University of South Wales

Business School
Strategic Analysis, Tools and Techniques (ST4S38-V1)
MBA
Lecturer: Christodoulos Kakouris
Topic: Strategic Analysis of General Electric Power/Energy Company

Student No. Name Enrolment

R1608D176373 Atalia McDonald ST4S38-V1
9

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Introduction

This presentation will do a critical strategic analysis of one business unit within the General
Electric Company. This analysis will explain the strategic position of the General Electric
Company, a critical evaluation of the resources and value systems, the product or portfolio mix
within the SBU. Finally this paper will critically analyze and evaluate the Key future directions for
strategic growth of the General Electric Company, by covering the following topics in the
module as follows: resource audits, value systems and product or service portfolio using the
BCG Matrix as well as potential future strategic growth through identification of options and
evaluation of options.

The world leading in power generation with great expertise to assist clients deliver electricity
from a wide range of fuel resources is General Electric. Constantly, transforming the industry of
electricity with digital power plant, most efficient and largest gas turbine, through upgrade and
service solutions as well as the leverage in data software.

According to Reuters.com, “General Electric is a global digital industrial company established on

April 15, 1892. The services and products of the company range from aircraft engines, power
generations, oil and gas production equipment for medicals, financing and industrial products.
The business units of this company include Power, Renewable Energy, Oil & Gas, Aviation,
Healthcare, Transportation, Energy Connections and Lighting and Capital. The company further
became a multinational company catering to approximately 180 countries.”

This paper will focus on the business unit of Power as it relates to General Electric Company.
Power is the foundation of life which sets motion of progress and moves the world forward.
General Electric are renovating and innovating constantly by advancing energy technology of
the future and enhancing power networks we currently depend on.

The landscape of global energy is changing, therefore through continuous alliances with
customers, commitment to deliver exquisite service and power to people around the world will
never change.

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Strategic Position of General Electric Power Company

This company has the strategy for competitive advantage with growth strategies which ensures
global markets. Porter’s generic strategy is used to maintain company’s competitive edge. For
example in this instance, General Electric utilizes the generic strategy for competitive advantage
in most of the business units. Intensive growth strategies employed by company’s, are available
to support and sustain the business growth.

The reliance of General Electric on diversification is a major growth factor over the years,
despite the changing economic conditions and competitive challenges. Strategies such as these
increases the company’s resilience as on the biggest diversified businesses in the world.

The main generic strategy for competitive advantage is that of differentiation. The company’s
goal is to attract target customers to special and unique products through research and
development which General Electric is known for. This competitive strategy involves product
offering to many segments.

Firstly, one main objective in using the differentiation strategy is that of intensifying the General
Electric Company’s research and development programs. This strategic objective enhances
product uniqueness which is necessary to capture and retain customers in General Electric’s
target markets. Secondly, the strategic objective based on the generic strategy is to increase in
the company’s presence in market segments. Example, the General electric utilizes this
advantage to increase customer loyalty to the General electric brand in the lighting industry.
However, a strategic objective is basically to establish intensive strategies that contribute to GE’s
growth in business while permitting successful application of the differentiation competitive
strategy.

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Critical Evaluation of Resources

The General Electric Company has an organizational structure which supports the
transformation of the business into the digital industry company. In evaluating the resources of
The General Electric Company. It is generally necessary to identify the company’s core
competences. In doing this the company has to identify the organizational competences which
is the importance of auditing a Business’ resources, what are business resources and consider
methods of classifying resources. According to Davies 2017, “value systems are simply ways in
which activities may enable the value to be realized.” The perspective of value is inevitably
shaped by the philosophy of the business for example is it low cost or differentiation.

The resources audit focuses on differences in performance which can be explained by external
environments however internal environment may focus on strategic capabilities, company
resources as well as competencies may play an important role. According to Johnson et al, 2014,
super performance is lead by managers understanding ways in which organizations are different
from rivals through a basis to achieve competitive advantage.

Johnson et al, 2014 explains that strategic capability includes resources and competencies.
Whether tangible or intangible it should be analyzed to identify effective utilization. Davies
2017, separates resources int categories as follows : tangible which refers to physical aspects of
the organization. As well as intangible which is concerned with that of value systems and
organizational capability which includes the way an organization performs it activities.

The General Electric company has created a major degree of core competences in terms of
external measures which area market consolidation, and ability to infiltrate newer markets
rapidly through knowledge gained in controlling other markets.

According to Johnson and Davies, when performing a resource audit it is imperative to identify
inputs and outputs that each functional area contributes to especially identifying these in a
competitive way in which tey are linked or interrelated. It is impotant to note that being unique
is key and the more the resource is unique the less likely for imitation as well as unlimited

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access which is key to include resources which can be accessed but not only to those who are
owners, have networks or customers and final the resources needed to support strategic intent.

The functional areas of a resource audit will be briefly explained such as finance, production,
corporate human resource management, logistics, marketing, research and development and
finally MIS (Mona information Systems)

R&D Manufacturi Marketing Logisti Finance Corpora

Engineeri ng cs te
ng Personn
el
Financial $20B assets, 13b in
Resource 300investme assets and
nts =vast core
energy competenci
footprint es go
beyond
most
capital
providers.
Physical GE’s
Resources Flexefficiency
60 Truck tour
Human Doubled the
Resources size of
people from
2500 to 5000
people.Playe
d four roles :
instigators,

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 innovators,
integrators,
implementer
s

Organizatio
nal
structure
Technologic Number of
al websites for
capabilities business
initiatives
and tailored
to different
countries/
recent
advertising
campaign
(Agent of
Good
Intangible A common
resources framework a
means of
measuring
success:
principles,
people and
process

Marketing

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For years, General Electric assumed that its products and services were extremely exceptional
that marketing was not an issue which could be done on its own. However, businesses began
growing and its executives realized they had to transform there sophisticated technologies or by
expanding into new markets.

General Electric Power had to transform there marketing operations and increase the size of
their marketing organization. Therefore marketers were given a common framework by which
they measured success: principles, people and process.

In marketing, General electric had the deepest online presence and so with this they used this
to launch a popular acclaimed advertising campaign named “Agent of Good” starring Matrix
movie. As well as General Electric posts print advertisements on social media websites such as
the following below.

GE Energy has three main physical resources and industry which are of main focus. GE Energy
business units industry focus spans into three industry groups namely, Thermal Power,
Renewable Energy and Oil and Gas infrastructure.

Finance

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There are 13 billion in assets and core competencies go beyond most capital providers, in which
there are offerings of equity investment, partnerships and project finance, term loans and
revolvers.

The thermal power segment of GE Energy financial services invests in development, generation
and transmission of power using traditional fuels.

GE Energy Financial services has developed a long track record of investing in renewable energy
focusing on wind and solar power generation. As renewable energy grows it will continue to add
to a 12 billion dollar portfolio.

Oil and Gas infrastructure is needed to move and store oil and gas offering customers access to
world class technology and expertise from other GE businesses.

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Source: https://www.ge.com/digital/sites/default/files/download_assets/GE-energy-electricity-
value-network-infographic.pdf

The Value System/ Value Chain

General Electric’s Energy Unit has augmented a new value chain which is connected to new
digital technologies. This is where both power and information flow in different directions and
all actors add value to the system resulting in overall efficiency and resilience of the system
hinge on information sharing, openness, coordination, collaboration and the right to set
benefits. This system will provide electricity in most reliable, sustainable and economic manner.

Three pillars of the Electricity Value chain are as follows:

 Digitized Central Generation

 Digitized Grid with Two-Way Energy and Information Flow

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  Digitized Consumer Model

Managerial Brilliance (Leadership) Value Chain Model

It can be noted, according to Prahalad and Hamel (1990) core competencies provide
accessibility in new markets and value added service to the company which are incomparable.
Inmelt’s motivational and democratic leadership style executed had effectively revamped the
culture of leadership into an pioneering culture known as “Imagination at Work” within General
Electric which eventually separated and differentiated them from other companies.

Grant, 2010 noted that Inmelt was a different being with such qualities that made him able to
communicate and relate to all employees in the organization, providing opportunities, high level
of motivation and quality management practices were high which brought out the best in
employees. Valuable capability was considered where priority was given to investors in order to
build relationships and loyalty. The approach of Inmelt’s Environmental opportunity which seeks
sustainability of stakeholders to maintain its competition in the market.

Human Resource Development

According to Magee, 2009, General Electric Global Learning was a kind of leadership by Inmelt,
an solid obligation to high skilled training was and educating employees, which fostered
advance in the knowledge of business, leadership program, functional skills, workforce and
traits of growth such as decisive thinking, external focus, comprehensiveness and imagination at
work. Through the right culture, organizational structure and communication and information
technology system within the General Electric Energy Unite, employee training could be
implemented.

Expansion of motivation and growth within the GE through innovation is much more effective
and cheaper than buying from outside which has developed competency to improve the
business model.

Organizational Structure

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According to Prahalad and Hamel (1990) organizations should be structured according to their
core competencies rather than a few business units. The changes from a highly decentralized
bureaucracy to a more broken cluster of unites as independent units has facilitated a more
cross-business integration. Knoll(2008) and Bucifal (2009) applied a strategy they saw fit to GE’S
market value to ameliorate from 12 billion dollars to 37 billion dollars over 25 years which
reinforced another core competency.

This change progressively adjusted the structure from result oriented to an open and less hard
edged infrastructure which revamped management divisions to smaller broad based sectors.

Technology Innovation Platform

GE changing into a more innovative organization was the technological advancement of the
company. The technological innovations for example, reengineering, employee manager
retreats and Ecoimagination and Imagination Breakthroughs initiatives were established
according to Bucifal (2009). This was for a open challenge commitment to innovatively find
solutions to solve environmental issues for market expansion opportunities and product
commercialization and benefit customers and society at large. Bucifal (2009) noted that GE
invested approximately 100 million in technology which differentiated them from its
competitors with lower costs, more access, better quality and customer value that solved global
challenges.

Marketing Diversified Portfolio

Welch and Inmelt’s leadership has greatly demonstrated competency has effectively leveraged
the diversified portfolio to utilize strategic interactions leading to growth of the company in
emerging economies. Due to the business units system, division managers are able to act like
small business owners able to be familiar with customers wants and needs. These competencies
acted as the link to diversify all the businesses. These core competencies allowed companies
shared knowledge, patents, resources and skilled labour common in different GE businesses.
Establishing both healthy relationships in China and India as well as potential access to diversify
markets have improved exploit labour resource, brand reputation and increase profitability and
efficiency while customer satisfaction and coherency within the organization (Grant, 2010).
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Customer Care Services

In the 1980s, customer focus began in Welch’s era, which focused on Productivity made
boundary less structure for process improvement which adopted Change Acceleration Process
(CAP) which established the learning environment that led to the road to customer impact
namely the Six Sigma.

BCG Matrix
The six Strategic business units of the General Electric are the following:

Operating businesses such as Power, Renewable energy, oil Gas, Energy Management,
Healthcare, Transportation, Appliances and Lighting and capital and financial industry.

According to the Strategic management insight, “BCG Matrix or growth share matrix is a
corporate planning tool used to portray firm’s brand portfolio or SBUs on a quadrant along
relative market share axis and speed of market growth axis.”

It is a framework created by Boston Consulting group to evaluate the strategic position of the
business brand portfolio and its potential. It classifies business units into four main categories
based on industry attractiveness otherwise called the growth rate of that industry and
competitive position.

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BCG MATRIX FOR GENERAL ELECTRIC COMPANY

Healthcare, transportation, Oil and Gas, Energy

appliances and lighting and management, power, renewable
capital and financial industry energy

Question
Stars
Mark

Poor Cash
Dogs Cows

Stars operate under high growth industries and maintain high market share. They are both cash
generators and cash users. The industry of Oil and Gas, Renewable Energy and Energy and
Power are all stars and primary units in which company should invest its money, because they
eventually will become cash cows and generate positive cash flows.

Question Marks are brands which require close consideration and hold low market share in fast
growing markets which consumes large amount of cash and incurring losses. Healthcare,
transportation, appliances and lighting and capital and financial industry has great potential to
gain market share and become a star which later will become a cash cow.

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FUTURE DIRECTIONS

The Ansoff Matrix Model is one of the models which can be used to determine the growth
opportunities that exist in the General Electric Industry

Conclusion
The General Electric has displayed changes over the yeas with a level of dynamic that such a
company has been subjected under the leadership of Jack Welch and previously Jeff Immelt.
The company experienced a high degree of expansion under the control and guidance of Jack
Welch. However strategies implemented during Welch’s time pertaining to the structure
focused on short term profits and financial benefits based on employee performance instead of
focusing on creation of product services.

The different types of strategies implemented for providing an exit process for the slow growth
areas in the business and reallocation of resources for the implementation of different types of
growth strategies to enter into new ventures for business.

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REFERENCES

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https://www.ukessays.com/essays/management/case-study-of-general-electric-co-
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https://www.bloomberg.com/quote/GE:US

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GE Capital Global Holdings, L. (2016). GE Capital Global Holdings, LLC: Private Company
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