Report on Business Level Strategy
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Added on 2020-04-21
Report on Business Level Strategy
Added on 2020-04-21
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RUNNING HEAD: Business Level Strategy/ Generic StrategiesBusiness Level Strategy/Generic Strategies
Business Level Strategy/ Generic Strategies1IntroductionJeff Immelt was appointed as the chairman and CEO of General Electric in the year 2001 after which slowly and gradually various events took place which required strict changes in the existing strategy for the company. Immelt handled the situation after deep analysis of the situation and after taking into account all the possible outcomes of the strategy. I.In what ways has Jeff Immelt redirected the strategy of GE?Answer – The corporate landscape of GE was affected by a variety of events that took place soon after the appointment of Jeff Immelt as the CEO of GE (Skarzynski & Gibson,2008). Immediately, he confronted a series of events in the form of challenges which affected GE’s business environment. The events included 9/11, and high profile corporatescandals like Enron, WorldCom which caused a crisis of assurance over financial reporting, corporate governance and business ethics. Few years later in the year 2008, GECapital, which was the main growth source for GE, suffered from a major financial crisis which led to the increase in bad debts and asset write downs. As a result, the domestic economic growth and investor’s confidence underwent a major downfall. This led to the change in environment which demanded Immelt to change the emphasis of the organization to the creation of new products, services and market. Therefore, his prime focus was to redirect the strategy of GE with the help of consumer focus, innovation and organic growth (Metzger, 2014). It was long-term transformation approach in which the complete business portfolio of GE was configured around two fundamental businesses of GE i.e. - specialty financial services and infrastructure with a view to redirect the performance goals set by GE towards profit maximization. The strategy also aimed at making technological innovation and customer service as the key strength of GE and also required to make necessary alterations in the structure, corporate culture and management processes. Immelt wanted the company to turn into high technology infrastructure company in the areas where GE had competitive advantage over the other similar organizations (Bartlett, 2006). Therefore, he developed a growth strategy depending upon five crucial elements-
Business Level Strategy/ Generic Strategies2Technical Leadership- It was believed that technology was one of the most important drivers of growth for GE from the day it was founded. Immelt further committed to achieve future growth with the help of technical leadership.Services acceleration- GE’s capability to serve its customers more appropriately was further enhanced by building service businesses on locomotives, aircraft engines, power turbines, medical devices, etc. while making high profits and increasing the entry barriersfor other organizations.Commercial excellence- The main aim revolves around creating a world-class commercial culture in order to overlap the monetary orientation and engineering bias of the overriding business approach possessed by GE under Welch (Abetti, 2001).Globalization- Basically, Immelt focused on the opportunities which still remain underexploited in developing countries like India and China and committed to enlarge its sourcing strategy and market admittance globally.Growth platforms- It was recognized that in order to build new business opportunities that significantly exploit the trends with the view to achieve growth in the future by proper resource allocation.The central theme of Immelt’s strategy revolved around organic growth of GE which he aimed at 8% per annum in the year 2002. This aim was set with the idea of maintaining the revenue growth between two to three times of the world GDP. GE started concentrating on the businesses where they found strong growth potential like healthcare, energy, technology infrastructure, broadcasting and entertainment by reallocating resources from the slow growth businesses. This required complete analysis and division of market to recognize high-growth segments that have the capability to offer attractive returns to obtain a leading position in the market either by acquiring other business in a way such that various technical, financial and managerial resources are organized or by building upon GE’s current businesses (Ocasio & Joseph, 2008). Immelt placed emphasis in the areas where GE shared a competitive advantage over other similarorganizations. Three sources of competitive advantage were recognized as – global presence, customer focus and integrated solutions, innovation and technology. He identified technology as the most important aspect in growth of GE in the coming years and recognized the need to speed up the distribution of new technologies within the
Business Level Strategy/ Generic Strategies3company. The customers were considered as the prime focus and attempts were made to build strong relationships with them along with taking proper steps for solving their problems on time and aimed at delivering high quality products. This led to the requirement of increased investment in the marketing function of the company which alsoincludes the appointment of capable marketing executives. A number of evolving global trends were identified by him like the requirement of improved infrastructure, the demand for sustainable infrastructure, opportunities in the developing market and the ageing population. Moreover, GE provided additional financial support to its research and development capabilities. Therefore, it can be concluded that the whole strategy focused on creating differentiation advantage through the introduction of innovative products and services and improved customer focus.In the year 2006, Immelt recognized General Electric’s growth engine as a six-part process which was distributed in the entire organization and also turned out to be an important source of communication to their external constituencies. It involved leadership in technology, globalization, commercial excellence, customer value, innovation and growth leadership (Lea, 2005). Under the business portfolio, Immelt adopted a value creation approach and opted for selected expansion. The main focus was shifted to the long-term earnings along with undertaking those mergers and acquisitions activities which were essential for worldwide growth. It aimed at exploiting all the available opportunities in various areas like infrastructure, healthcare and environmental conservation (Gunther, 2007). As far as performance management is concerned, the customer satisfaction was considered as the prime focus and the investment criteria for marketing was subsequently increased.The organizational structure achieved a level of flexibility as different businesses of the company were combined together and was reduced from six to five. This led to greater level of ease in knowledge sharing and cooperation among the divisions. Moreover, the strategy was influenced to great extent with the personality of Jeff Immelt as he was the man of the people and also an idealist (Ireland, et. al. 2001). He used to encourage people by teasing them, being polite and sophisticated and praising them for their efforts which acted as non-monetary motivation for the employees.
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