Wednesday, April 6, 2016

Internal Organizational Analysis and Developing Strategic Options - GE Goes With What It Knows

General Electric under Jeffrey Immelt, developed a strategy that enables resources of the company as key to superior company’s performance. Their approach to looking inside the organization to find sources of competitive advantage instead of looking at the competitive environment for it has helped them to achieve success in most difficult times, such as from the time of great depression. The key take-away is that organizations should structure by its core competencies, rather than analyzing a portfolio of business units. The strategy to adopt a cross-business integration by decentralizing the organizational structure, i.e. breaking into a cluster of units as independent units has helped the in a long way. The capability to change and adapt to the technological trends, i.e. investing and keeping upbeat with the technology sets GE apart from other competitors. Also, increase in access, improved quality and delivery of customer value, and substantially lower costs have helped GE solve some of the biggest global challenges. For example, GE constantly strived to answer and reflect upon these questions: Where are we now? Where should we go? And how do we get there? – All the business functions working coherently has benefited the company to become leaders in the respective markets. GE has been able to reap several benefits by developing strategy based on coherence – they created value for themselves in ways like – they were able to strengthen their competitive advantage, able to focus on strategic investments that really mattered, for instance making a decision to invest more in manufacturing and production rather than investing in capital, etc., and it certainly helped them to align better with strategic intent and day to day decision-making.

Another interesting thing to note is that, how it vested power in the resources, i.e. it was able to expand globally at a very fast pace because of its business units system, which treated division managers as business owners according to the customer needs and wants. So essentially GE was able to make a clear differentiation on its positioning in the market by creating uniqueness on the industry-wide basis; using its product design, brand equity, technology and other elements to its competitive advantage and success. Another differentiator was the effective leadership of Immelet. His motivational and ‘democratic’ style of leadership was instrumental in revamping the leadership culture into an innovative cult, within the GE. Immelet also believed in investing and prioritizing training and learning of the employees of GE – this helped them foster development in the leadership program, business and functional knowledge, analytical thinking and much more. Therefore, GE’s ability to look and analyze within itself – formulate an effective strategy for sustainable growth has largely contributed to its impeccable growth and success. 

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