Core Competencies and Capabilities

General Electric is a multinational corporation with headquarters in New York, United States. It was formed in 1892 out of the merger between Thomson-Houston Electric Company and Edison General Electric Company. Today, the company is a reference point for its success in management and is a model for other businesses. In the course of its business, it operates a wide array of segments including pharmaceutical, automotive, home appliances, financial services and engineering industries among others. In 2011, the company ranked as the 6^th largest firm in the US in terms of its revenue and 14^th most profitable. Currently, the company is relocating some of its employees to the new headquarters in Boston. The full move of the company assets is expected to be complete by the end of 2018.

The value chain model designed by Porter can be used to explain the core competencies and capabilities at General Electric, and indeed any other organization. A value chain is a complete array of primary and support activities strategy that help a company to bring a product (Simerson, 2011). The chain starts from raw materials and includes everything that the company adds to develop the final product to the end users. There are five top activities that support core competencies and capabilities for the success of general Electric Company. The journey of production begins with the Inbound Logistics that is responsible for providing the raw materials necessary for production. Next, the Operations stage involves the progression of raw materials into final products and outputs. After the conversion of products, the outbound logistic activity distributes the final products from General Electric. In the next stage of marketing and sales activities such as promotion, advertising and promotion help in revenue generation for the company. Finally, the final stage of feedback and customer satisfaction is essential in the operations of the company. In fact, the company greatly values after sale follow up activities including maintenance, installation and warranty.

Core competencies enable new market accessibility and value added services to the organization. One of the key capabilities at General Electric is leadership and management. It is argued that companies should be structured based on its core competencies through provision of more market accessibility and value addition. The democratic management style imparted by Jeff Immelt has continually changed the leadership culture at General Electric. The concept of imagination at work is unique at General Electric and sets them apart with other organizations. The CEO’s communicative approach encourages him to interact with most of the employees in the organization (Magee, 2009). Ideally, the concept is effective in the motivation of employees and maintenance of high standards of best practice in quality management. In addition, the intelligence emotional leadership also builds better relationships with customers thus enhancing loyalty.

Another capability is the development of human resources particularly through the Global Learning program that is effective in the development of commitment leadership. The emphasis of the program on such matters as critical thinking, creativity, comprehensiveness and external focus helped in the advancement of business knowledge among employees. The company’s infrastructure for talent management operation ensures effective and efficient structural changes in management. The training centers are located across the world in locations such as USA, UAE, Japan and Germany. In fact, the company spends more than one billion dollars annually in training of its employees. This is achieved through influencing of local schools to offer training courses for the company’s employees and then certify their skills in manufacture.

In addition, the infrastructure at the organization is a major capability that is set according to its core competencies. The ability of the company to structure its structure according to its key competencies rather than based on targets and business portfolio sets it aside. The decentralization of the management structure breaks up the centralized bureaucracy thereby facilitating integration across business. This strategy has been attributed to the company’s improvement of 25 billion dollars in market value across 25 years of operations (Bucifal, 2009). The conversion of the results oriented structure into an open architecture that recognizes management divisions is also effective in outlining the key competencies at General Electric. The management of Immelt has further seen the reduction of management divisions from 12 to 6 smaller sectors. The incidence of high level management as well as efficient communication further adds to the company’s firm structure.

Over the company’s operation, it has gained tract in innovation through culture changes within the company. The ability of the company’s CEO to reform the more than 125 year old company has depended on innovation competence in making the organization more efficient. Indeed, technological innovations are growing in demand across the international platform. On e way in which innovation is gaining tract at General Electric is through the reengineering of process mapping. In the environmental management sector, the company is also performing well through the integration of innovativeness in solving the problems affecting the environment. Further, the company embraces manager retreats and employee workouts in breeding a culture of innovativeness thus benefiting both customers and society in general. The inclination towards innovation is reflected in the huge investments that the company places in technology (Tajvidi & Karani, 2015). The result is a reduction in production cost and improvement in quality thereby setting the company apart from its main competitors.

Strategic Options

Over the past, General Electric has been renowned for its leadership in both management and production thus giving it an advantage over its rivals. In fact, the CEO has been quoted as arguing that a company that has no competitive advantage cannot be deemed to be competing at all (Slater, 1999). In a world where competition is increasing over years, the company needs to improve its strategy to include better options for its customers. The much strength that the company has including its infrastructure provides a ready platform for the implementation of new strategies. In addition, the growing market for most of the products presents an opportunity for the development of the company. In today’s world, the company has the option of developing either its market or products therefore giving the company an upper hand in market share.

One of the most proven record strategies involves the development of a company’s market and the venturing into new markets. The Ansoff model states that entry in to new markets is a sure of product and service improvement for all companies irrespective of the industry sector (Hitt, 2009). India’s natural resource industry is one of the growing markets although some of the products such as gas turbines and associated generators being in existence in the country. Penetration into a market that is already flooded with such products requires market development. The company has a long history in the development and deployment of technology in the efficient utilization of natural resources. In fact, the company has the necessary infrastructure since it is the main supplier for the Sravanthi Energy Company of India. Automatically, GE could be entering a market with an existing product and can use the same as a leeway in expanding its geographic reach to cover other parts of the market.

There is an increasing growth in the presence of gas and the need for more power generation in India’s major load centers. This revelation further enhances the company’s prospects to invest in the highly efficient gas turbines in the country’s mid-sized power producers. In so doing, the company can create a competitive advantage through provision of innovative and highly performing gas turbines for industrial and commercial applications. Although it is a first time mover, General Electric can bank on its competitive advantage brought about by its innovation levels therefore outsmarting its rivals for market share.

One main strength at GE is the experience in mergers and acquisitions as has been evidenced in the past. As thus, the company could lead into a merger with Sravanthi Energy Corporation in India to bank on local knowledge acquisition and greater market share. The success of a merger with a local Indian company could only mean well for general Electric in terms of market share and research and development through local knowledge. The result is the development of better quality products suited for the particular market (Monczka, 2000). However, the same approach could lead to the risk of cultural conflict as the company enters a market with a different set of culture. The risk with such an approach is the distortion of the corporate and leadership culture at GE leading to inefficiencies in management (Hitt, 2009). However, the risk can be averted due to the anticipated increase in the number of generator users in India. In addition, Sravanthi Energy’s development of power projects presents another chance of risk reduction thus increasing the potential for high returns. Ultimately, the choice of a local company increases the chances of shareholder acceptability due to its inclination towards long term investments.

The other strategic option that the company has is the chance of developing its products in the ready markets such as the US and Germany. The strategy involves the development of new products to meet the proximity of its customers in existing markets thus outperforming those of its competitors (Jurgens, 2000). One of the main fields that General Electric has potential for growth is in its healthcare products. The strategy involves the development of a new wireless detector that operates with ultra wideband connectivity. The release of the product showed a high and stable income due to the developments in the modern healthcare sector. Today, most of the practitioners are aiming towards streamlining of the x-ray departments while maintaining patient satisfaction. With effective marketing, the product can act as a substitute for the regular x-ray equipment by attracting more customers thus increasing profitability.

A review of the competitor analysis shows that other companies offer similar products including rival companies such as Siemens healthcare and Philips Healthcare.  Regardless, offering the product could mean the construction of a digital radiography which is very competitive for the company. The healthcare sector in the US has increased in expenditure by more than $300 billion from 2005 to 2011. The same trend is expected to continue into the foreseeable future therefore presenting a different and positive environment for growth of companies in the field. In addition, the existence of GE in the US market presents an opportunity for the company to widen its geographical coverage in areas where it already has a market.

By moving fast and being the first to bring the product in the US healthcare market, GE can acquire an upper advantage in terms of competition. The ability of the product to image the patients at a faster rate than the Computed Radiography gives it a marketing edge over other related products. In addition, it shows reliable data due to the interaction with ultra wideband connectivity. The availability of infrastructure and the huge investments in research and development enables the company to develop more efficient and differentiating products in all the sectors that it serves. GE Healthcare should invest more finances towards the realization of product development. In essence, the result would be the increase in sales of the company’s innovative healthcare products through the presentation of better and varied choices to the customers.

Although the two options seem most viable and practical, there is the risk of failure of either one or both of the strategies. To avert such occurrences, it is prudent to only implement strategies that have higher chances of success and abandoning those that seem not to succeed. As thus, the company should focus more on its strength and choose the option of market development due to its higher feasibility. The availability of a ready market in India makes the strategy most suitable because it requires less marketing. In addition, there is already a demand for the company’s products and availing the products could bring customer loyalty and better relationships with customers. The success of the company in mergers as evidenced by past acquisitions is another reason for the execution of the first strategy. The merger with a local company could provide a useful link in entering the new market thereby increasing the chances of acceptability.

Management Approaches between Jack Welch and Jeff Immelt

Jack Welch and Jeff Immelt have both been effective in articulating General Electric’s strategies and propelling it to success. In particular, Jeff Immelt had the daunting task of taking over from Jack Welch who was considered as a living legend as well as the greatest CEO of the 20^th century (Bock, 2001). That notwithstanding, both leaders have different approaches to management with each being effective in their own right. Jeff Immelt’s management style is sharply different compared to that of his predecessor in a number of ways. While the former’s focus is in encouraging and motivating others thus relating with them at their level, Jack Welch’s approach was based on intimidating the employees and forcing them to perform at the highest level. Ideally, both approaches did achieve results and are only different in their manner of execution rather than in effectiveness.

Although both management styles are effective, Jeff Immelt’s leadership style of being a regular guy and being people friendly creates a different environment at GE thereby earning him praise amongst his subordinates. Perhaps the difference in management styles is facilitated by the differences in circumstances during the two different periods in which the two leaders managed the organization. Under the current leadership, GE’s strategy is following a very different approach from that of the former CEO. Jack Welch was the youngest CEO to take the helm of the company and has served the company for more than 20 years before the appointment of Jeff Immelt. Through his approach, Welch was able to realign the strategy of the company through drastic changes in the corporate structure of the company. Essentially, the bureaucratic culture was scrapped under his watch as he chose a more decentralized culture where the managers worked under close proximity from the CEO.

Just like Welch,. Jeff Immelt was eager to make a unique and clear difference between the unique corporate model at GE and the very unpopular conglomerate model all over the world. As thus, the two leaders shared the same ideals regarding the management of the multinational corporation and this is evident in the maintenance of the model under the latter’s leadership.  In fact, both of them repeatedly outlined the role of General Electric’s common resources, initiatives, culture and systems in wheeling the different businesses of the company (Magee, 2009). Ideally, most of the easy efficiency gains were realized during the leadership of Welch through his extensive internal reforms. In continuation, Jeff Immelt realized that the existence of future opportunities for profit will most likely result from organic growth.

Jack Welch focused on developing General Electric’s cost advantage thereby resulting in the company missing valuable opportunities. In contrast, Jeff Immelt focused on commitment to good corporate governance as well as greater transparency. The focus for Immelt was on the creation of differentiation advantage through the use of innovation in developing products that are centered on customers. Immelt has continually shown his sensitivity to the changing business climate in the face of an economic recession. In addition, his style of leadership helped in the stabilization of the company even after sliding share prices in the aftermath of the September 11 terrorist attacks. Through his management style, he articulated his outward looking-organic growth strategy.

Leadership strategy is a key component in the success of General Electric since its inception. In a world of volatile, uncertain, complex and ambiguous developments, General Electric prioritizes effective leadership strategies. In determining the best leadership style, the core competencies and capabilities of the company need to be examined for better production of the company. Based on the assessment and VUCA model, Jeff Immelt’s leadership style is much more effective compared to that of his predecessor. While the style of Welch was effective in enhancing employee performance and production, it cannot be as effective in today’s world. In addition, his style was most effective because of the monopoly that the company enjoyed during his years at the helm of the company. As thus, the organization was a big brand that attracted the best employees with the right talent to improve production.

In today’s world, however, Jeff Immelt’s management style is most effective for its ability to communicate with employees at all levels. The advantage is that it encourages and motivates employees to perform better while giving them satisfaction. This is in contrast to the forceful nature of pushing employees to work and giving them instructions. While the management style of Welch was effective in pushing performance, it faces the risk of rebuttal and stubbornness in today’s world. Overall, Jeff Immelt’s style is most effective and this is evidenced by the ability to maintain the stability of the company in the face of difficulties. In effect, his style is proven to withstand turbulent times in the course of the company.

References

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Magee, D. (2009). Jeff Immelt and the New GE Way: Innovation, Transformation and Winning in the 21st Century. New York.

Bucifal, S. (2009). Corporate Strategy Analysis: General Electric Co. 1981 – to present. Crawford School of Economics and Government.

Bock, W. (2001). Assessing Jack Welch. Monday Memo. Online. 10 September 2001. (http://www.mondaymemo.net/010910feature.htm)

Simerson, B. K. (2011). Strategic planning: A practical guide to strategy formulation and execution. Santa Barbara, Calif: Praeger.

Tajvidi, M., & Karami, A. (2015). Product development strategy: Innovation capacity and entrepreneurial firm performance in high-tech SMEs.

Slater, R. (1999). Jack Welch and the GE way: Management insights and leadership secrets of the legendary CEO. New York: McGraw-Hill.

Monczka, R. M. (2000). New product development: Strategies for supplier integration. Milwaukee, Wis: ASQ Quality Press.

Jürgens, U. (2000). New Product Development and Production Networks: Global Industrial Experience. Berlin, Heidelberg: Springer Berlin Heidelberg.

Hodge, G. A. (2006). Privatization and market development: Global movements in public policy ideas. Cheltenham, UK: Edward Elgar.