R1901D7210658 STRATEGIC ANALYSIS OF GENERAL ELECTRIC

University of South Wales

Assignment 2

Strategic Analysis; Tools and Techniques (18393)

Present a current critical strategic analysis of ONE Business Unit within General Electric
74109939
Juston Mubwandarikwa
13th September, 2020
 8Table of Contents

1.0 Introduction……………………………………………………………………………....2

2.0 Discussion…………………………………………………………………………….….2

2.1 Strategic Position of General Electric……………………………………….…...2

2.2 Identification of Strategic Business Units………………………………………...4

2.3 Evaluation or Resources and Capabilities…………………………………………

2.4 Value Chain Model……………………………………………………………….5

2.5 BCG Matrix and Strategic identification………………………………………….7

2.6 Future Directions for Strategic Growth……………………………………………

3.0 Recommendations…………………………………………………………………….….9
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4.0 Conclusion……………………………………………………………………………....10

5.0 References……………………………………………………………………………….11
 Introduction
The process of strategic management involves the planning and development of processes
that may aid in the achievement of the objectives and goals of a business organization.
Strategic management thereby includes several processes of not only evaluating the business
environment in which the organization operates but also deciphering how the threats may be
prevented and the opportunities may be utilized in the most efficient manner (Wheelen et al.,
2017). This is done with the help of setting appropriate goals and targets and evaluating the
available strategies that may be useful in attaining those goals and objectives based on the
results of the evaluation of the external and internal business environments. Another
important aspect of strategic management is the process of planning the direction in which
the business activities and functions will be conducted as well as how the various resources
available to the organization will be allocated and utilized (Lasserre, 2017). In this regard, it
may be mentioned that strategic management is one of the most essential processes that the
business organizations may engage in to ensure that their goals and objectives are achieved
efficiently and effectively. General Electric is recognized as one of the major American
multinational organizations in the world. The company was founded in the year 1892 and
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specializes in several industries, as itSTRATEGIC ANALYSIS
is a conglomerate in termsOF
of GENERAL
its business ELECTRIC
activities and
operations (Ge.com, 2020). The specific fields in which the company specializes include
power, healthcare, aviation, digital industry, renewable energy, venture capital, financing and
additive manufacturing. The following sections of the research will provide a detailed
analysis of the strategic business processes of the company with a particular focus upon the
operations of the different strategic business units. In doing so, the strategic position of the
company will be analyzed in terms of the resources and capabilities that are available to the
organization as well as the position of each strategic business unit and the strategies that must
be adopted for each. The key direction in which the business operations of the company must
be adopted for strategic growth will also be discussed in detail.

Discussion
Strategic Position of General Electric
General Electric is an American multinational conglomerate that specializes in a variety of
industries and running its business operations and functions in various regions across the
world. The legacy of innovation at General electric follows from Thomas Alva Edison's
invention of the light bulb, after which the organization has enabled the pioneering of world-
 transforming technologies, aimed towards developing the standards of living of individuals
across the world (Ge.com, 2020). The main business operations and functions of the
organization are conducted in primarily nine specific industries, which are individually aimed
towards making technological transformations through the process of innovation and creative
ideation. Nine industries in which the organization conducts its business activities and
operations include material science, health, manufacturing, industrial internet, wind turbine,
grid, jet engines, gas turbines and hydroelectric power (Ge.com, 2020). The mission of the
organization is to facilitate a new industrial era by developing the potential to build, power,
move and cure the world. The vision of the company is to improve the functioning and
efficiency of the communities by exceeding their expectations in terms of innovation and
development.

In the increasingly competitive business environment of the present age, it is becoming

increasingly essential for a business organization to develop and adopt effective and efficient
strategies to enable their growth and development. Furthermore, the scope of strategic
management in these business organizations also pertains to the achievement of competitive
advantage in the market by obtaining a positive strategic position in the market (Ge.com,
3 2020). The strategic position of General
R1901D7210658 Electric can
STRATEGIC be analyzed
ANALYSIS OFusing the theory
GENERAL of Porter’s
ELECTRIC
Generic Business strategies. According to the theory proposed by Michael E. Porter regarding
the strategies that may be used by business organizations to achieve a competitive advantage
in the market include those of cost leadership, differentiation, focus and differentiation focus
(Islami, Mustafa and Latkovikj, 2020). The strategy used by General Electric is that of
differentiation, which allows the organization to attract customers by providing them with
services and products that are special and unique.

The differentiation strategy used by General Electric involves the process of developing
highly unique and valuable products and services for the customers with the help of
innovation and creative ideation (Omsa, Abdullah and Jamali, 2017). In this regard, it may be
mentioned that the resources of a highly skilled and knowledgeable workforce, as well as
highly advanced technological infrastructure, are of significant importance to the business
processes and operations of the company as they facilitate the process of innovation. The
company focuses on the aspects of research and development to create highly differentiated
products and services so that the potential customers of the organization may be targeted,
captured and retained. Furthermore, the focus on capturing a large market share is also
enabled by providing the products and services offered by the organization to a variety of
 market segments. For example, this strategy has been used in its segment of electric lighting
in which the unique and innovative products and services of the company are offered to a
large market segment of customers.

The main strategic business unit, which will be analyzed further, is the oil and gas unit of
General Electric. This business unit has faced a downfall in terms of revenues earned due to
various factors, such as an increase in the price of oil and gas to the customers. The main
functions involved in the business operations of this unit include the designing and
manufacturing of drilling equipment, turbines and other auxiliary equipment used in the
petrochemical and refinery industry (Bieker, Slupphaug and Johansen, 2007).

Identification of Strategic Business Units

The concept of strategic business units involves the specific units of business operations that
operate independently within the scope of a business organization. Conglomerates such as
that of General Electric involve the operations of such strategic business units, which have
different competitors, target customers and other stakeholders of their own. As has been
identified in the previous section, General Electric has been identified to primarily consist of
nine strategic business units, which can further be segmented into several other units. These
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nine industries in which the organization conducts its business activities and operations
include oil and gas, health, manufacturing, industrial internet, wind turbine, lighting and
capital, jet engines, gas turbines and hydroelectric power (Ge.com, 2020).

Evaluation of Resources and Capabilities

The evaluation of the resources and capabilities available to a business organization is
essential to plan and develop strategies for its growth and development efficiently and
effectively. The resource-based view provides for a managerial framework determining the
strategic resources available to a business organization as well as how they should be utilized
to achieve the strategic business objectives and goals (Lin and Wu, 2014). In this regard, it
may be mentioned that the strategic resources of a business organization may be segmented
as being tangible or intangible in nature. The tangible resources are regarded as those
resources, which are physically present the organization as assets such as inventory, cash
buildings, vehicles, human resources, machinery and the like (Miller, 2019). On the other
hand, the intangible resources available to a business organization are those resources, which
are not physically present with the organization but are owned by them nonetheless and
essential to ensure the success of their business operations, such as goodwill, brand
 recognition and identity, intellectual skills of the employees in terms of creative ideation and
the like.

In this regard, the resources available to the strategic business unit of General Electric under
discussion, that is oil and gas may be determined with the help of the VRIO framework. The
VRIO framework is a resource-based model, which helps in the identification of the strategic
resources available to an organization and the degree to which they may be able to provide a
competitive advantage in terms of their value, rarity, inimitability and organization (Knott,
2015). The VRIO framework as applied to the strategic business unit of oil and gas of
General Electric shows the following results:

Capabilities Value Rare Inimitability Organization

Brand Identity and Image * * *
Goodwill * *
Brand reputation in terms of product * *
and service quality
Human resources * *
Intellectual resources in terms of * *
innovation and development of

5 products
R1901D7210658 STRATEGIC ANALYSIS OF GENERAL ELECTRIC
Technological resources and * *
equipment
Financial resources * *

As can be observed from the above table, the resources and capabilities of General Electric
are aligned with its strategy of differentiation. In terms of the intellectual and technological
resources of the organization, the strategy of differentiation is followed by developing highly
innovative and unique products and services that not only satisfy the customers but also help
in developing a goodwill, positive brand identity and recognition in the market. The use of
human resources and financial resources are thereby targeted towards the process of research
and development, which in turn aids in the process of differentiation.

Value Chain Model

The value chain is identified as a business model describing the variety of business activities
and functions that are performed by a business organization to create and distribute its
products and services to its customers (Koc and Bozdag, 2017). The process of value chain
analysis thereby helps in the evaluation of how these processes of production and distribution
 may be enhanced in terms of efficiency. According to the value chain model developed by
Michael E. Porter, the business activities of an organization may be divided into two
segments, namely primary and support. The primary activities consist of the inbound
logistics, operations, outbound logistics, marketing sales and service. On the other hand, the
support activities include procurement, technological development, management of human
resources and infrastructural development (Zamora 2016). The value chain model as applied
to the operations of the strategic business unit of oil and gas of General Electric can be
described as in the following section.

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Primary activities:

 Inbound logistics – This involves the management of the supply chain to receive,
store and supply the products and services. This further involves the retrieval of raw
materials and other inputs such as steel, copper, polyethylene, etc. required to conduct
the production processes of the oil and gas unit.
 Operations – This involves the conduction of business activities and functions for
production and manufacture of the products and services in all the countries in which
the company operates. Those relevant to this SBU include equipment used for
drilling, oil refinery, oil storage, petrochemical, etc.
 Outbound logistics – This process refers to the distribution of the products and
services to the customers via other intermediaries such as the refineries brokers,
dealers and the like. It also involves the entities engaged in transporting and
delivering the products and services to the desired destinations.
  Marketing and sales – this involves attracting the customers to buy the products and
services offered by the organization by applying its differentiation strategies of
innovation and creative ideation in terms of product development. In this regard, the
features that are highlighted include its superior quality as compared to competitors.
 Service – The pre-sale, as well as post-sale services offered by the company, include
providing training regarding the usage and control of oil and gas and other support
activities; these are important marketing functions performed by the company.

Support activities:

 Firm infrastructure – This involves the management of activities such as quality

control, handling of legal matters regarding interest rates, operational risks, credit
risks and the like in the oil and gas business unit, financing and accounting.
 Human resource management – This involves the management of the approximately
38,000 employees operating in the oil and gas business unit, in terms of recruitment,
training, performance management and rewarding.
 Technology development – This involves focusing on research and development for
innovation and creative ideation to achieve the differentiation strategy adopted by the
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company.
 Procurement – This involves the procurement of the raw materials, technological
equipment, machinery and other supplies required to conduct the operations of the oil
and gas business unit.

BCG Matrix and Strategy Identification

The product portfolio of a business organization refers to the range of products and services
offered to the customers thereby determining the growth prospects in different segments
(Seifert, Tancrez and Biçer, 2016). In the case of conglomerates, the analysis of product
portfolio enables the evaluation of the product and service offering in terms of the operations
of the various strategic business units. This process in turn aids in the process of identifying
the business units, which have further potential for growth and development.

The framework of the Boston Consulting Group Matrix or the BCG matrix provides for the
creation of a portfolio for the business organizations, thereby determining the strategies that
should be implemented for each of the strategic business units (Mohajan, 2017). This
framework as applied to the business operations of General Electric determines the potential
for further growth as provided by each of the business units.
 The stars of General electric can be identified to be the strategic business units of oil and gas,
renewable energy, power and energy management as they have a high rate of growth in the
market as well as a high relative share in the market. Sustaining these business units may
involve higher investment but they have the potential towards further growth. On the other
8 R1901D7210658 STRATEGIC ANALYSIS OF GENERAL ELECTRIC
hand, the other strategic business units of General electric including health, manufacturing,
industrial internet, lighting and capital and jet engines can be regarded as question marks as
per the BCG matrix. It is so because these business units have high market growth rate but
comparatively low market share. These business segments also require a significant amount
of investments but have the potential to access adequate returns with the help of an increase
in the market share through the adoption of efficient marketing strategies, market
development or further product development.

Future Directions for Strategic Growth

As discussed in the previous sections the process of product analysis helps in the
identification of the strategies that may be adopted in the case of the different products and
services offered by a business organization for the purpose of achieving the desired objective
of gaining a competitive advantage in the market. The Ansoff Matrix provides for one such
strategic framework, which helps in the analysis of the potential paths for the growth of a
business organization (Loredana, 2017). The four strategies available to the organizations in
terms of presence in the existing markets and risks involved for the business organization
 include the strategies of market penetration, product development, market development and
diversification.

The strategy of market penetration involves focusing on the increase of sales of the existing
products and services in the existing market (Cleberg, 2019). The product development
strategy involves the introduction of new products and services in an existing market. The
strategy of market development involves the entering of a new market using the existing
services and products. The strategy of diversification includes the entering of a new market
using new services and products (Yin, 2016). In the case of General Electric, the strategies of
product development and market development may be suggested to propagate further growth.
The process of product development would enable the organization to align with its strategy
of differentiation by the creation of new and innovative products. The strategy of market
development of the other hand would enable the organization to tap into new markets
throughout the world and cater to the needs and requirements of new markets with their
innovative products and services. This in turn would help General electric to not only obtain
new customers but also retain them, thereby achieving greater market share.

Recommendations
9 R1901D7210658 STRATEGIC ANALYSIS OF GENERAL ELECTRIC
 Focusing on generating greater value for the customers – The strategy of
differentiation as undertaken by the organization must be implemented within its
business operations and functions keeping in mind the demands and requirements of
the customers (Tokar, 2020). In this regard, it may be mentioned that the company
must focus on catering to the requirements of the customers, thereby generating
higher value for the consumption of the products and services offered.
 Enhancement of marketing strategies – The company must also focus upon the
enhancement of the marketing strategies undertaken. The increasingly competitive
business environment of the industries in which the organization operates requires the
organization to reach out to its targeted customers in a more efficient and effective
manner.
 Strategic alliances for market development – the company may also consider forming
strategic alliances and partnerships with technology companies to conduct market
development strategies more efficiently. Such strategic alliances will not only help the
organization to utilize the resources offered by these other technology companies in
 terms of the skills and expertise of their workforce, but also reduce the risks of
conducting business operations in new markets.
 Training and development programs – The company must also focus on continuous
enhancement of the skills and expertise of its workforce in terms of innovation and
creative ideation through implementing frequent training and development programs.

Conclusion
Form the above discussion regarding the operations of the different strategic business units of
General electric, it can be deduced that an evaluation of the internal and external environment
of business in which the organization is essential to be able to formulate and implement
effective strategies for the organization. In this regard, the resources and competencies
available to the organization may also be evaluated to determine the manner in which they
may be utilized to not only achieve the strategies developed but also achieve a competitive
advantage in the market. Based on an evaluation of these resources, further evaluation of the
products and services offered by General Electric has been identified, so that effective
strategies to be adopted for each business unit may be determined. Finally, recommendations
have been provided as to how the overall business operations of the company may be
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improved. STRATEGIC ANALYSIS OF GENERAL ELECTRIC
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