Organizational Strategy, Case Study on General Electric
GE (general electrics) is a multinational corporation that is quadratically segmented. The segments involve energy, infrastructure, technology, capital finance and consumer & industrial. This corporation started all with turbine, working for generation of power, which later led to the introduction of the other fields such as the aircraft. This is a bureaucracy type of organizational structure that has general regulations that from the top management to the low level management. The business participation of the company is involvement in power generation, transmission and also electricity distribution. This has led to improvement in various sectors in the lighting, industrialization, medical equipment, motors, rail locomotives and also in the aviation services. Therefore, GE Corporation is highly important in the economy enhancement of people in the world.
The core competences are the uniqueness's in the capabilities that will enable the company or organization to attain a competitive edge in the market world. Therefore, there are a lot of competences that are by the GE Company so that it can have a competitive environment on the world market. This organization has a very wide range of factors that enable it to cope with imitation (David 2009). This will give the company the ability to enjoy monopoly in the field without much competition from major competitors. The second factor that can give the corporate evidence towards the core competitiveness is the access to the markets of the company or the organizational goods (David 2009). This will help the management to have the knowledge on what should be improved and on what should be paid more attention.
This will help in production of goods and services of good quality to the customers (Richard 2009). This is by the basic strategic plans that are by the management before starting out the business. Better markets give confidence and morale to the management of the organizations due to enhanced growth and the increased profit margins in the organization. The third and the most important test that differentiates the core competence of a corporation is the distinct difference between the services and goods offered by the organization. This will enable the organization according to their demand in the market portfolio.
The key competences employed by the GE Company are in the innovation sector and the development sector (Richard 2009).
Innovations ensure that the areas existed in the company and require more improvements are looked at and major improvements done order the standard the services are the organization.
Therefore, innovation involves research and management of the company invested so much inthis sector so that they improve ways of delivering quality services. Innovation is a very important factor that will enable the company to set the pace in improvement of the goods and customers in the world (Richard 2009). As a multinational organization, it has to ensure that the goods are of the appropriate quality. This will help the organization to set the pace over the other organizations that intend to produce goods of the same type all over the world..
Innovation helps to get the new way of getting the knowledge how to make the work for the instruments are the manufacture and also the manufactured goods. This will help to attract more and more customers towards the organization that will lead to better and improved profit margins within the organization (Richard 2009). Developments incorporate the achievement of better and reliable goods to the markets. This will be facilitated by the efforts that the organization put in order to get better and reliable goods are out of the markets. This will help the customers to differentiate between the organizational products and the goods offered by the competitor organizations.
The other core competence that can be applied by the organization is the improvement in the corporation technology and use of easier and simpler ways to achieve the end products (David 2009). These better organizational products will beat out the quality of the goods offered by other companies, enabling them to get better markets for the goods. The joy of the management in any organization is to produce quality goods and services that are welcomed by the customers.
This is the reason why technology is extreme importance to the organization so that it can lead to better accomplishment of the vision and mission of the organization (David 2009). This is through better and paramount sales that will increase the revenue of allocation towards the company lading to better offering of services and, therefore, leading to growth and expansion. Technology incorporates the use of small engine technology in the company to reduce the work of the huge engines. The best improvements that the core competences have brought to the GE Company is in improvement of the company in production of electrical appliances (Francis 2007). This has led the company to be one of the leading companies in electrical appliances, even getting the company deeper to other segments such as in locomotives and even aircrafts. This shows growth and expansion of the company lading to it getting better revenues from the business transactions that it carries out. All these factors are used by the use of the core competences that have led top developments and improvement in the technology throughout the company.
This is by the position of the company in the profitability rank of the organizations in America, where it stands at number fourteen on the most profitable corporations. This is also the sixth largest corporation in the U.S by gross revenue; therefore, these are amongst the evidences that stand for the GE Corporation amongst other (Francis 2007). GE is among 500 of America, which competency of relevance to that by. This data is very true validates the importance of the core competences in the organization.
Models of Improving Strategic Planning
In order to improve the strategic plans for any organizations there must be the models employed so that plans can bring out profound yields that will at the long ran benefit the organization. The types of models employed are in such a manner like the SWOT analysis in order to grow the plans of the company to become results the organization (Francis 2007). The SWOT analysis deals with the strengths, weaknesses, opportunities and adverse threats that may affect the organization.
Therefore, the strengths are, for example, the areas where the organization like the General Electrics is performing well and making good and reliable efforts (David 2001). The GE started as a corporation of generating power, where it made a lot of progress leading to expansion of the company to higher heights of diversified products in the areas of locomotion and also in the aircraft (David 2001). This was strength in the company that led top it growing and expanding because the organization profit margins were high due to the products produced by the company. Weaknesses are ever present in the world has to undergo down falls and peaks again leading to uplifting (David 2001). Therefore, for resistance, of weaknesses which are prevalent the organization of the General Electric came out with plans that paralyzed the weaknesses to strengths.
Opportunities were very available for the organization in major sectors such as industrialization and medicine, leading to improvement and creation of customers so that the organization can grow that will lead to better profit margins in the organization. The opportunities were much unexploited, leading to lack of competition in the field (Janet 2010). These gave the organization a major pace in the production of goals and objectives through diversification of products in the organization. Therefore, for the development of any organization, it has to apply the strategic plan of diversification that will lead to grow of the major sectors of the corporation. Threats are very bad for the prosperity of any organization (Janet 2010). The reason is that threats undermine the delivery of services, leading to poor and stunted growth of the organization and to collapse or down fall of the organization.
This is through better management skills that are by the management to counteract the threats. Therefore, threats for this particular company is a lack of the market and lack of region a land international support production quality goods enable the organization maneuver the world business for this reason, the management has to apply major roles of management that will counteract the weaknesses and threats of the company to ensure that the organization will grow and expand.
Formulating the Strategy
After having being hit by the financial crisis, General Electrics (GE) formulated various strategies that will help to realize both their short-term and long term goals (Tim 2006). The company financial situation was deteriorating, according to the Chief Executive officer, Warren Buffet. The financial crisis is what exposed the company to a dividend cut off until later in the year. The strategies that the company adopted were directed to recovering from the financial crisis. This included downsizing the debts and any loan that shifted its revenue downwards. The strategies laid down by the company to be implemented include the focus on innovation through strategic entrepreneurship and business level strategy. The company ought to focus on making more physical products that would amount to sales and focus less on the financial engineering that caused it to experience a crisis. This included majoring on investments and other finance sourcing activities (Tim 2006).
Less Financial Engineering Strategy
The today's market cannot be compared to the market in the 20th century. During those days, the capital of GE would dictate the investment decisions that the company is going to take. The market today has dictated a downward trend in the financial units. The strategy the company undertook was downsizing the lending capabilities. At the time, the company was ranked the largest non-bank finance institution. The company opted to narrow down, lending to only the midsize industrial companies (Hunt 2007).
Innovation Though Strategic Entrepreneurship
The only possible way out of the financial crisis that hit the company is through focus on the areas that gained the company a competitive advantage. These areas included manufacturing of products and increasing the product line. The company, therefore, should specialize in industries that are related to power generation, health care equipment, and aviation. The long term objective of the company is developing heavy weight products that normally take some time to reach the market. The products are, however, costly and require a lot of cash to develop. These products include the locomotives, power turbines, the jet engines, nuclear plants, medical imaging equipment, wind mills, solar panel and water treatment systems (LOHR 2010).
The reasons for investing in the heavy weight products is because they have higher returns in terms of the profit margins, even when compared to the lending banks. Strategy implementation will entail heavy investment in the research and development function. Research and development work hand in hand with technology. Manufacturing that is based on technology endure low costs of production amidst the competitive business environment. Opening research centers in various countries will help in discovering the potentials hidden in those countries. For instance, the company, as part of its strategy opened a research and development centers in Michigan. The function of this research and development center was to advance the manufacturing technologies (LOHR 2010).
The only way that the company can overcome the economic cycles is to include promoting innovation and making of investments that are smart and realistic. These include investment relating to production of products that are market oriented and investing on the people, who carry out production work. Hiring and training skilled staff to become more competitive is the best way to achieve strategies put in place (LOHR 2010).
Strengths of this Strategy
Developing leaders is one step towards ensuring expertise in the carrying of tasks. The executive chief of the company was, for example, hired in 2001. The company has retained the chief executive despite the economic crisis. The reason is due to the ability to drive the company from crisis to achieving better returns. One advantage of keeping employees is to enable them gaining experience and expertise, mostly in the knowledge of company's market dominance and acceptance of its products. Understanding the business of the company increases the knowledge of running it even in difficulties. There is also the advantage of innovation. It helps in creating the new products that are more durable and marketable (Hunt 2007).
Overreliance on this part of the manufacturing may shift the responsibilities of the company. The company has to focus on other related activities, including sensitizing the products (Tim 2006).
Richard Rumelt Strategy Evaluation Criteria
According to Rumelt, there are four items that the company should take into consideration when implementing the strategies put in place (Artco Continuity 2012). The strategy formulated by the company must always be consistent with Company's goals and policies, for instance, in this cases the company's policies and goals have been fully incorporated in the strategy. The goal of the company includes meeting both the short term and long term objectives. The strategy has incorporated this through developing heavy weights products that are expected to earn high returns to the company later in the years. The policies the company formulated include valuing the employees as the best assets they have. They have done this through training the staffs and maintaining them in the company (Artco Continuity 2012).
The test of consonance that is carried out in the organization includes focusing on the ability of the organization to respond to the external environment through competing with the rest, while at the same time prospering in its operations. The strategy put in place has rendered the company compatible in its product line. Manufacturing products like jet engines and water treatment systems is both an adaption to the environment as well as prospering in the business. The arithmetic achieved by the company represents a trend analysis done over the years. The company has changed the focus from capital gains to revenue receipts. This was meant to adapt to the financial crisis that hit the economy from the year 2009. This was also meant to enable the business remain in business (Artco Continuity 2012).
This strategy also provides for maintenance and creating of competitive advantages. The strategy to focus on the research and development in order to promote innovativeness was adopted. The move will keep the company competitive and growing. The company also adopted the long term production of products to help to gain from the returns later. The anticipation is that, by that time, the company will have recovered fully form the financial hit. The strategy has not overtaxed any resources nor has unit created problems that can not be solved. Having analyzed the company's financial, physical and human resources, it is credible to state that the strategy put in place is feasible (Artco Continuity 2012).
The company has in years hired more than 4000 employees in a move meant to strengthen the economy as was recommended of the institutions in America. Through adopting technology, the company has reduced the costs of production and increased the capital available for investments. The physical equipment of the company has long life spans and are well maintained. The company strategy is, therefore, making maximum use of the available resources and helping solve problems emerging, including reducing unemployment rates (Artco Continuity 2012).
Balanced Score Card Criteria
Kaplan and Norton linked a company's strategy to frameworks or perspectives relating to finance, customer, and business process and learning and long term (Niven, 2006). This strategy measurement system or tool translated the company's visions and strategies in to the four perspectives. This strategy of GE Company, to focus more on manufacturing of products has rendered the company prone to financial success. Then cost benefit analysis proves that focusing on innovation and long term objectives will yield higher returns in the later years. The move was made enable the company to gain the capital reserves that had been diminished by the financial crisis (Niven, 2006).
The company has experienced growth in the market share, in terms of the products being consumed. The customer shows their level of dissatisfaction through seeking other suppliers that satisfy their needs. The implementation of this strategy will enable the company to develop products that are more market dominant. The evidence of this is the broadening of the market to China. Although reports have shown that the market is not well receptive due to competition from products from the host country, the company's strategy to counter the products manufactured their will improve the reception with time (Niven, 2006).
The company also looks at the business processes it should focus on to enable it meet the customer requirement. The company's strategy to focus on products like jet engines, water treatment systems and nuclear plants has enabled the company to adopt high tech machinery and skilled hand craftsmanship. The newer version of the jet engines are fuel efficient and have quiet engines they are designed to fly in wide body planes for instance, the Boeing 747-8. The machines that are being used are computer controlled. Customers have expressed good feedback on the products developed so far. The strategy has also included hiring and training of more employees, especially in the manufacturing. High performance work team led to an increased payroll form 220 to around 450 by 2012. The factory employed around 30 persons for various jobs (Niven, 2006).
The core competencies play a major role in upgrading the corporation's revenue allocations. General electrics, in an effort to recover from the financial crisis, developed strategies that extend for over five years to help take the company back to track. The company adopted two strategies as mentioned in the paper. The paper has analyzed the two strategies, their advantages and disadvantages. The paper has stipulated the some of the core competencies the company has applied in ensuring the products remain in the market and maintained the competitive advantage. The paper has also stipulated two strategy measurement models that enable full implementation of the strategies formulated.