Sei sulla pagina 1di 13

1.

Introduction to Strategy

Strategy comes from ancient Greek word meaning The Art of Leading an Army.
The Art of Generalship.

The Concept of strategy applied to business emerged after the WWII


The methodology was adapted first to industries in the US.

The publication of „Theory of Games and Economic Behavior‟ by Neuman and Morgan Stren acted as a bridge to Business Strategy.

They formulated the method of resolving conflicts in Politics, War and Business by interpreting strategy in two ways.
- Pure Strategy: series of moves by a business in a specific area e. g. Product Development
- Grand Strategy: A combination of Pure Strategies a business should pursue according to a situation.

In business today, strategy traditionally answers the question:


„How can we compete in the market and maintain an advantage‟

The concept assumes Strategy as a Zero Sum Game.


That is the cake is only so big, so that there will be winners and losers.

However the markets are fast evolving due to Globalization, Technology, IT, Dismantling of Government Controls and Media and
several other factors. As a result of which, business have to Manage Change and exploit opportunities.

Thus the strategy also needs to answer the question: „How can we add value to a customer in a sustained way?‟

Today business strategy needs to be linked to


- Systems including IT strategy
- Structure- HR Strategy
- and of course Finance strategy
A successful business strategy will need to ensure that it has fast efficient processes, systems, in a culture that supports overall
strategy.

Concept of Strategy

A strategy is a fundamental pattern of present and planned objectives, resource deployment and interactions of an organization with
markets, competitors and other environmental factors

A good strategy should specify:


1. What is to be accomplished?
2. Where? Industries, products, markets it focus
3. How? Which resources, activities will be allocated to each product market to meet environmental opportunities and threats and to
gain competitive advantage

Components of Strategy:
There are five components or sets of issues within a well developed strategy
1. Scope: The number and types of industries, product lines and market segments it plans to enter
2. Goals and objectives: Desired levels of accomplishments- Volume growth, profits ROI over specific time period
3. Resource deployment- human and financial across product- markets, functional departments, management teams
4. Identification of sustainable competitive advantage
The organization needs to examine
- Market opportunities in each business product-market
- Core competencies or strengths relative to its competitors
5. Synergy: When a firm‟s business, product market, resource deployment reinforce one another
Synergy enables the total performance of the related businesses to be greater than it would be otherwise

The Hierarchy of strategies:


Most organizations pursue a hierarchy of inter related strategies- each formulated at different levels of the firm
Three important levels are:
1. Corporate strategy
2. Business strategy
3. Functional strategies
Key Components of Corporate, Business and Marketing Strategies

Strategy Component Corporate Strategy Business Strategy Marketing strategy


---------------------------------- ------------------------------ ------------------------------- -------------------------------------
Scope Corporate Domain- Business Domain-
“Which business shall Target market def
we be in?” “Which product- markets Product line, width, depth
shall we be in? Branding policies
within this business or ind.
Corporate dev. strategies Business Dev. Strategy Prod-mkt dev plan
Conglomerate diversification concentric, diversification Line extension plan
e.g. expansion in unrelated (new customers for existing product elimination plan
business, Vertical integration products or new products
Acquisition, disinvestments for existing customers)
policies

Goals & Objectives Over all across business Depends on Corp goals depends on corp./business goals
Revenue growth Objectives aggregated objectives of specific product, mkt
Profitability across prod.-mkts entry, sales, mkt. share, cont margin
ROI, Earning per share. sales growth. customer satisfaction
new product- market growth
profits, ROI, cash flow
Strengthen basis of
competitive advantage

Allocation of Resources Across businesses among product, mkts across components of a mktg plan-
Across functions shared across functional depts. elements of maktg mix, product-mkt
by multipal businesses within the business unit entry
e.g. R&D, MIS

Source Of Competitive Primarily through superior Primarily through through effective product positioning
Advantage corporate financial, HR, R&D competitive strategy superiority of a component of mktg mix
relative to competitors
Better org. processes or business units competencies for a specific product- market
synergies relative competitors relative to competitors in its
across all industries industry
in which firm operates

Source of synergy Shared resources Shared resources shared marketing resources,


technologies,or functional e.g .favorable customer image competencies, or activities
competencies across or functional competencies across product-market entries
businesses within the firm across products-markets
within an industry
Session 2

STRATEGY FORMULATION

Mission Objectives

Internal Resource Analysis Environmental Analysis

Corporate Social Management


Responsibility Values

STRATEGY CHOICE

Generic Corporate Strategy Generic Business Strategy

STRATEGY IMPLEMENTATION

Culture Structure Leadership Reward Functional Policies


System

STRATEGY EVALUATION
AND CONTROL

Feedback

THE STRATEGIC MANAGEMENT MODEL

Strategic Management is a continuous activity of setting and maintaining the strategic direction of the organization and its business,
and making decisions on a day-to-day basis to deal with changing circumstances and the challenges of the business environment.

A step by step description of the tasks of Strategic Management are given below.
1. Prepare Mission Statement: "Why does the organization exist?" The mission statement provides continued direction and focus to
the firm.
2. Prepare a Vision Statement: "What do we hope for our organization and customers?"
3. Prepare Value Statement: The value statement depicts the priorities in how the organization carries out activities with
stakeholders.
4. Conduct an External Analysis: Look at trends effecting the organization, e.g., economy, demography, competition, technology,
political, and the stakeholders‟ interests.
5. Conduct an Internal Analysis: Strengths and weaknesses, and the trends effecting the organization, e.g., reputation of the
organization, expertise of employees, facilities, strength of finances, patents and intellectual rights, goodwill, etc.
6. Identify Strategic Issues: Identify the major immediate and near-term issues that the organization must address. The key issues
should come from the internal and external analyses. Consider each of the issues. Ask whether it‟s “important” or “urgent.”
Attend to the important issues.
7. Establish Strategic Objectives: Design objectives that are specific, measurable, acceptable to the people. The objectives should be
closely aligned to the mission, vision and values.
8. Establish Strategies to Reach Objectives: Define the general approaches needed to reach the objectives.
9. Develop Staffing Plan: Reference each of the strategies to reach the objectives and consider what kind of capabilities are needed
to implement the strategies.
10. Create an Action Plan: Identify objectives that must be achieved while implementing the strategy, when and by whom.
11. Develop an Operating Budget for Each Year in the Plan: The entire time span the plan should be covered by the budgeting.
12. Strategic Objectives and Performance Objectives: Identify the performance objectives of the management staff. Decide which
board committees will be addressing which strategic objectives.
13. Implementation of Plan: To monitor and evaluate the status of implementation design reporting and control systems to identify
current issues and any additional resources needed to implement the plan.
14. Specify How Plan Will Be Communicated: The plan should be known to everyone in the organization. Decide how we can make
this possible.

Session 3: SWOT ANALYSIS - A FRAMEWORK


Environmental Analysis
Strengths: Weaknesses:
-Powerful strategies, skills, competencies -No clear-cut strategies
-Financial resource -Weak balance sheet
-Brand power -Higher costs
-Economies of scale -Lacking key skills
-Cost advantage -Lower profitability because----
-Superior technology -Too narrow product range
-Strong A&SP -Weak brand reputation
-Innovative skills -Weak dealer network
-Processes -Underutilized capacity
-E-commerce technologies -Low on product quality, R&D, tech know-how
-Superior customer service -Not attracting new customers
-Wide market coverage
-Alliances, JV’s access to technologies
-Membership of regional blocks
Potential opportunities: Threats:
-Serving new customer groups -Entry of new powerful competitors
-Expanding new markets -Loss of sale to substitute products
-Existing technologies to enter new product lines -Competition from startups
-Using e- commerce to cut costs -Intensifying rivalry of competition
-Technological changing
-Vertical integration -Innovation by rivals
-Falling trade barriers in attractive markets -Government policies
-Chances to improve market shares -Adversely changing foreign exchange rates
-Sharply rising demand -Changing customer needs
-Acquisition opportunities of rival firms -Demographic changes
-Alliances, joint ventures opportunities -Suppliers drying up
-Availability of emerging technologies

Framework for Industry and Competition Analysis


1. Dominant Economic characteristics of the Industry (see attachment I)
2. Competition Analysis
 Threat of potential entry, assessment of entry barriers (Strong, moderate or weak force)
 Competition from substitutes (Strong, moderate or weak force and why)
 Power of suppliers (Strong, moderate or weak force and why)
 Power of customers ( Strong, moderate or weak force and why)
3. Driving Forces, what is causing industry, competitive environment to change
e.g. Internet, globalization, innovations, technology, e- commerce, entry or exit of a major firm, govt. policy, lifestyle
changes.
4. Competitive position of major companies or strategic group’s understanding helps better early moves
5. Competitor Analysis. (See Attachment II)
 Strategic Approaches and moves of key competitors
 Whom to watch and why
6. Industry Key Success Factors
 Factors that make the industry attractive
 Factors that make the industry unattractive
 Special industry issues problems
 Profile outlook (favorable/ unfavorable)

Keep in mind the following while doing industry and competitive analysis.
The task of analyzing a company’s external situation cannot be reduced to a mechanical exercise in which facts and data
are put in and definitive conclusions pour out.
Strategic analysis always leaves room for differences of opinion about all factors add up and what future industry and
competitive situation will be.
Industry Analysis - Dominant Economic Features
The factors to consider in profiling an industries Economic Features is fairly standard
This is where analysis of industry and competition begins.
Key features are:
- Market size
- scope of competitive rivalry
- Market growth rate and position in Industry Life Cycle
- Number of rivals and their relative sizes, fragmented, concentrated in clusters, dominated by few rivals
- Number of buyers and their relative sizes
- Extent to which rivals have backward or forward integration
- Distribution channels used, type and extent, trade terms
- Pace of technological changes in production process, innovation and new product introduction
- Extent to which products and services of rival firms are differentiated
- Extent to which rivals can realize economies of scale in purchasing, manufacturing, transportation, marketing or
advertising
- Whether industry activities are characterized strong learning and experience effects such that unit costs decline as
cumulative output grows.
- Whether high level of capacity utilization are crucial to achieving low cost production efficiency
- Capital requirements
- Ease of entry and exit
- Industry profitability
A industry’s economic analysis is important for its implication for strategy formulation

Session 4: Porter 5 force


Session 5: Identifying company competencies and competitive capability

Competency: A company’s competency is the product of leaning and experience and represents proficiency in
performance of an internal activity.

Examples:
Expertise in a specific technology,
Skills in working with customers on new applications and product use
Expertise in Just-in-time inventory management
Expertise in creating an effective advertising campaign

Company’s competencies are normally a bundle of skills, know-how and resources rather than a discrete skill or a
resource

Competitive Capability: A company’s capability to become a meaning competitive capability when customer considers it
valuable and beneficial.

When it helps a company to differentiate from competition

Core Competency: a valuable company resource is something a company does something better relative to other
internal activities.

A core competency can relate to several aspects of its business, e.g.


- Speed and agility in responding to new market trends
- Integrate multiple technologies to create family of new products
- Manufacturing skills in high quality products
- Expertise in building networks and systems that enable e- commerce
- Customer service, creating and operating systems for filling customer orders accurately and swiftly

A company may have more than one core competency but usually no more than 2 or 3
A core competency gives a company Competitive Capability and thus qualifies as a genuine its strength and resource
A company’s core competency lies in its people, and in its intellectual capital and not in its assets and balance sheet

Distinctive competency:

A distinctive competency is something a company does better than competition.


It is a competitively superior company resource.
A core competency becomes a basis for competitive advantage only when it is a distinct competency.
A distinctive competency become empowers a company to build competitive advantage

Determining the Competitive Value of a company resource

Differences in company resources account for why some companies are more profitable and more competitively
successful than others, the sustainable competitive advantage

 Is the resource hard to copy? More difficult and more expensive it is to imitate, greater is the potential competitive
value.
 The resource uniqueness, location and protection
 The life of the resource, the longer it lasts, greater its value.
e.g the value of Kodak’s resource in film and film processing is rapidly being undercut by digital cameras
 Competitive superiority of resource
e.g Coca cola’s marketing skills are presumably better than Pepsi cola’
Mercedes Benz’s brand name is more powerful than BMW

Can a resource be trumped by different resources/ capabilities of rivals’


Profiling competitors’ - Objectives and Strategies
Weapons that rivals use in their efforts to out compete one another

Competitive Strategic Market share Competitive Strategic Competitive


Scope Intent Objectives position Posture Strategy
---------------- ---------------------- --------------------- ---------------------- --------------- ------------------------

- Local - Be dominant - Aggressive expansion - Getting stronger - Mostly offensive -Striving for
leader via acquisition and on the move leadership
for low cost internal growth
- Regional
- National - Overtake leader internal growth - Well entrenched - Mostly defensive - Focusing on
market niche
- Global - Be among top 5 - Expansion through - Stuck in middle -Aggressive risk taker
organic growth via
- Move into - Try to move from - Conservative follower - Focusing on
top 10 - Expansion weaker to stronger differentiation
- Overtake a acquisition position bases on
particular rival - Quality,
- Hold on to - Losing ground - Service
- Maintain position present share -Technology
-Range
- Just survive - Give up share for -Image
short term profit - Value

Product Life-Cycle Perspectives


Key Aspects:
At the product level: We need to focus on different issues and priorities at different times in the PLC
We cope with change factors along the way

At the Range Level: This involves having products at different cycle stages to ensure overall balance in volume, growth, profitability and cash flow
It may also involve rationalization and product improvement exercises
At the Product Category Level: Stages in PLC has a major bearing on how much effort or resource we are prepared to or is sensible to commit

Life Cycle Marketing Actions:


New Products marketing action would be geared to:
- Maximizing growth opportunities
- Establishing share
- Achieving volume
Key task is to make early adopters be aware of your product, know about your product, try it and buy it
At this, stage generally, products are simple, distribution limited and prices high. Advertising is generally heavy.

Growth Stage Early maturity Late maturity/Decline


Convert non users Maximise share Improve productivity
------------------------- ------------------------ -------------------------------
Convert non- users Reduce price in real terms Offer value for money
to attract price sensitive buyers through cost reduction programs
and special value options

Develop new segments Improve/ re-launch product Later perhaps increase prices
as product is refocused and
repositioned on narrower segments

Maximise exposure in Make additions to product Change focus of advertising


distribution channels line with emphasis on reminder
function

Improve quality Motivate channels to


add new features maximize volumes Rationalize range and reduce
variety
Focus advertising Focus advertising on
on developing awareness new features and
and encouraging trial brand loyalty
Strategic Positioning

Specifies how a business brand or a product should be [perceived by the customer relative to competition
This is strategic and is a long-term effort to give advantage over competition
Strategic Position:
 Differentiates from competition
 Resonates with customers
 Drives strategic initiatives
 Expresses the value/ culture of an organization
 Is the face of business strategy

Two case studies


1. Virgin Atlantic Airlines
2. IBM

Strategic positioning options:


1. The quality with a defined product space- Mercedes car
2. The value option- Hyundai, Amul, West-side stores, K-Mart
3. The pioneer-HP< IBM
4. Narrow product focus- Ferrari cars
5. Target Segment focus: Pepsi, Coca-Cola, Star One
6. Product category: Dove
7. Product Attributes- Fair & Lovely, Close-up
8. Emotional, self-expressive benefit –Gap, Levi‟s,
9. Competition position- Visa, Avis
10. Organizational intangibles- Maruti service stations, Visa international acceptance

The Process of Positioning

Segmentation Co
Competitor
analysis

Choice
Choice of Analyzing
Customer their offering
targets

Customer Developing an
insights edge

Matching Why yours is


offering to needs better choice

Position your
offer
Session 6: Culture

Culture: Is the synthesis of shared values, a common mind- set, characteristic behavior & symbols of various kinds.

Values: What members of an organization collectively see as important and this tends to guide their behavior.
E.g. Order, conformity, status, growth, job security, respect for authority, openness, loyalty product quality, risk taking, ethical behavior, flexibility.

Mind-set or paradigm: Consists of shared set of assumptions- „Chinese products are of poor quality‟

Characteristic behavior: Key aspects include, management style, Dress, relationships and interactions

Symbols: Symbols of corporate culture- image created by a firm‟s identity programs, impressions created by corporate office

Culture change is of vital importance in any program of transformation of an organization

The roots of corporate culture are many and complex.


- The geographical origin of the organization
- Source of senior managers
- Organization‟s core activity
- Organization‟s history
- Organization‟s systems and procedures

Four culture types:


The role culture:
Rationality, order, integrity, service efficiency, conformity, seniority, stable environment- large bureaucratic organizations
Public-sector organizations

The power culture:


Dominated by one individual at the center who controls all resources and takes virtually all decisions
Such organizations achieve outstanding performance if the person has a strong sense of direction, sound judgment Integrity, can win loyalty through
setting examples

A weakness of power culture org. is that it tends to lose its most able people who become frustrated at their lack of involvement in key decision
areas.

The Person Culture:


An individual is paramount. The org. systems and structure are designed to support the work of key individual wealth earners. Partnership firms, law
firms, accountancy and consultancy firms are some of the examples

The problems arise when the firms become large. This may lead to anarchy

The Task Culture:


The power is widely distributed and is based upon competency rather than charisma of holding an office
The values would include- achievement, teamwork, openness, trust, autonomy, personal growth and development
It is an adaptive culture responsive to fresh ideas and suits highly educated, intelligence workforce and is found in Service organizations, R&D
organizations.

The organizations has flat, project teams or taskforce based structures

Some other types of cultures:

Entrepreneurial Culture: A mix of power and achievement culture defined by young organizations those are lively and exciting places to work.
Family Business Culture: Common element as power culture. Two subcultures- family members and the rest characterized by traditional practices,
paternalist attitudes, tend to cultivate family atmosphere.

Cultural Change:
See change management

Vision:
Is a description of a desired future state of the organization, whereas Mission is about ultimate purpose, values and standards.

The term contains the idea of innovative imaginative thinking challenging conventional thinking and points the way to new opportunities
Development of vision involves thinking freely without constraints of the past or cultural limitations
It is about dreaming ahead.
It is however difficult to develop a radically new mind set or paradigm
Examples of visionaries who built entire organizations on the basis of a vision are Ray Kroc – MacDonalds
Richard Branson- Virgin Atlantic, Narayan Murty-Infosys. JRD Tata

Developing a Vision is a top management function

1.Top managements go through a consultative process inviting ideas or suggestions from the members of an organization before developing a
Vision Statement.

Or the chief takes the lead, develops a Vision and seeks to share it with others, and seeks their comments
Whatever the process, the vision is owned and shared. Some steps that may be needed are:
- Create arenas or for a within the org. at several levels where possible alternate futures are discussed
- Meet members of the org. face to face and expose them to new thinking
- The vision must be „launched/ presented‟ to the members
- The vision must be exciting and inspiring. It should be believable
- Members must be given some idea of turn the vision into reality

Jack Welch Statement of Vision for GE

A decade from now I would like GE to be perceived as a unique, high spirited entrepreneurial enterprise
- company known around the world for its unmatched level of excellence. I would want GE to be the most profitable highly diversified company on
the earth with world class quality leadership in every one of its product lines

Creating a sense of mission:


Two schools of thought:
1. Mission as a statement of business strategy
2. Mission as a philosophy, values or even ethics
First approach defines a company's commercial rationale: What business we are in? What business should we be in X years?
Companies should not define their businesses two narrowly. E.g. an oil company may define its business as Energy Business

The mission should ideally appeal to both minds (strategy) and hearts (cultural values) of the organization‟s members

The definition of mission involves four elements:


1. Purpose What is the company for? e.g. Cipla might define as „To offer life saving drugs the world over at affordable prices. Some
companies define their mission in terms of shareholder value
2. Strategy: Defines markets in which the business will operate & how it will build a competitive advantage.
3. Behavior Standards: The standards of performance and the patterns of behavior that will be required and making sure that they will be
achieved in practice.
4. Values: The underlying beliefs which give a moral force to the other aspects of the mission
Ashridge Mission Model:

A strong sense of mission exists when the four elements of mission reinforce each other

Purpose

Mission
Strategy
Values

Behavior Standards

Successful mission depends upon how far the individual‟s personal values and beliefs match with those of the organization
In order to promote a strong sense of mission careful recruitment is very important
People don‟t change values when they join an organization.

A pharma company‟s mission statement:


We will be the leading healthcare company by providing the best products and services for our customers around the world, consistently
emphasizing on innovation, operational excellence and highest quality in everything we do

Principles we are committed to are


Customers: Understanding and meeting their needs
Employees: Respecting them as individuals and providing opportunities for their personal growth
Stockholders: Achieving long-term growth & the best return for our investors

Through teamwork, quality our customers require, business excellence- acting ethically & continuously striving for excellence in our performance.

Strategy: We are unique in our product and service breadth and our technological depth. We will use these strengths to be always ahead of our
competitors- have competitive advantage on sustainable basis

Session 13: Change management

Change Management: Creating a learning organisation

Most industries and their competitive environments are rapidly changing.


This change is not confined to high-tech or knowledge intensive industries, e.g. software, health-care, biotech but also to once stable
industries e.g. banking, insurance, retailing, food-processing…

When the change come, organizations cannot rely on existing source of competitive advantage, but learn to create new one as their
environments change.

Building and sustaining competitive advantage amidst rapid change requires the organizations to learn new technologies, new markets
and new ways of managing.

In future the only source of sustainable competitive advantage will be to learn new skills and this can be traumatic.
Managers and employees at all levels resist change.

Management practices of learning organizations:

Continued learning

Frequent rotation of mgrs

Decentralization

Learning
Openness & diversity of ideas
Organization

Multiple experiments

High tolerance to failure

Continued rotation exposes a manager to new ideas and insights. A manager tends to get emotionally attached and promote current
strategies. Continuous rotation overcomes this tendency and helps the manage to learn new functional skills, new perspectives and
competencies
Continued training of personnel helps to overcome resistance to change as it removes the fear of becoming obsolete and thus loose
promotional opportunities/ career advancement- the main obstacles to change.

Successful companies have long commitment to training as it benefits both the individual and the organization

Decentralization of decision making to some degree is important. Lower level mangers. front- line managers are the first to spot new
opportunities or problem areas

Encouragement of multiple or parallel experiments is better bec of high failure rates of new initiatives
It also helps in a superior idea getting rejected. Parallel experimentation helps choose better technologies, product standards,
marketing approaches and management methods. This also encourages a healthy internal competition.

High tolerance for failures: Many innovative companies tolerate failure and reward achievements

Openness & diversity of viewpoints: True openness by managers to new ideas, suggestions and criticisms is rare
Successful organizations listen to new ideas but encourage diversity of viewpoint and perspectives thought the firm
Excessive control makes the manager myopic.
We can broadly classify organizations into three types.
Learning organizations that consider change as an opportunity & renewal
Static Organizations that focus on doing better what they are doing. They do not promote new learning

In between organizations that change after overcoming varying degrees of resistance. They take time but change. Most
organizations fall in this category.

Common reasons for organizational resistance to change:


- Lack of awareness for need to change
- Lack of interest in opportunity for change
- Incompatibility of change with existing values
- Fear of cannibalization
- Fear of personal loss

Change Steps:
1. Sensing the need for strategic change
2. Building organizational awareness for this need
3. Stimulating debate for alternative solutions
4. Strengthening consensus for a preferred approach
5. Assigning responsibility for implementation
6. Allocating resources to sustain the effort

Case: Transformation of GE
Before Welch took-over GE was profitable and grew slowly. Its home appliances, aircraft engines, lighting plastics, consumer
electronics & motor businesses were mature, profitable.
Each business unit was finally attuned to competing in its own environment with competition and technology fairly predictable and
stable.

The process of transformation from a static to a learning organization that is agile and lean was not easy.
It took two decades to implement many new management practices that make change an acceptable part of working at GE. The figure
below shows implementation of various changes that has changed GE to a learning organization.

The steps Mr. Welsh took the following steps:


1. Make GE a „boundryless‟ organization meaning people in one department/ division talk with people in others and at all levels, to
share ideas, resources and insights. Ideas can also come from customers, vendors even competitors
Corporate Transformations in the 1990s: Making GE Boundryless.

1980 1986 1988-1992 1994


GE vulnerable to change Reduce peripheral Form strategic alliances Reduce SBU walls
businesses even more

Slow growth Sell no performing Work out Invest in Asia/Europe


assets
Average earnings Breakdown strong Team with suppliers/ Foster continual training
SBU lines Customers & development
Big Bureaucracy Acquire strong perform share knowledge & skills Encourage best practices
ers elsewhere across SBU‟s and benchmarking
High divisional walls Delayer gement Promote risk takers Promote common vision
management
hierarchies
Lots of protected turf Adopt new reward Invest in streamlined Hire people with
systems product development time entrepreneuri tendencies
al
Resistance to change Six sigma

Welsh believed that a boundary-less organization would change faster because it will learn faster

2. Welsh dissolved many layers of management. It lead to layoffs. GE became a thin organization in many units
3. Each business unit was expected to become no 1 or no. 2 in its industry or were sold away.
Several businesses were sold away that were profitable
4. Acquired several new companies. Mr. Welsh acquired 100‟s of small companies to bolster GE‟s growth rate

Mr. Welsh of course resistance from lower level managers who feared erosion of power base. Some veterans left others were trained.
Over time he introduced several new initiatives
- Managerial rotation and training
- Promote openness and idea exchange at all levels
- People with the most workable suggestions were given the authority to implement

5. GE introduced six sigma to revamp all its operations, core processes to promote those practices that best support and improve
quality objectives of six sigma to identify and eliminate all sources of waste, unleashing in greater improvement in quality and
productivity
6. GE trainees graduated to „black belt‟ in process improvement
7. GE became aggressive to expand into new markets and into new service-based businesses i.e. investing in Asia
8. Expand services businesses to expand to improve profitability of its major businesses

Some major service areas are Aircraft Engines, Medical Systems, Power Systems, Lighting Plastics, and transportation systems.
They also moved closer to customers by setting up service operations on customer sites e. g. on-site repairs.

They adopted change as a way of life.

Potrebbero piacerti anche