Competitive Strategy and Innovation at General Electric - Case Study Example

Competitive Strategy and Innovation Contents Introduction 3 Core competences and capabilities of General Electric 4 Strategic options considered by GE over the next five years 7 Management approach of Jeff Imeldt in comparison to Jack Welch’s 11 Conclusion 12 References 14 Introduction GE or General Electric Company is considered to be one of the most renowned companies during the time period of 20th century. The company is a multinational conglomerate that has its headquarters in United States. The company is based on three major segments such as capital, industrial and consumer finance as well as technological infrastructure. The major products that the company deals with are consumer electronics, appliances, electric motors, lighting, wind turbines, locomotives, gas, electrical distribution, aviation, finance, healthcare, software, energy, water, oil and weapons. Over the years the company has been able to maintain a strong position through its capabilities and core competencies. The leaders of the company have been very focused and visionary with the common objectives of further acquisitions and divestments so as to facilitate global expansion. As stated by Fortune 500 GE in terms of gross revenue occupied 26th position as largest firm of United States in 2011. There are many awards that the company has received over the years such as green award, most innovative company and even the most admired company award. The company has been even recognized for having the best of leaders who has contributed greatly towards the success of the company and has able to make GE a global brand. The two most influential leaders of the company are Jeff Immelt and Jack Welch. As CEOs of the company the two leaders has set different and innovative strategies that has made the company achieve a competitive position in the global markets. The growth of a company largely depends on the leadership skills and their strategic approach towards nurturing and developing human capital which forms the major competency of a company. Core competences and capabilities of General Electric The core competencies and capabilities of a company are those factors that add value to the products of the company which cannot be imitated easily by any other player in the market and even provides the opportunity to expand its business operations into new market segments. The term core competencies were first coined by theorists Gary Hamel and C.K. Prahalad. They were able to define how the competencies can be created by an organization which would be able to put them at a competitive position. The introduction of new services and products often provides an organization with a competency that result into long term success and growth of firm (Ali and Kaynak, 2012).The major core competencies that are normally possessed by a firm are as follows- (Source: Hoskisson, Hitt, Duane and Harrison, 2007) Some firms may possess human capital as their core competency while in some cases the factor of strategic thinking or innovative thinking form the basis of competencies. In most of the cases the core products play a vital role in the development of these competencies. The core products are not sold to the end customer but they are responsible for laying the foundation for many such end products that simultaneously gives rise to many forms of business (Simerson, 2011).The new business that is launched by a firm is result of an intersection between the core competencies and market opportunities. The business portfolio of a firm is largely dependent on such core competencies that give rise to new set of business. In case of General Electric the major competencies that it possessed was its people or human capital. The company outsourced human capital from across the globe so that it is able to maintain a strong employee base. The company from its initial stages was very focused towards high performance so it nurtured its human resource in such a way that they were able to deliver exceptional performance at every operational level. The company even offered these employees attractive rewards and motivated them to perform well. The empowerment that was given to the line managers were the same as that of employees so that they feel a sense of ownership towards the company and their job (Jeffs, 2008). The other major competency that the company had over the years were its influential leaders who believed in working together as a team and looked forward towards continuous growth of the company. The leaders always motivated the employees to contribute their innovative ideas which would be beneficial for the company and thus enabling a two way communication which eliminated restrictions of hierarchical organizational structure (Porter, 2008).The competencies that were created by the leaders and the employees were of excellence, adaptation and speed. These form the core competencies which could not be easily imitated by the other players in the market. The competency cluster of the company even comprised of being customer focus. The company focuses on its customers and aims at delivering value so that their products and services are the only options for the customers in terms of high quality and value. The factor of technical leadership is the most important competitive advantage of the company. The company through this form of competency has been able to create a significant position in the market and develop switching costs for the customers. The R&D capabilities of the firm are truly one of its major strengths that have facilitated the company to be a leader in the technological aspect in the healthcare sector. All these capabilities and competencies of the firm have enhanced the growth of the company over the years. Through its competency of strategic thinking and innovation the company has been able to deliver customized solution through all forms of service as well as product bundling. GE’s innumerable expansion and its product as well as market expansion has only resulted because of the fact the leaders work collaboratively with all its team members and enhanced the performance of the employees to deliver the best outcome. The core competencies of the company have made the company increase on its brand equity by a total value of $10 billion. The growth strategy of the company forming the base of all its competencies has been able to provide a financial stability to the firm. All the competencies that are possessed by the company has resulted into success and growth of the company in terms of outstanding R&D capabilities, vertical integration and effectively sharing the overall costs amongst all its business units. Strategic options considered by GE over the next five years General Electric gains a strong position in the market majorly due to its unique innovative strategy. During the time period when the business operations of the company were controlled by Jack Welch the strategy that was adopted by the leader was to strive for excellences. The company in this period was more focus towards developing on human capital and adapt quickly to the changing the market conditions. It can be stated that the leader exercised more of control on the human resource with a viewpoint of rewarding those individuals who performed well as discarding those employees who did not perform well. The strategy of digitization and globalization was first established by Jack Welch. At that point of time the company was more focused towards entering into global market and exploring more of new opportunities. The work out strategy that was adopted by the leader enabled the company to create a forum where all of the managers and employees of different business units could interact with each other and also at the same time share their issues or problems that they were facing so as to derive better solutions (Thompson and Martin, 2010).The six sigma strategy was another effective strategy that was adopted by the company during this period which aimed at improving the entire work process through monitoring, controlling, measuring, analyzing and defining all of the corporate process. However all of these strategies that were adopted by the former CEO initiated competitive advantage for the firm but they were not suitable enough in terms of further growth of the firm. The growth factor was not viewed seriously by the leader though he had specific objectives of globalization but there was no proper allocation of financial resources that could foster such a strategy (Abell, 2010). In the later period when the company came under Jeff Immelt as the new CEO of the company there were some drastic changes in the strategy formulation with the entire focus towards future growth and development of the company. The leader utilized all the internal strengths of the company in order to encounter threats in the external environment as well as set up strategies for long term growth of the firm (Proctor, 2014).The innovative strategies that was incorporated in the organization by Jeff Immelt is been followed till date and forms the pillars for the success of the company. The first strategy that was adopted by the company was to be focused on customer’s expectations. The company adopted the strategy of customer focus so as to deliver quality products to the customers and even aimed at entering into completely different sector such as financial segments so as to provide its customers base with the added feature of financial services (Greasley, 2007). The company used the low growth products as an option of generating cash so that it can support well all the other business units that was being launched in international markets. The company’s strategy was to draw funds from internal business operations so as to support global expansion (Keller, 2008). The company prioritized all its business operations and implemented its strategic thinking for future success. The other most important strategy that was adopted by the company during that particular phase was to gain leadership through advanced technology. The company utilized all its R&D capabilities so as to produce the best products in terms of content, products or services (Hitt, Duane and Hoskisson, 2012). The company was able to transform this strategy into real time through its advanced technologies in health services. The company provides facilities such as nuclear medicine, 3D analysis and visualization solutions and molecular imaging. Such services enabled the company to maintain a strong position in the competitive world (Lynch, 2007).The structure that it has adopted has facilitated distribution of energy to that of supporting as well as financing facilities. The other strategy that was implemented by the company was diversification strategy. The company was focused on both aspects that are market as well as product expansion. GE entered into new markets with products such as financial services, health services as well as weapons and energy efficient devices. The company with the support of this strategy in the present scenario focuses on energy storage devices (Markides, 2013).This innovative concept of the company has been the base of the success and growth of the company. The last strategic option that has been adopted by the company is to create marketing and sales excellence so as to manage the diverse business operations under the common brand name. All of the above chosen strategies had worked efficiently for the firm as all of them were aligned with the common objectives of the company that was to maintain high performance standards and deliver quality to the customers. The commercial excellence was another effective growth strategy of the company. The balanced score card is one of the efficient tools that can be incorporated by a company so as to monitor the progress or performance of adopted strategy. The strategy that could have been monitored well by the company was globalization and diversification strategy (Neil, 2010).This strategy can be monitored on the basis of four major perspectives such as financial, internal business process, growth and learning, and customers. The finance part would have enabled the company to adopt the best measures so that their image is good in front of their shareholders. The financial analysis of the company would be based on four major factors such as objectives, measures, targets and initiatives (Bagad, 2008).The internal business process analysis would have two different aspects that are respective goals and measures. All of the four factors of the score card would be aligned with the vision and mission of the company. The balance score card for monitoring the respective strategy is stated below- The above defined measures could have been incorporated by the company so as to check the progress of the strategy. The strategic implementation would require all the factors so that business operations are well aligned with the vision of the company. GE could have used such measures so as to observe that the goal of the strategy is being accomplished or not and if it is not then what are the essential changes that are required so that there is no failure that would have an impact on the business operations. Management approach of Jeff Imeldt in comparison to Jack Welch’s The management approach that was used by Jeff Imeldt was focused towards employee benefits as well as benefits of other stakeholders in the organization. He preferred more of democratic style of leadership in comparison to a strict authoritative leadership style. He was more concerned with the factor that employees should be given equal opportunities in terms of sharing ideas as well as they should be motivated continuously so that they are able to deliver the best performance at every stage of business operations (Mcfarlin and Sweeney, 2008).His management approach was to reach out to the global markets and consider the future mission of the company. He as a leader not only concentrated on gaining profitability margins but also focused on long term growth of the company. He even possessed clarity in his approach and said to all the shareholders that gaining profitability margins were the only focus of the CEO and he was not be held responsible for the falling share prices. As a leader he always adopted customer oriented approach where he laid emphasis on delivering quality to all its customers. He kept customer first in all its operations and entered into effective partnerships with all its suppliers (Lussier, 2012).The quality level was the major concern of Jeff Imeldt where he focused towards creating customer value and achieving leadership in the market through its advanced technology and innovation. He followed the strategy the low performing business units should not be discarded from the system but they would act as a cash generator that would support business operations in the international platform (Watson and Gallagher, 2005).On the contrary the former CEO Jack Welch had adopted the management approach of being a strict leader following rules and regulations so as to well train all its employees. He had well defined performance criteria where the non-performers were not developed to perform better but were discarded from the system. He believed to adapt quickly to the changing environmental conditions and maintain excellence as well as speed in the organization (Daenzer, 2009).The approach that he followed reduced the human capital and the work atmosphere was not at all friendly that would facilitate the motivational level of the employees so as to perform well in the system. In today’s scenario of VUCA world the most suitable management approach amongst the two is that of Jeff Imeldt simply because it helped the company to create an atmosphere that enhanced the performance level of each and every employee in the organization. He was able to design effective strategies with the support and contribution from the employees (Iqbal, 2011).He created a forum where all the employees’ cam discuss their problems and also put forward their innovative thoughts that would be beneficial for the company for long run. His approach of strategic thinking, aligning business operations with the needs of the customers, and maintaining level of quality is very essential for sustaining business operations in the competitive world. Conclusion General Electric has been able to survive in the competitive market and even situation of financial crisis simply because of its creative and innovative strategy. The leaders of the company are the key personnel who have been able to deliver the best of strategies to the company. The strategy that has been formulated by the leaders of the company has been able to give a new strategic direction to the company. Over the years the company has been developing new products for new markets all of which are based on the strategies that were formed by the two most influential leaders of the company; they were Jeff Imeldt and Jack Welch. Both the leaders had their own set of management approaches such as former was focused on quality, technology and the customers, whereas the later was more focused on nurturing the human capital of the organization. The success of the company has been dependent on the strategies that were framed by Jeff Imeldt. These strategies have been able to provide a new direction to the company and also at the same time has enabled long term growth and profitability of the company. References Abell, D. F. 2010. Managing with Dual Strategies. USA: Simon and Schuster. Ali, A. A., and Kaynak, E. 2012. Globalization of Business. New York: Routledge. Bagad, V. 2008. Total Quality Management. New York: Technical Publishers. Daenzer, B .E. 2009. Quantitative Correlation of Leadership Styles. USA: Proquest Greasley, A. 2007. Operations Management. Great Britain: SAGE. Hitt, M., Duane, R., and Hoskisson, R. 2012. Strategic Management Cases: Competitiveness and Globalization. USA: Cengage Learning. 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