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Module 3 Group Case Study: General Electric

Calvin Shelly, Alisandra Alzaghtiti, Brianna Holtzer, Nicholas Zambo, Tayyab Mohammad

MG201: Principles of Management

Professor Jerry Spight

October 10, 2021

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1. Explain how GE is creating a “fit” among its activities at its factory in India.

Nick: Recently, GE has been working to improve their efficiency and performance in what they

manufacture. A factor that has a major impact on the company’s sales in the demand of the

products they are making. If a major product of the company is not in high demand, it is

possible that the company may begin to lose potential revenue, which could otherwise be

obtained by producing something else. However, most companies have lines which can only

produce one product, making this shift difficult. In order to combat this, GE developed a new

factory in India capable of producing multiple products on the same line with very little changing

time. This is done by using flexible 3D printers. If one product is not in high demand at the

time, the company can shift production to a different industry by telling the same 3D printer to

produce a different product. This allows for very little downtime, increasing efficiency and

allowing for the company to take advantage of quick swings in the market. This system allows

for the many different industries of GE to be developed in the same location and on the same

lines, regardless of the product. In theory, this will help GE to recover financially and continue

to thrive afterwards.

2. Using the steps in Figure 6.1, describe how GE should be transforming the way it

does business.

Tayyab- General Electric needs a transformation in the way it does business to prevent any

further losses. Previously with their first CEO Jack Welch, they were following the proper

strategic management at each level which was reflected in the company's financial performance.

When Jeff Immelt came into office he practiced corporate-level strategies, by managing their

acquisitions and making significant investments into newly arising markets. One of the mistakes
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Immelt made was he tried to manage business level strategies at a corporate level and he should

have assessed the current reality. General Electric was already performing well, they were the

leading maker of medical systems, commercial jet engines, etc. (Knicki,217) but Immelt focused

too much on trying to invest in stuff that makes products work instead of making great products.

Once they replaced Immelt with John Flannery he corrected his actions by halting large scale

additions to the company and he understands to learn from the past mistakes Immelt has made in

his statement “ Complexity hurts us… Complexity has hurt us”( Knicki, 218), GE Should be

transforming the way they conduct their business from Immelt to Flannery by trying to limit

spreading the resources they have, focus and improve on what they already have and conduct

strategic management properly like how CEO Welsch did.

3. Develop a SWOT analysis for GE

Calvin Shelly:

Strengths: Weaknesses:

-General Electric has high levels of marketing -They have accumulated high levels of debt,

experience since its foundation and has a especially since the global pandemic.

good reputation. Its primarily known According to their financial statements on

industries are in healthcare, renewable energy Mergent, their net income as of 6/30/2021 is

and power, financial services and aviation. -2.441 billion dollars. They have been

This level of diversification allows them to reportedly resorting to selling some of their

have a safety net in the case one of their assets to pay off debts such as their jet leasing

sectors fail or underperform. business. (Feuer)

-They are partnered with many governments -Their source of raw materials comes from
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globally including local, state and federal third party companies who ultimately control

governments. It is present in developed the amount of production their company can

countries and currently developing countries. generate. Dependence on third parties for raw

These customers use their services to “fulfill materials can be a concern in the case that

public policy objectives, and may request their operations are halted temporarily or

unique contract requirements such as permanently. Having no control over steps in

domestic preference restrictions, the value chain before their own may cause

socioeconomic provisions, and especially issues in the case there are government

stringent business ethics and compliance regulation changes, shortages of jobs or raw

obligations.” (gm.com) These customers are materials, or natural disasters.

good to have because if they find their

services reliable, that is a large market to

profit from.

Opportunities: Threats:

-The field of artificial intelligence (AI) and -The cost of raw materials continually

robotics is a rapidly growing market that increases with inflation and supply and

General Electric could focus and expand on demand every year. This will, therefore,

more. In a world that is dependent on increase the cost to create their products and

technology for nearly everything that we do, increase the price their customers will pay for

this would be a great, profitable opportunity their products. This could potentially make

for them. They currently have research them lose business if a customer decides to

development and some programs already buy from a cheaper competitor. “Raw material
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created according to the research page of their prices are expected to average 10% higher

website. this year, compared to 2020, before stabilizing

-The world is growing more conscious of in 2022.” (Baffes)

carbon emissions and other greenhouse gases -Their stock price has taken a major loss since

in hopes to slow down the rate of global its peak and this loss in market value does not

warming. Furthering their development of meet the needs of stakeholders who have

renewable energy and cleaner means of invested their money into the stock. They

production would greatly benefit the have little reason to believe that their

company’s reputation and make customers investment will make a return. If there are no

more likely to consume GE products. people investing their money into GE stock,

that is less cash for the company to work with.

4. Is CEO Flannery employing a growth, innovation, or stability strategy? Is this

different from Immelt’s strategy? Explain.

Bri: In 2017, GE replaced Immelt with John Flannery. Flannery is employing a stability strategy.

A stability strategy is a grand strategy that involves little or no significant change. The book

states that Flannery's first move was to “stop large scale acquisition...He also announced that GE

Digital would be scaled back and have basic strategy.” (Kinicki 218) This means that Flannery is

trying to regain stability by eliminating large changes within the company. Flannery’s strategy is

different from Immelt’s strategy. Immelt was implementing a growth strategy. He wanted to

grow outside of GE’s traditional businesses. Immelt was planning to expand the industry by

manufacturing both medical equipment and its supporting products. This is very different from

Flannery’s idea which was just to maintain the same and not expand and grow.
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5. Which of Michael Porter’s four competitive strategies is GE trying to follow?

Explain

Alisandra: Out of the four Michael Porter’s four competitive strategies, GE Company is trying

to follow the cost-leadership strategy. A company takes on this strategy if it aims to increase

profitability through selling to customers while keeping costs below those of competitors

(Kinicki, 2018). The ways in which to follow this strategy include creating products through

reducing cost of production, increasing market size, and achieving higher profit margins (Cost

leadership strategy). General Electric is specifically focused on selling as many units of their

products as possible. This shows that they are focused on keeping costs below those of their

competitors, while at the same time putting an emphasis on providing products to target a wide

market around the world. John Flannery wants to sell divisions that are not growing profits, even

if they make up a significant part of the company’s assets. This shows dedication for growing the

company through focusing on products that can make profit and not just because of uniqueness.

The differentiation and focused-differentiation strategies focus on offering unique products and

GE is not following these competitive strategies because they are cutting out divisions that are

not making profit, such as loco-motive building and industrial light manufacturing. (Kinicki,

2018).
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References

Baffes, & Wu. (2021, September 10). Raw material commodity prices continue rising amid

stronger demand. World Bank Blogs.

https://blogs.worldbank.org/opendata/raw-material-commodity-prices-continue-rising-amid-stron

ger-demand
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Cost leadership strategy. StudyFinance.com. Retrieved from

https://studyfinance.com/cost-leadership-strategy/.

Feuer, W. (2021, June 14). GE sheds finance assets as it focuses on industrial business and seeks

to strengthen balance sheet. CNBC.

https://www.cnbc.com/2021/03/10/ge-sheds-more-assets-as-it-focuses-on-industrial-business-and

-strengthens-balance-sheet-.html

https://www.ge.com/sites/default/files/GEA33644_Government_Business_Feb_2020.pdf

Kinicki, A., & Williams, B. K. (2020). Management: A practical introduction (9th ed.). McGraw

Hill.