Situational environment analysis of General Electric

1.1 Current profile

GE is the world’s largest diversified services company which is also high quality, high-tech industrial and consumer products provider. It is the unique company which on Dow Jones industrial average list since its inception in 1896. GE has five business segments in the Energy, Technology Infrastructure, Capital Finance, NBC Universal and Home & Business Solutions (Jing, 2010). From light bulbs to fuel cell technology, to cleaner, more efficient jet engines, GE has continually created our world with groundbreaking innovations for over 130。GE has plenty of customers throughout 100 countries in the worldwide and employs more than 3,270,000 staffs in the world. GE wants to use various technical and service to create a better life. Jeff Immelt has succeeded Jack Welch to be chairman and chief executive officer of GE since September 7, 2001.

1.2 Company mission and recent strategic

“Imagination at work” is the mission of GE, who is committed to change innovation into leading products and services for helping customers solve the most intractable problems. The concept of cultural innovation on GE, manifested that it was good at “control their own destiny”(GE, 2010). That is to say, GE was adept in analyzing the situation and potential of staffs in their company, recruiting and selecting outstanding managers. In the GE, great dreams of the staffs are not enough. Imagination must be constrained by ethics, regulations and integrity. GE’s high standards does not limit creativity, on the contrary, it has attracted a number of various employees, each of whom attempts to build a more outstanding company, and further more, extending their efforts to establish a better society.

The mission of organization is what this company wants to reach, while strategy is how they can go to get there. GE has been developing a series of strategic plan for achieving their own mission, as well as adjusting itself according to the changes in the external environment.

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-Globalization strategy: The implementation of GE’s external strategies includes acquisitions, alliances, joint ventures and other strategic measures. Meanwhile, its’ internal strategies contains business restructuring, organizational adjustment. GE takes advantage of the global management of intellectual resources to achieve the globalization of managers and technologies so that it can continuously push forward the process of globalization.

-Service strategy: GE continually expands the clients, develops the service capabilities, as well as separates the service and manufacturing completely. Meanwhile, it attempts to be closer to the customer market, enhance organizational learning and inspire the vitality of their staffs.

-E-commerce strategy: For turning to the Internet Services, GE changes transforms the traditional operating methods into the e-commerce company through remodeling the systems of production and supply, as well as reducing intermediate links.

– Six sigma strategy: GE systematically designs and monitors the process of production, and depends on the data and fact to eliminate differences in the pursuit of customer satisfaction. (Byme, 2003)

2.0 Situational Analysis

2.1 Internal analysis of firm

The core competencies of GE include business diversification and innovation. The performance of diversity is that GE has five business segments in different regions. Its Energy Infrastructure segment manufactures steam, gas, generators, combined cycle systems, and renewable energy solutions, as well as provides water treatment equipment and services (Discovery Media, 2010). Its Technology Infrastructure segment produces jet engines, turboprop and turbo shaft engines, and its replacement parts for using in commercial and military aircraft. The company’s Capital Finance segment supplies commercial lending and leasing products to distributors, and end-users of equipment and capital assets. GE’s NBC Universal segment indulges in the distribution and operation of films and television programs, of production television stations and so on. Its Consumer & Industrial segment produces various lighting products, home appliances and control products.

GE’s innovations include the following four aspects.

– Management innovation: management innovation is one of GE’s core competencies. The traditional organization structure of GE was pyramid structure, which led to the information was distorted and a decline in the speed of information flow. For obtaining the best operating results, Jack Welch reduced the levels of organization so that the information can be communicated directly. Through management innovation, Jack Welch not only streamlined the organization and personnel, but also improved organizational performance in a few years time.

– Product innovation: products are the point of a business which wants to advance continually. Jack Welch not only paid attention to the product’s brand innovations and functional innovations, but also attached importance to the innovation of the product value-added and service innovation.

-Employing innovation: the concept of employing is that talents are everything, and who owns them is the biggest winner. GE continually supplies challenging work to staffs for mobilizing their enthusiasm, the further more, increasing organization performance.

2.2 External analysis of industry

2.2.1 General environment factors

The external environment of GE includes industry, raw materials, human resources, financial resources, market, technology, economy, government, socio-cultural, as well as international environment. The different segments of GE are in different industries and face different external environment, and further more, environmental uncertainty is not consistent.

– International Environment and Economy: with the development of economic and globalization processes, products can be more extensively distributed to worldwide market. Meanwhile, because many countries, regions and companies develop rapidly, GE is not only facing competition from Japan and Europe, but also facing the impact of new-developing nation.

– Market: consumers who can get more information become more rational and gradually reduce the brand loyalty. Facing to rapidly change of market, GE needs more flexible organization structure and more swift market reaction, as well as continuous innovation.

– Information Technology: with the rapid development of information technology, the information is disseminated more rapidly and exchanged more transparently. These changes bring more uncertainty to the external environment.

– Human Resources: with the continuous improvement of population quality and living conditions, the satisfaction of employees not only depend on the salary and promotion, but also relate more perfect organization culture and regulation.

2.2.2 External Opportunities and Threats

On the one hand, there are plenty of opportunities for GE because of the rapid change of external environment. With the rapid development of economy and technology, the earth’s resources are depleted gradually, especially petroleum resources. This problem creates a great opportunity for developing and using new energy, as well as provides a platform for further development of GE’ Energy and Technology Infrastructure segments.

Recently, with the swift development of economy and living condition, people gradually increase the demand of healthcare, and due to “super bacteria” spreads far and wide in the global, the pharmaceutical industry set off another boom. This is undoubtedly creates the great conditions for the development of GE pharmaceutical industry.

On the other hand, with the rapid development of science and technology, new industries which include new materials, new energy, energy saving and environmental protection grow continuously. For GE, it is a big challenge, to keep pace with this situation.

2.3 Competitors

This section of report will indicate the primary competitors of GE. It is decided the primary competitors are the ones providing almost identical services that GE provides. From research, 3 primary competitors were discovered and they are CITIGROUP INC, SIEMENS A G, and KONINKLIJKE PHILIPS ELECTRS. Each competitor will be briefly discussed in terms of its operation and its competitiveness against GE.

– CITIGROUP INC: As the world’s outstanding financial services company, CITIGROUP INC provides a wide range of financial products and services from consumer banking to credit, investment banking services, as well as brokerage. It is considered to be the most competitive rival in capital finance business in GE’s view.

– Siemens: Siemens is a large international company which operations in more than 190 countries around the world and has approximately 600 facilities, research centers and sales offices. The company’s business focuses on six major areas: information and communication, automation and control, power, transportation, medical systems and lighting. Many businesses of Siemens are similar with GE, such as medical system, lighting, power and so on.

– Philips: Philips is a comprehensive organization which has three segments including quality of life of Philips, Philips Lighting, and Philips Medical Systems. Its main products contain household appliances, military and civilian communications equipment, medical equipment, computer, instrumentation and display system. It is also one of Europe’s biggest arms company and electronics multinationals in the world. Like Siemens, the businesses of Philips are competing with GE to a certain extent.

3.0 Industry environment analysis using Porter’s Five Forces

GE wants to select suppliers whose quality, price and service are competitive, and further more, to implement in-depth cooperation and provide relevant training. As a monopoly enterprise, GE strictly requires the overall strength of suppliers what include their quality, technology and capacity. Suppliers, however, can use these stringent requirements to improve themselves so that push their products into the world with GE. In a word, the bargaining power of suppliers is limited for fixing this situation. Buyers influence the profitability of existing enterprises in the industry through the ability of lower prices and higher required on the product or service quality. However, GE not only has multiple businesses in various industries, but also stays on the leading position of most industries. What is more, the bargaining power of buyers is restricted due to the great control power of GE. Because of the diversity of GE’s businesses, the competitors are also from various industries. However, the abilities and strength of these competitors are far less than GE. What is more, the competitive power of GE is continuously increased due to its diversification and innovation. As we know, the businesses of GE are in the high-tech industries, the entry barriers for the new entrants are higher than other industries. Obviously, the barriers can decrease the threat of new entrants to GE. As mentions above, the industries where GE operates are almost contained in the high-tech industries, such as energy. On the one hand, the barriers of new entrants are higher, and on the other hand, the treat of replacement is comparatively lower.