (p.2). therefore, information
is collected by the marketing organization of GE Power about their customer that explore
online through their website. Then the information of the customers’ interest in a new
product is shared with a seller and a $7 million order is won after the customer is approached
by the seller.
Services
The pre-sale and post-sale services offered by the GE. Power will play an important role in
developing customer loyalty. Therefore, GE power serves government, industries and
others with services and product that has to do with energy production. To meet the needs of
customers, they are provided with a huge aftermarket services portfolio. These include the repairs, installation, maintenance, monitoring among other things (GE, 2020). Also, to provide better services and comply with the strict environmental regulation of today, GE Power continues to invest in development.
GE-Power SWOT Analysis
Strengths Power been a significant section of every company and major organization, GE power has been able to make it huge mark in over 180 countries that has the presence of GE giving GE power a global recognition and a company to recon with. The huge investment in research and development to develop new innovation is another area of strength for GE power. For instance, GE power invested about 2 billion dollar in R&D between the years 2014 to 2017. This which in turn has been giving them then edge in the intensely growing competition (Pratap, 2018). Other strength of GE power does include: diversified portfolio or sub units, strong management, and environmental initiatives among other things. Weakness :
Due to the unstable price of fuel, the performance in GE power was below expectation (Hubert, 2007). This instability which is caused by shortage in supply threatens the profitability of the company. Also, according to Pradhan (2013), it may be slow for GE to make decisions because they have too much of diversification. This also makes it difficult to make the numerous units that are in GE power if there is excess in diversification. Opportunities GE powers opportunities lie in their investments and huge interest in Research and Development which makes it necessary for GE to produce services and products that are innovative, meets the current needs of their customers and continually have competitive advantage (Hubert, 2007). As much as diversification can be a weakness it can also be a significant option for the expansion of GE since it has a good bottom line and “it might be worth entering new business segments” (Pratap, 2018). Threats
Like every other company, GE power could be threatened competition. Also, media deception
like the Enron scandal which brought about investors of confidence and criticisms could be used
by competitors to tarnish the name of the company. Changes geopolitically that is happening
constantly all over the world affects businesses in different ways. These changes include
terrorism, ISIS, oil price among other things (Pradhan, 2013).
EVALUATION OF THE PRODUCT/PORTFOLIO MIX WITHIN THE SBU
To suggest various strategies for allocation of resources and the analysis of “a business unit
environment”, business portfolio is a suitable tool to be used by management. This is done with
consideration to the growth rate in the industry and the market strength/share of the organization
(Debrecht & Levas, 2014). Boston Consulting Group matrix make provision for the
recommendation need for strategic resources allocation development and development of
strategy in a multi-business company like GE. According to Mohajan (2018) two dimensional
analyses on SBUs management is provided by BCG matrix which are “relative market share”
and “industry growth” and they are on the horizontal and vertical axis respectively.
Figure 2 : BCG Matrix
GE power is one of the most profitable units of GE but her limitations lies in financial situation, competition and policies made by the government. Also, with considering GE power’s future direction, there will be an enhancement in value chain with the revolution of the energy industry going towards digital technology. Therefore is it very important that GE power continue to invest into Research and Development, this will help her in been innovative and continual follow any new trend or technology. In the past GE generally and GE power specifically has been involved in several mergers collaborations and acquisitions some of which have been earlier stated. I believe more of this merger will help them to have more market share and competitive advantage over their competitors. Also, GE power been a global company can directly or indirectly get involved in the power companies in the countries they have not reached just as it is in Nigeria where after the privatization of Nigeria’s power sector in Nigeria, GE power is working with the new owners of the to enhance the power production (https://www.ge.com/africa/content/nigeria). With the increasing population of people all over the world and with a projection of about 0% increment by 2050, there is call also for an increment in power supply to meet up with this increment. This implies that there will be need for higher power and gas generator. It is therefore advisable for GE to develop a power system huge power system at a low cost to have a competitive advantage. GE power also need to improve and invest more in their gas turbine as that is one of the major source of power been used in various countries. Reference Osako, M.N. (2014). General Electric Company Case Study, accessed on 19/05/2020 from
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