Strategic Capability of General Electric - Case Study Example

PEST Overview: Political The case in question exhibits a firm, General Electric, that grew exponentially during a relatively brief period in history.However, in seeking to understand and define this growth it is necessary to appreciate the fact that political realities during the time period in question had a very strong impact with regard to the way in which the firm grew and experience challenges. As is widely known, the period between 1980 and 2000 was a period of widespread deregulation. Example: As financial markets were deregulated, the opportunity for large multinationals to capitalize upon this deregulation provided a unique opportunity that General Electric, and many others for that matter, took advantage of. Moreover, it must also be understood that due to the multinational Fortune 500 status of this particular company, it also engaged in a large number of lucrative government contracts, as the economy was growing by leaps and bounds during this particular period in time, the overall number of government contracts that were provided to General Electric significantly contributed to its overall growth rate during the period in question. As such, the political environment in this particular case was perhaps the strongest motivating factor in helping General Electric to achieve the runaway level of success that it did. Risks and Recommendations: Political risks relate to the overall legislation and potential tax burden that might be expected of General Electric. As such, any one particular incident or public relations debacle could easily turn the political spectrum against the firm and create a situation in which a drastically higher tax burden would be required. As a way of guarding against this, GE must have a strong lobbying campaign and should continually seek to engage with a high favorability rating within the market. Economic As been noted above, the economic growth between 1980 and 2000, with the exception of the downturn of 1987, proved to be one of the longer sustained periods of economic growth that the United States has yet seen. The case study specifically asked the question of whether or not it is fair to assume that the CEO should be credited for the runaway level of success and growth that General Electric experienced during this particular period in time. It is the belief of this student that he should not. Example: Although it is true that he made certain key and insightful decisions which helped GE to continue along the path of growth the growth that General Electric experienced during this period of time was all but guaranteed; due to the fact that the overall economy was growing at a particularly faster rate and General Electric would have needed to do something incredibly stupid were shortsighted in order to not grow during this particular period in time. However, with this qualification being made, it must also be asserted that the leadership of the CEO and the Board of Directors decisions were essential in guiding the company through the economic growth that this period in time denoted. For instance, the integration with C and emerging markets allowed General Electric to capitalize on these gains in a way that promoted its overall level of success to an even more unbelievable height. Risks and Recommendations: Risks and recommendations that are associated with this would include the risk of another global economic slowdown. As can be seen, the firm is currently very wealthy; however, seeking to invest too much money back into research and develop could likely create a situation in which the firm would not have available funds to survive through a retraction in the global economy and the way that consumers choose to integrate with the goods/services that GE provides. As a recommendation to this, it is the belief of this student that GE must set aside a larger portion of revenue to guard against this possibility. Sociological Sociological factors that most certainly contributed to the rise of General Electric during the period involved in the case study are multiple. However, perhaps the most notable of these factors is with respect to the fact that globalization had. Ultimately, nearly all of the products and services that General Electric provided were not only consumed by individuals within the United States; they were also consumed by individuals elsewhere throughout the world. Example: As was exhibited within the case in question, by integrating with a diverse workforce and seeking to promote increased levels of global appeal, General Electric was able to experience extreme levels of growth and profitability during the time period in question. More than merely seeking to engage diverse markets and promoting General Electric’s goods and services throughout the world, the firm also made great strides with respect to increasing the overall level of diversity that it represented both within management and the rank and file employee base. Although this is a topic that is oftentimes glossed over with respect to corporate analysis, it is essential in understanding; due to the fact that the overall representativeness of General Electric allowed it to continue to promote itself as a company that was in touch with the minute changes that were taking place within society and sought to reflect these as a strength – not as a drawback. Risks and Recommendations: The risk of being seen unresponsive to the changes in the global marketplace creates a demand for GE to promote a higher level of diversity. Further, if this is done correctly, GE will become a more successful international firm that is able to reflect more relevant products/services to more people in more places. Technological To the credit of the CEO, the means by which technology was integrated within General Electric served as a fundamental mechanism through which the company was able to experience a renewed level of profitability throughout the 1980s, 1990s, and early 2000. Although it is important for technology to be utilized and effected within any business, the importance of technological innovation and growth within General Electric was specifically fundamental to the growth that it experienced; due in part to the fact that this particular period of time sell directly within the period of time in which the computer revolution and the Internet came to redefine the means by which traditional business was carried out. Example: As was indicated within the case study, by maintaining on the cusp of this revolutionary approach, General Electric was able to capitalize upon all the benefits that it provided. By means of contrast in comparison, other companies that did not choose to expand the necessary time, effort, and resources to integrate with technological solutions such as the computer or the Internet, found themselves at a distinct disadvantage with respect to the business and the overall level of competition that they can promote. Risks and Recommendations: The obvious risk of not integrating with changes in technology is contingent upon being irrelevant to the market. As such, the obvious recommendation is for GE to create a technological group that continually reviews existing best practices and recommends how these might be implemented within GE to effect better customer relations and/or higher sales etc. McKinsey’s 7S Overview: Additionally, McKinsey’s 7S also has relevance to the case study in question. As a brief overview, McKinsey’s 7S involves the following: strategy, systems, skills, staff, style, structure, and lastly – shared values. Firstly, with respect to strategy, it is clear in the case provided that General Electric pursued a series of careful strategic maneuvers during the time period in question. The first of these is with regard to the development of new technologies and the continual distribution of profits back into research and development. As any corporate analysis will quickly denote, those companies that wish to maintain a level of profitability should continue to reinvest profitability back into the firm as a means of developing new products and services that future consumers will deem necessary and inventive. Even though this requires a sacrifice on the part of the stakeholders involved, the benefits of this over the long term far outweigh the costs. As has been listed above, a focus upon the integrity and serviceability of existing systems within General Electric was also a primal concern for the CEO and senior leadership within the firm. In the case provided, GE realized that the dynamics of business were changing at a rapid rate; as such, the need to integrate with new approaches and new systems/technology provided the impetus for General Electric to abandon many of the old practices and forge a new path. Such although it may seem that this choice was easy, the overall amount of time and effort that it took for General Electric to fundamentally reinvent the way in which it does business and recalibrate the manner through which five key formed as a central cornerstone of business strategy and approach was an extraordinarily difficult and costly task. However, in the same way that strategy was formulated as a means of returning profitability into research and development, the decision within the case to continually upgrade and manage existing systems so that they were able to maintain on cost of technological innovation was a fundamental aspect of what kept the firm relevant and profitable during the time period in question. Another relevant factor with respect to McKinsey’s 7S has to do with the focus and approach that the firm made towards developing their staff and promoting a unique skill set within this group of elites. Within the case provided, both of these represent their own unique competence within McKinsey’s 7S approach. However, it should further be noted that without a level of ongoing training engaged with staff, the overall level of success that firm might hope to achieve during the period in question would have been drastically limited. By recognizing the fact that the external environment is changing at a rapid pace and realizing that these changes demanded internal change as a function of ensuring continued profitability and success, the CEO of the given case study, and other stakeholders within General Electric, effectively engaged and a successful training program that sought to develop the skills and efficiency that were represented throughout the staff. With reference to style, this can also be understood in terms of a culture that takes place within the organization. In the case that is being discussed, one potential benefit for General Electric was able to have during this period was the fact that it did not change leadership for period of nearly 3 decades. Although this is sometimes viewed as a potential drawback weakness for a firm, the singularity and leadership allowed for the CEO and others within General Electric to ensure that a uniform and methodical approach to the culture and style in which the company would engage issues and the external environment was resoundingly exhibited all stakeholders. Naturally, all of these six compliments tied directly in to the final component of McKinsey 7S: namely shared values. Shared values within General Electric involved each and every one of the aforementioned aspects that have been discussed. As was noted in the case, elements of a culture that prides itself on maintaining technological superiority, understanding potential changes in the external and internal of art, placing a high level of importance upon the need for training continual employee/stakeholder development, and each of the other compliments that have been discussed all helped to contribute to an understanding of shared value. Without a successful delineation of each of the previous determinants, the shared values that would have been represented within General Electric, and ultimately responsible for the success, would not be denoted. As such, the shared values serve as a final metric by which the reader can understand whether or not General Electric was successful in its business model; besides merely analyzing financial results and market share. In the end, the company that is not able to develop a strong and resilient culture will find itself losing stakeholders, valuable talent, and potential efficiency with respect to other entrants into the market that do have a high level of success with respect to shared values within their corporate culture. Taking this understanding a step further, it is the belief of this student that even if the CEO of General Electric had not posted resilient levels of profitability and market share throughout the time period in question, the creation of shared value within General Electric would have been a sufficient metric to engage his success over the long run. The underlying reason behind such a bold statement has to do with the fact that even if runaway levels of profitability had not existed during the 1980s, 1990s, early thousands, General Electric would have eventually benefited from the development of shared values that were created during his tenure as CEO. Strategic Capability: Finally, the analysis will discuss the strategic capability that General Electric was able to display during the aforementioned time period. Moving away from praise of the CEO, the analyst should consider the fact that General Electric’s strategic capability is measured on skills, capabilities, and resources. Based upon this understanding, it is clear that General Electric has a very high level of all of these. GE has a high skill level as a result of the fact that it continually re-invests in research and development and has been providing products and services to the consumer for a period of nearly 100 years. Likewise, the capabilities of the firm are in excess of others; due in part to the multinational and differentiated markets they engage with and products they produce. Finally, the resources that GE has at its disposal create a bright future for the firm as it allows the company to draw upon these resources during a time of hardship or during a new product launch as a means of creating immediate funding. All of these position GE in a favorable position and create a much envied reality for the firm that others necessarily wish they had. Read More