Organizational strategy - Essay Example

The assessment herein discusses three strategic aspects of GE with application of the academic valuation models. The areas discussed include: Core competencies and capabilities assessment Real options to improve business performance assessment Strategic Options Available For GE Each section will be developed including critical analysis of GE with respect to the assessment tools followed by conclusion. CORE COMPETENCY ASSESSMENT Assessment f business on road of success with competitive advantage from 1980s to 1990s has moved in from capability to empower business layers to developing, exploiting and strengthening core competency of business. De Saa?-Pe?

rez and Garc??a-Falco?n, (2002) established that only resources and capabilities transformed into core competency can develop business competitive advantage (De Wit, & Meyer, 2004). Hence, in line with importance stated for core competency, the section develops assessment for the core competency of General Electric. CORE COMPETENCY Selznick (1957) first introduced the concept of core competency as competence with distinction for depicting corporate advantage in various activities (Barney, & Hesterly, 2008).

The strategic perspective of core competency was put forward by Hamal and Prahalad (1990). . xpertise with newer areas in a manner more interestingly than routine framework (Cravens, and Piercy, 2008) TESTS FOR CORE COMPETENCY Firms to retain their competitive advantage must possess distinctive competency that provides business separate positions as against competitors. The simplest test for competency to be core as well as distinctive one is core competency does not finish like physical assets (Grant, 2009).

Instead core competencies increase their strength to bind the businesses together. Hamal and Prahalad (1990) core competence as competencies that must following three tests: Core competency must provide business capability to reach wide variety of markets. Competency must pass the litmus test to add value to the perceived benefits by customer through product. Organization to rely on the competency as core competency must enable business to retain their distinctive position in a way that cannot be imitated by competitors (Hamel, 1991; Prahalad, & Hamel, 1994).

Resource based view also provide a litmus test for strategic capabilities to be regarded as core competency. Barney’s (1991) VRIN model is also taken test for competency of an organization to be regarded as core competency (Gamble, and Thompson, 2010). VRIN model, an acronym, states that core competency must be Valuable, Rare, In-imitable, Non- Substitutability to benefit firm with competitive advantage over competitors (Fleischer, & Benoussan, 2003). GENERAL ELECTRIC’S CORE COMPETENCY General Electric (GE) under Jeff Immelt to position GE for stronger growth planned to reposition business with resources transferred to areas that have stronger growth prospects from business that have already undergone heavy juice extraction.

To strengthen value based system, Jeff Immet defined Growth Platforms.