General Electric Company's Core Competencies, Capabilities, and Strategic Options - Case Study Example

General Electric Company Name Course Lecturer Date General Electric Company This company is considered to be one of the most successful corporations of the 20thcentury. The company applies corporate strategies and core competencies as well as capabilities in its operations. This report aims to critically discuss the company's strategies over the years. The report is organised in to three sections; the first discusses the company's core competences and capabilities. The second section analyses strategic options considered by the company five years from year 2009. Lastly, the last section compares and contrasts the management approaches of two chief executive officers of the company from 1981 to 2008; the CEOs are Jeff Imeldt and Jack Welch. General Electric Company's Core Competences and Capabilities Some of the most powerful and effective approaches in global competition are still invisible to many organizations and companies. In the early and late 1980’s, the managers applied approaches such as restructuring, delayer and declutter in their companies. They were judged on their ability to apply these approaches in their organizations in order to gain competitive advantage. The approaches or core competences changed in the early and late 1990’s, the top executives applied cultivate, identification and exploitation approaches to gain competitive advantage. They were judged by their ability to make their companies grow. Nevertheless, the present top executives have to rethink the concept and core competences of their companies. In the same way, the general electric company has evolved its core competences and capabilities since its establishment in 1876. The present core competences and its capabilities has propelled the company to be one of the most effective and innovative company in the world (Henderson & Evans 2000). One of the company's core competences is innovation. The company has been making innovation since its establishment. The company started by inventing the dynamo in 1876, after this innovation, the centennial would spark over a century off dynamic innovation. Innovation has been the company's most effective and competitive edge. Since the inception of the company, invention and innovation of new methods and products has enabled the company to elevate to be the leading electrical provider in the world. The company innovation and invention competences have produced products such as practical incandescent light bulb and the first central power station in the United States. The company has a history of life changing innovations with most of its innovations being water and light related. With the innovations, the company provides the basis of modern life to billions of people in the world; it has been, and continues to be, very essential help to companies, institutions, corporations and organisation in their operations. The innovation redefines everything right from the length of a day to the human knowledge (Rudd et al., 2008). The company was the first corporation in the world to produce a practical and functioning X-ray machine. This indicates that the company does not only concentrate on light and power but also in the understanding and knowledge of the human body, this is evidenced by the production of machines that are used in hospitals and health learning institutions. Through the endless innovations, the company has inspired products for many generations. These innovations are just but demonstration and illustration of how the company makes a difference not only in the United States but also in the whole world. The innovations make the company to be very effective not only in its operations but also inexploring new markets and reaching out to potential customers around the world (Taylor &Lubkeman 1990). Another core competency and capability is the company's infrastructure. This is evidenced by the strong performance of the company's brand; the general electrics’ brand value in terms of dollar is at number four. GE’s top executive has organised the company in to four business segments in terms of infrastructure (Combe&Greenley2004). This has enabled the company to keep with the changing markets. These segments focus on the company's core strength of infrastructure. These are; GE technology infrastructure (includes aviation, healthcare, enterprise and transportation solutions) GE infrastructure (includes water, gas and oil, and energy) GE capital (includes commercial finance, financial services business, GE money, industry verticals and corporate treasury) NBC universal (this remains unchanged) Importantly, the three of the four elements primarily focus on infrastructure in all market realms. This is important as it follows the global trends of infrastructure developments especially in the emerging markets. This core competence and capability underscore the message that the company's portfolio is fully committed towards high margin markets, high growth and sustainable competitiveness (Brenes et al., 2008). This positions the company with its competency well in place. The company focuses around its core competencies and this helps it to be very effective. Similarly, general electric has been having strategic leadership. This is a capability that the company has enjoyed over the years. The capability of strategic leadership in this company has become very essential in its business world over the years. The past chief executives of the company has always done exemplary in bring success to the company as well as making the company remain dynamic (Bungay&Goold1991). They realize that for the company to remain relevant and to succeed in the ever evolving world of business. They carefully change from the old ways of doing business and adopt the modern methods, these ensures that the company remains competitive. Through the strategic leadership, the company has depicts anticipation, ability to envisage, empowerment as well as maintaining flexibility in developing strategic change that is required by the company. Strategic Options Considered By General Electric Company over the Next Five Years From 2009 One of the strategic options considered by the company is strategic management. The company realizes that a consistent and stable management is crucial in success of the company in the future. As such, the company embarked on ensuring that it has strategic management. The company's top executives possess unique qualities and competences to drive the company to greater height. To ensure consistency, the company ensures that the top management of the company is well versed with the company. The company does not hire the top management from outside the company but it promotes its own personnel in to top management and executives. The personnel do not require time to familiarize themselves with the company as they already know everything about the company. The company asserts that the performance of the internal personnel is generally better and this cont3inues to make the company stable and successful(O'Boyle 2011). By promoting internal personnel, the company retains the culture of the company. This is essential as it reduces the chances of failure. This is because the personnel have enough knowledge of the company, this avoids company fit problems. The capabilities, abilities competences, innovation and performance of the internal personnel are well known and therefore the company promotes the best. These aspects reduce chances of failure very much. The company pays special attention to strategic management because of is crucial to future of the company. It ensures that there is consistency(O'Boyle 2011). For example, the CEO’s leadership does not vary much; they lead the company in a consistent manner. Besides, the strategic management does not only reinforce the culture of the company but also sends message to the rest of the company that performance, innovation and loyalty will be rewarded with promotion. Strategic management in this company integrates and capstone course for company's success and competitiveness over the last five years (Best 2014). This is evidenced by the company's competitiveness both in the North American market and in the global market. The company formulates implements and evaluates strategies in a unique approach thereby giving it a competitive advantage. Another strategic option considered by the company is core rigidity. This is a core competence adopted by the company to enable it to achieve a competitive advantage over its competitors and rivals. This includes the how the company uses its services and resources that are rare, valuable, costlyto imitate and non-substitutable. The company uses these resources and services strategically and hence achieves great significance as well as valuable asset to the firm as a whole. Although the company produces products and services for different industries, it has been able to maintain its core values, the difference in competitor environment, the general environment such as the social cultural, demographics, political legal and economic does not affect its strategies. This demonstrates the company's strategy of core rigidity(Joseph &Ocasio 2012). As such, the company finds its own signature activities that make it stand strong in the market. The harmonization and combination of the above aspects and abilities (under the umbrella of core rigidity) make the company strategies and competences very difficult to imitate. Under core rigidity, the company's flip side, the dark sides of its capabilities are revealed due to external events especially when new market entrants figure out better methods of serving the customers, when new technologies emerge and when legal or political events shift the ground underneath(Rudd et al., 2008). Diversification is another major strategic option pursued by the company in the last five years from 2009. The company has diversified machinery, in this the company products range from medical equipments and large turbines to coffee pots and laundry machines. The company is in an industry where there is fierce competition; the rival companies produce similar products as well as substitute products. On a positive note, the general electrical products are differentiated and they are known for quality and convenience. Through differentiation, the GE products appear different from those of the competitors. Through the eyes of the consumer, the GE products are characteristically different as compared to the rival company products. This gives value to the products. This has been necessitated by the company's innovation; it has been important and paramount for the success of the company in diversifying (Joseph &Ocasio2012). Another strategy option that the general electric company has considered since 2009 is reward system design. The company believes in a very strong sense of changing the pay processes and system. The purpose of this is to encourage the development of behaviours, character and skills among the personnel. The company develops the behaviours and skills in that reflect the organisational design and business strategy. The processes, value as well as the pay structure changed drastically from 2009, they influence how the pay gets the message to the personnel. The purpose of changing the pay system and processes is to align the company's strategic goals with the performance of the employees(Best 2014). The company believes that the pay system motivates the employees and therefore influences their performances. This contributed significantly to changing the pay system and process of the company. The company has a very strong case of rewarding and remunerating its personnel not only for motivating their performance but also for .making them to be loyal to the company. This makes them to improve their skills and knowledge within the company. Jeff Imeldtand Jack WelchManagement Approaches Comparison Both are great leaders, they propelled the company to new heights never achieved before their reigns. They increased the company fortunes to more than $500 billion. This was considered to be a major achievement by the two CEOS. Both leaders focused on quality and cost of their products. They paid special attention to improving the quality of the company products while at the same time incorporating differentiation. Jack Welch utilised “fix it, sell it or close it” approach as a method of ensuring that only the company's best business remained active while doing away with underperforming business (Pascale 1990). Jeff Imeldt implemented a similar strategy; he implemented selling off less profitable GE businesses. Both CEOs participated in the practice of firing the least effective ten percent of the workforce every year. Moreover, they both borrowed winning ideas from other corporations and used them to improve GE operations (Wise 1985). Contrast Jack Welch was the chief executive of the company from 1981 to 2001. When he took over the CEO’s post in 1981; he embarked on a holistic radical transformation of the company's strategies. He ushered new era of internal efficiency and performance management. His profit guidance was very strategic as it aimed for growth in earnings of 1.5 times to double the growth domestic growth rate. Notably, his values to management found were articulated in the company's slogan. This was speed, self- confidence and simplicity. Importantly, these values were reflected in the company's processes and systems. In addition, the values were reflected general electric products and services through the company's highly functional and simple designs. This was very instrumental in shaping the future of the company in relation to the increasing competition and increase in similar products and substitutes products (Eckes2002). Jack Welch’s corporate strategy was all about efficiency and performance. He is noted to relentlessly drive his employees and subordinates to the limits of their abilities. He used to encourage the employees at all levels to continuously improve their performance and to embrace ambitious targets. One of his unique philosophies was applying constructive conflicts as a way of eliciting commitments of the managers and other subordinates (Schatz 1983). He used imposing leadership. Furthermore, his strategy focused on cost cutting, deal making and efficiency. He targeted the USA and the European Union markets. On the other hand, Jeff Imeldtgraduated from Harvard business school with M.B.A and joined GE in 1982. He was made the vice president of the company's home appliance. He continued to rise through the ranks in the company and he was finally made the company's CEO in 2001. His management approach was quite different from that of Jack Welch. He was more people oriented, he has paternal like personality. Unlike Jack Welch who focused on efficiency, Jeff Imeldt focused on effectiveness. He set the company on growth engines for the future. He was a risk taker, believed and applied innovation and he also used sophisticated marketing to reach out to emerging markets. His target markets were the developing countries. In addition, he was more open and trusted people his subordinates more than Jack Welch (O'Boyle 2011). He focused more on infrastructure development and more specifically on green energy. He is credited with opening the company to the global market by shifting production from the United States to developing countries. He stayed true to his management approach and he was disciplined as well as detailed. He was not afraid to intervene on things that were important. He focused on the external communications as he communicated with third parties and investors. He is also credited with removing emphasis from bottom line. This got employees to embrace and take risks and therefore develop more innovative ideas. Jeff Imeldt is more suited for strategic management in the current volatile, uncertain, complex and ambiguous world. His management approach focused on innovation and opening up to the developing markets. He is credited with taking the company to new levels because of his innovation and management approach. His innovative breakthrough program was central to the future of the company in VUCA world. References Best, R. J. 2014, Market-based management: Pearson. Brenes, E, R, Mena, M, & Molina, G, E, 2008, Key success factors for strategy implementation in Latin America, Journal of Business research, 61(6), 590-598. Bungay, S., &Goold, M. 1991, Creating a strategic control system, Long range planning, 24(3), 32-39. Combe, I. A., &Greenley, G. E. 2004, Capabilities for strategic flexibility: a cognitive content framework. European Journal of Marketing, 38(11/12), 1456-1480. Eckes, G. 2002, The Six Sigma revolution: How General Electric and others turned process into profits, John Wiley & Sons. Henderson, K. M., & Evans, J. R. 2000, Successful implementation of Six Sigma: benchmarking general electric company, Benchmarking: An International Journal, 7(4), 260-282. 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