The General Electric - Report Example

STRATEGIC MANAGEMENT: GENERAL ELECTRIC Introduction This paper discusses how the resources and capabilities of General Electric have been deployed inthe area of research and development (R&D) to achieve innovation that resulted in some core competences in its diverse businesses. The history of General Electric Company is a significant part of the history of technology in the United States. General Electric evolved from Thomas Edisons home laboratory into one of the largest conglomerates in the world, beginning with the simplest applications of electrical technology to the amazing range and diversity of high-tech wizardry of the early 21st century. With headquarters in Fairfield, Connecticut, General Electric is associated with innovation in modern times. It was its founder, Thomas Edison, who ignited the firms spirit of innovation and discovery. Today GE continues to hold up that spirit with the belief that “anything is possible,” and that consequently through research and development, technological breakthroughs can be made with significant impact on modern life, making for a better world in which to live. GE Research Programs GEs long-range research programs have created and continue to create breakthroughs that enable it to launch new products and to achieve substantial market share where the company seeks always to be either no. 1 or no. 2 through cost leadership and product differentiation. The company, a conglomerate unmatched in size and scope anywhere in the world, is engaged in diverse research programs which include aircraft engines, biosciences, electronics and energy conversion, health care, material analysis and chemical sciences, and a host of others. GE utilizes what it has achieved in the technology field to leverage them across scientific disciplines and across industries. When it makes breakthroughs through this approach, it increases its business application capabilities, establishing core competences in technology with which to gain considerable market share or market dominance. An area of research which the firm labels as Ecomagination is one where the firm commits to help its customers and society solve environmental problems and face environmental challenges thereby boosting its long-term objectives of continued future growth. Another area of research concerns the replacement of fossil fuels with hydrogen, and GE is poised to take advantage of this new alternative by the provision of the "production, distribution and storage solutions to build hydrogen infrastructure and utilize the more environmentally friendly carbon-free fuel to fuel the world."(GE Global Research website ). The automotive industry, with the research programs of its members, is complemented in this effort by GEs research activities. Still, another research effort concerns the production of cleaner-burning coal fuel. Finally, the firms resources and research capabilities are also aligned with efforts to explore the technology of hybrid cars and buses in order to reduce fuel consumption, reduce gas emissions, and yield fuel economies. GE has registered 10 patents for hybrid technology that will bring about cleaner air and lessen dependence on fossils fuels. GE Global Research is made up of 10 global laboratories of separate disciplines geared towards creating breakthroughs across the firms multiple businesses. Scientists from the US, Europe, China and India collaborate in doing research and learning from one another. In so doing they can build on their successes and thus improve the chances of making breakthroughs that result in the differentiation of the firms products and the expansion of its markets. These laboratories located in the four major geographical areas in the world where such competences are concentrated deal with the areas of biosciences, ceramics and metallurgy, computers, electronics and energy conversion, energy and propulsion, imaging, materials sciences, micro and nano structures, and polymer and chemical. Such dazzling diversity of research is created through the operational synergy of laboratories collaborating with one another despite great distances (See GE Global Research website). GE boasts of a diverse, multinational group of brainpower and the cumulative experience of generations. It claims that it has more 3,000 of the best and the brightest technical minds from around the world. These are comprised of chemists, computer scientists, physicists, microbiologists, material scientists, systems engineers, mathematicians, and so on. About a third have Ph. D. degrees. "Imagination at work" is to them a way of life. These people have received numerous awards for their work. Two of its researchers in the past have received the Nobel Prize. While the majority of GEs are in other fields, in the past up to the start of this century, the companys business portfolio consisted of 250 or so business divisions grouped into ten business categories (Thompson and Strickland, 2001). These may be identified and discussed as follows: 1. Aircraft engines. The company produced more than half of the number of the worlds large commercial engines orders, making GE the worlds largest producer of small and large jet engines for civilian and military aircraft. 2. Appliances - Producer of a large proportion of the major appliances such as GE and Hotpoint refrigerators, freezers, ovens, microwave ovens, dishwashers, air-conditioners, and water purifying systems, among others. 3. Industrial systems - The worlds leading supplier of products to distribute, operate and control electrical and power equipment. Major products and services included circuit breakers, switches, transformers, AC and DC electric motors, and others. 4. Lighting - Leading producer and supplier of lighting products for the worlds consumer, commercial, and industrial markets. These included lamps (incandescent, fluorescent, high-intensity discharge, halogen and holiday); portable lighting fixtures, lamp components, and quartz products. Others were outdoor lighting fixtures, residential wiring services and commercial wiring controls. 5. Medical systems - The company leads the world in medical diagnostic imaging technology; and products included CT scanners, x-ray equipment, magnetic resonance imaging systems, nuclear medicine cameras, ultrasound systems, mammographic systems, and patient monitoring devices. 6. Plastics - Producer and supplier of versatile, high-performance engineered plastics for the computer, electronics, data storage, office equipment and construction industries. 7. Power systems - Design, manufacture and servicing of gas, steam, and hydroelectric turbines and generators for power production, pipeline and industrial applications. It also provides nuclear fuels and related equipment. 8. Transportation systems -- More than half of all freight locomotives in North America are produced by GE. They are also sold in many foreign countries. Other products: passenger locomotives, diesel engines for marine and stationary markets, electrical propulsion systems for rapid transit cars, motorized electric wheel systems for large mining trucks, and advanced railway signalling and control systems. As a giant conglomerate, GE is also into financing services and media (NBC television network, television stations, and many others which do not have to be mentioned here). Business application of research discoveries The jump from the laboratory to business application is done through experimentation and pilot runs before products are made available in the market. There is no doubt that GE has done numerous undertakings of this type and that a lot of time, trouble and expense go into the effort. However, the company, known as probably the best-managed company in the world since the time of CEO Jack Welch, has evolved systems that would ensure quality in all stages from that of practical experiments to commercial production. During the 1990s the company, under Welchs leadership, embarked on a series of initiatives to boost efficiency and productivity in all of the companys businesses, reduce bureaucratic inertia, and create a "boundary-less" organization where new ideas, technology, and experience were transferred from one GE business to another. The transferring and borrowing of ideas and best practices from one business to another became the norm. This was done through job rotation and transfers of personnel across businesses and geographic areas where they could learn from innovative ideas already in place and which could be applied upon their return to their work places. This had the effect likewise of building relationships that made possible the continuation of idea sharing, and of helping block out insular thinking within each business unit (See Thompson and Strickland, 2001) Competitive advantage Competitive advantage is made possible by discoveries whether from the laboratory - with regard to new products - or on the ground, in the factory where better and more efficient methods are discovered. In the case of efficiencies, the lean manufacturing methods of Toyota Motor comes to mind. Lean manufacturing has become a distinctive competence for Toyota Motor because no other automotive firm has ever succeeded in imitating it, and it is the source of its competitive advantage that has led to its overtaking General Motors in the race for the biggest international revenues in the automotive industry. By reducing costs and time it takes to build one unit, the firm can afford to sell its product at a lower price, beating the competition. For its part, GE adopted the six-sigma quality program that introduced rigorous thinking and analysis into the management process. - by reducing defects in the manufacturing or service process. Though Six-Sigma was originally developed by Motorola in 1986, its adoption by GE in late 1995, and its continuous application thenceforth, enabled GE in 1998 to improve its operating margins from 13.6 percent in 1995 to 16.7 per cent and working capital turnover improved form 5.8 to 9.2. (Thompson and Strickland, 2001). The six-sigma has adopted in many companies worldwide, attesting to its value in eliminating defects, increasing efficiency, and improving competitiveness. Conclusion Innovation alone would not be sufficient to create competitive advantage for a company in an industry environment where competition is intense. It has to be complemented by management systems that can take care of converting the innovation into a marketable product. The gap between innovation and market success has to be bridged through systems and procedures that improve the probability of success. General Electric has always inspired its people to develop new technologies and to create valuable applications that could result in meeting the demands of the market. It has tapped the talents and energies of some of the world’s brightest, talented people in the pure and applied sciences as well as the vision and business acumen of its leaders to bring it about. There is no doubt that innovation will continue to be the main source of GEs business successes in many years to come. REFERENCES Hitt, MA, Ireland, R.D. & Hoskisson, R.E. (1996). Strategic management: Competitiveness and globalization, (2nd ed). St. Paul, MN: West Publishing Thompson Jr, A.A. & Strickland III, A.J. (2001). Crafting and executing strategy. (12th ed.), New York: McGraw-Hill Irwin Wheelen, T.L. & Hunger, J.D. (1992). Strategic management and business policy, (4th ed). New York: Addison-Wesley Publishing, GE Global Research website. Retrieved October 4, 2008 http://www.ge.com/research/grc_2_1_2.h Read More