Strategic Analysis; Tools & Techniques - Coursework 2
This assessment is 50% of the overall grade
Present a current critical strategic analysis of ONE Business Unit within General Electric
You are required to cover the following topics covered in the module:
You may want to focus the analysis on a specific product. This is fine but you will need to make the focus of the analysis clear to the reader.
The following structure is required for the submitted report:
The coursework is an individual piece of work. It will be 3,000 words, inclusive of appendices (+/- 10%). Please note that text in diagrams or tables will count towards the word count.
Hand in date: tbc
It is important that attention be focused on a strategic appraisal of the company as opposed to providing lots of interesting facts over what interests you or what you find on the internet. Assessment will focus on students’ abilities in applying strategic models and frameworks in a coherent manner that enables them to develop a clear strategic view of the strategic position being studied. You do not need to reference many academic sources in this element of the assessment, but you must reference sources of company or market information. Furthermore, you must reference sources for any theoretical background that you decide to include.
Please remember that an assignment is not meant to DESCRIBE what you have found. Analysis means commenting on your findings and EXPLAINING what the evidence suggests about the company.
Strategic Analysis; Tools and Techniques
Strategic analysis is determined as the procedure that includes researching the company’s business atmosphere in which they operates. This report aims to demonstrate understanding of strategic analysis, techniques or tools applied to the SBU or strategic business unit of GE (General Electric) as the essential formulation of strategic planning and effective working of the organization. General Electric to be the multi-divisional organization emphasize particularly on the GE Power as their prime SBU to drive leading position in the work. With the gas and oil supplies becoming minimal across the globe, the scarcity of resources is challenging corporate to gain success within business environment. The organization found struggling to utilize limited resources within efficient and best ways along with scarcity still impacting decision of business managers.
The report discussing current significant strategic analysis of SBU within GE, the strategic positioning, value systems and resources of the organization will be evaluated. The BCG matrix as product mix in the SBU will be analysed with providing potential future tactical growth direction to GE for ultimately enhancing their business competency within the marketplace. General Electric corporate is effectiveness to administer complex business portfolios with distinctive services or products. The company having multiple units, every unit provides unique services, products that differ within the performance and holds varying future prospects. The several strategic analysis tools or techniques will be usually used to define competency of the SBU namely ‘GE-Power’ along with outlining future prospects taking place in the worldwide marketplace.
Brief strategic position of the company
General Electric organization is the globally diversified range of financial services and technology facility corporate. The organization’s services and products involve generation of power, household appliances, aircraft engines from industrial products, medical imaging to consumer and business financing along with water processing (Bloomberg 2020). The company was founded in the year 1892 and at present with varying business segments is competing within broader range of sector worldwide. The present GE strategy within the power division has enhanced business’s international marketplace acknowledgment due to latest technology-based goods and services, for instance grid facilities. All through their improvement, specifically within guidance of Welch’s and Immelt leadership, the organization has encountered several modifications that created potential competency and diversified portfolio which utilizes synergistic tactics leading towards business growth.
Figure 1: Strategic performance of GE
Source: Bloomberg 2020
Along with this, the strategic positioning of GE is more related to their strong income statement with the company generating revenue of worth AUD 26,238 million. The net income of the company has valued AUD 728 million in the year 2019 (Bloomberg 2020). Under the guidance of Welch, GE leading several changes has been largely benefited with partly downsizing the business. The end outcome observes to modernize management and business productivity. Still after the appointment of latest CEO in GE, Immelt decided on emphasizing over the techniques and approaches that has made the organization successful within past (Immelt 2020). It is argued that General Electric gained leading position in globe due to the business unit framework in which divisional principal proceed as miniature trade owners, in specifically through acknowledging potential desires or demands of potential consumers. The core competency of GE including shared knowledge, patent, skilled labour and resources has been formed possibly by diversification. For instance, GE Power as critical SBU of the company has diversified its market reach within China and India to gain strategic position by fostering healthier relationship, improve brand reputation, profitability and efficiency (Ge 2020a). It has helped GE to maintain consumer satisfaction and business consistency. Irrespective of this, the company still need to evaluate their success elements and recognize aspects promoting accomplishment of better outcomes.
In consideration of the existing General Electric Strategy, it is arguable that the organization's strategies would still success on the international market. The reason behind such is the effective utilization of technology within the product development that offer strong brand acknowledgement in the global market. It allows GE to be a leader within innovation, enhance sales of products and company's acquisition knowledge with the six-stigma paradigm would improve business development as well as quality maintenance of services or products.
A critical evaluation of the resources and value systems of the company
The competency of GE offers the SBUs including power division or GE Power with the strong foundation of strategic and financial resources as well as to unveil future marketplace opportunities. In here, the capabilities of GE are explored in context to value chain model and analysis of resource audit.
The resources are the assets of the business, capabilities refer to the capability of exploiting resources and competencies have been cross-functional coordination as well as the integration of capabilities. The resource audit has been considered to recognize the competent resources of the GE and ways they generate values into the system.
Resource Audits and Value Systems
Leadership is the core competency that offers value addition to the organisation and releases the newest marketplace accessibility. Mudambi and Puck (2016) leadership is the value proposition that is inimitable. In such a context, Immelt's motivational approach and democratic leadership have led transforming the organisation towards the innovative culture that is largely noted as ‘imagination of work’ in the GE. Thus, leadership has differentiated the company from several corporations. Under the Immelt guidance, the third-parties, investors were offered the priority that yields effective consumer loyalty and healthy relationship as the valuable corporate capability (Immelt 2020). For maintaining corporate competitive benefits, Immelt reached potential stakeholders with the driven method of grasping the environmental opportunity that has ultimately resulted in expenditure competitiveness along with operational efficiency (Ge 2020b). The emotional intellect of Immelt has offered a greater intensity of motivation to staff. Thus, a higher standard of quality administration was achieved.
GE-Power is amongst several strategic commerce units of General Electric holding global reputation within power technologies and power generation with the utilisation of self-governing industrial applications as well as power creator (Ge 2020a). The organisation has improved gas and steam turbines that constitutes significant resources contributing towards the improvement of infrastructure, facilitating the company to serve the consumer in more than 140 nations.
Innovation and Technology
It is observed that General Electric has focused more on technology and facilitating the digital platforms that drive the company being highly innovative. With the increase in marketplace demands, the organisation has countered by venturing within technological advancement for instance initiative of a staff retreat, imagination initiatives and process mapping. It has helped corporate to deal with several complexities and dynamism of business atmosphere by extending marketplace prospect with similarly profiting consumers. With the investment of nearly AUD 100 million within technology, the organisation became capable to enhance access and decrease cost, amplified product quality along with delivering developed consumer value (Ge 2020b). Specifically, the inclusion of technological appliances and growth in artificial intelligence noted to drive competency in improving the financial prospect of the energy industry.
The consumer-oriented programs established in the leadership of Welch has helped to transform the marketing function of GE and led the focus on process improvement, productivity and created learning atmosphere. The learning approach has noted to influence consumers and core business growth of the company, where the new strategies such as ‘imagination at work’ and ‘ecomagination’ are fostered (Ge 2020b). Ultimately, General Electric continuous to invest within technologies and more distinctive products that support corporate to enter the newest market through divestment or acquisition within different industries. The respective strategic emphasis has allowed differentiation benefits resulting in the manufacturing of innovative services and goods that developed on consumer focus.
The General Electric Company’s SBU namely ‘GE Power’ employs a workforce of nearly 57000 developed over the ‘GE Global learning’ that highlights the commitment of Immelt towards education and skill training of the staffs (Immelt 2020). The respective talent management method has offered staffs with necessary function and skills and business knowledge allowing a structural modification that encourage GE training within varying centres. In addition to the training program by General Electric, the leaders attempted to modify the old process by recruiting the newest staff who adds focus over imagination breakthroughs. Even though the training program cost higher than AUD 1 million, this motivational method has been cheaper and highly effective (Ge 2020b). Thus, it noted to be a well-built competency for improving the business model of General Electric.
As mentioned above the utilisation of synergic tactics has helped towards corporate development leveraging distinctive diversified portfolio. The respective competency was depicted by the reduction within income levels resulted in the decrease of industries from the organisation's portfolio.
Value chain analysis of GE Power as SBU of General Electric
Value chain analysis is the systematic approach of analysing the internal practices and ways they communicate define the critical sources of competitive benefits (Mudambi and Puck 2016). For GE Power, the value chain evaluation is helpful in disaggregating the organization into strategically relevant actions, ultimately building a clear overview of interior organization.
Figure 2: Value Chain linkage
Source: Mudambi and Puck 2016
Operations: In consideration to the General Electric operation, GE-Power incorporated with the PCI or Power Cost Inc that is independently owned-energy organisation help connecting energy functions towards energy dealing for an ultimate software solution (Ge 2020a). The other operational expense involves energy salaries and manufacturing, for illustration, the standard salary of any supervisor is AUD is 97,522. The higher venture in R&D would allow General Electric to become the marketplace cost leader along with maintaining the product quality through the utilisation of innovative technologies.
Inbound logistic: General Electric noted to have multifaceted and inbound logistic activities that include the delivery of various types of raw material with the energy expenditure constituting a large share within the production cost (Ge 2020b). The provision of services and tools that formulate supplies to be a highly efficient addition to the increased value of the company's resourcing techniques. It supports the corporate to attract better inputs of high quality and maintain associations with potential suppliers.
Outbound logistic: The chosen organization provides one-third of the worldwide electricity along with supporting higher than nearly 100,000 individuals. The innovative technology of the organisation has supported 64% of business efficiency, where digital offers have helped to build power highly trustworthy, sustainable, reachable and affordable. As other SBU, GE-Power has also noted to utilise web-based logistics, Oracle transportation administration along with transformation management that help in logistic planning, measurement and execution within General Electric (Ge 2020b). The grid services have been critical value addition to the business supplies.
Sales and Marketing: The intensive marketing tactics by General Electric is currently awarded power facilities with the huge contract within history valuing higher than AUD 10 billion (Ge 2020b). It was done to sustain the critical energy volume within Sonelgaz and Algeria involving 68 improved up-gradations of the gas routes. The organisation utilise online and offline sales channel. The corporate regardless of having a chief brand position in the world, continuous to advertise their brand by reducing services or products costs, workplace established in various locations and strong promotional strategies applied.
Services: The activities of GE-Power emphasize equally on differentiation tactics and cost leadership with help of which its efforts to obtain newest consumers (Ge 2020a). Distant from being the cost leader, ‘GE-Power’ as the SBU have been capable to deliver large diversified services or products to the consumers, creating greater values in comparison to other arrivals. The strategic business unit emphasizing on innovation and research is likely to be benefited for their success to generate higher consumer satisfaction that adds to the competency of General Electric.
A critical evaluation of the product/portfolio mix within the SBU
Figure 3: BCG or Bolton Consulting Group matrix
Source: Shanbhag et al. 2016
The BCG Matrix or Bolton Concentric Group matrix would be focused to analyse the GE-SBU in relation to selected variables. It is determined as strategic tool utilised for multi-products, the multidivisional organisation to evaluate diversifying portfolios and allocation of resources simultaneously (Shanbhag et al. 2016). The market growth rate and relative market share might be valued between 1 and 0 depending on their strategic competency. In order to acknowledge the marketplace status of SBU like ‘GE Power’ certain calculation is produced depending on the data offered by General Electric.
|Service/Products||Revenues in 2016 (AUD)||Revenues in 2017 (AUD)||MGR||Market Share in 2017|
|GE Gas and Oil||6533||6110||6%||11.3%|
|Gas renewable energy||3763||4501||20%||8.3%|
|Energy lightning and connection||8657||5957||31%||11%|
Table 1: Market Status of GE-SBU
Source: Ge 2020b
The analysis of the above figures depicts that General Electric Company has been experiencing declined market share and market growth at the time of recession in the past years. Although gradual in marketplace share, specifically within aviation and power segment has facilitated the company to be segmented as cash cow relating to the high marketplace share and slower market development. It is depicted by the data, where GE-Power found generating nearly 24% in the industrial segment income and almost 28% within industrial division profits (Ge 2020b). It can be observed that the energy sector offers optimism for the business's greatest time in the coming years.
Moreover, the decline performance of the energy and power sector within current years would be because of fluctuating fuel costs taken place within 2016 and 2015 (Baumeister and Kilian 2016). The present business environment having stable fuel cost, the business unit is expected to gradually enhance their expenditure on gas and oil to obtain a larger market share within varying sites. For eventually becoming a Star and Question mark, the GE-Power is suggested to emphasize on technology, product innovation with managerial expansion over the international market place as well as optimising resources utilisation.
A critical analysis and evaluation of KEY future directions for strategic growth
Figure 4: Product/Matrix model
Source: Gurcaylilar-Yenidogan and Aksoy 2018
In the process of evaluating of essential future course for tactical improvement, the Ansoff matrix as a product/matrix model found effective. The growth matrix has been a strategic planning technique that offers the framework to support executives, marketers and superior managers to device tactics for future developments (Gurcaylilar-Yenidogan and Aksoy 2018). Within the case of General Electric with mainly relying on GE Power has their critical SBU, the application of the Ansoff Matrix would support marketers to evaluate the threat included while moving within the specific directions. In consideration of the future direction of the GE Power, the energy sector is shifting rapidly towards digital technologies that would enhance the business value chain. For achieving so, the marketplace penetration as a development strategy is likely to be favourable for GE with the adaptation of modern technologies. In future, the strategic business unit may enhance its competency by recognizing the newest consumers in the current market through more improved distribution and promotion. The GE-Power has observed to characterise by the advance technology that supports efficient utilization of natural resources (Ge 2020a). With undertaking such a plan for improved infrastructure, the GE-SBU become large technology suppliers offering gas turbines to Sravanthi energy that helped it enhance business market share (Sinha 2020). In consideration of such aspects, the modest power and energy services or product refinements would help the company to achieve successful marketplace penetration as a critical strategic escalation option. Moreover, the market development tactics mean the company tries to extend into the newest marketplace utilizing their current offering or with fewer services or products development (Gurcaylilar-Yenidogan and Aksoy 2018). Nearly 1.2 billion individuals across the globe have found deprived of power or electricity and projected to increase with 50% power requirement within the coming 20 years (Oecd 2020). The demand for high power and gas generators is likely to grow. This improves the business opportunities for GE-Power to utilize their distinctive product or service technologies to leverage into the newest marketplace, particularly the Indian market. The company with innovative gas turbines is more likely to acquire a competitive edge over potential rivals. In consideration of the strong experience of the company in merger activities, GE-Power might lead a merger with Sravanthi Energy for increasing market reach and more investment made in R&D (Sinha 2020). The business unit has significant local knowledge together with improved market research would enhance the products and services quality.
Moreover, some of the strategic direction of the organization relies mainly on the adaptation of the newest energy technologies and strong R&D (Hussain et al. 2017). The strategic growth achieved through digitalized central generation for the mix of various fossil fuels and renewable energies is favourable to enhance power supply, confirm continuity of affordable, safer as well as reliable electricity. Additionally, the digital grid making the multi-directional flow of energy easier, confirm the balance within demand and supply along with transmitting price signals as well as information. The digitalization would add potential value to the energy industry.
Conclusion and Recommendations
In affirmation to avoid discussion, it is concluded that the energy sector in which General Electric holds operation, competent value chain improves the internal capability of the organisation to gain profitable market research. The strategic business unit like GE-Power needs to capitalise on technological and research strength to profit from increased marketplace opportunities. At present over millions of individuals does not have accessibility to electricity and this has described as the key element towards industrial growth responsible for increasing demands in energy. While developed infrastructure, fuel diversification and effective energy system has noted to cost further ventures, it has potential to benefits GE to gain reliable and secure power services. GE's improved storage and distribution technology have facilitated higher customer satisfaction within an energy distribution operation.
Key points for strategic development-
The company is likely to be under stress to adopt the latest digital technology for coping with demand and outage fluctuations. The whelming data and workforce may become challenging in future, where digital technology found effective to resolve these. The company is recommended to remain committed to approve energy grid development to unite energy utilization and production has noted to remain profitable as well as successful (Aguero et al. 2017). In case the value chain becomes entirely digitalised, the system would develop into sustainable, affordable and reliable aligning the data to merge with machines along with improving value throughout the business operation.
In consideration of the benefits provided to the consumers, it is suggested to use digitalized service or product delivery platforms to ultimately balance energy demands, efficiency, accessibility and supplies within the business market. Even as the strategic business unit is recommended to operate the latest technology, modern machines or equipment, it is affected to make more investment in the same. The customer’s preference needs to be grasped continuously, where strategic partnership and coordination is beneficial to turn challenges into profitable opportunities.