Activity 2 Scanning the Environments

Activity 2: Scanning the Environments

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Activity 2: Scanning the Environments

Part A: General Electric Company (GE) Description

General Electric Company (GE) is an international company in digital industry and it was incorporated in 15th April 1892. The services and products of the company include industrial products, aircraft engines, medical imaging, power generation as well as gas and oil production equipment. The company has a number of segments that include capital, power, energy connections and lighting, renewable energy, transportation, oil and gas, healthcare, and aviation (Returns.com, 2017). GE current slogan is imagination at work which was adopted in 2003 to stress on the creativity of the company. This slogan replaced “we bring good things into life” slogan that the company had used for a period of 23 years, before adopting a new slogan in 2003 (Kranhold & Silverman, 2003).

GE is transforming the digital industry with machines that are software-defined and solutions which are predictive, responsive and connected. The company is systematized around a worldwide knowledge exchange, the “GE store” via which every business accesses and share the same intellect, technology, structure and markets. Each further invention fuels application and innovation across sectors in the digital industry. With scale, people, technology and services, GE delivers improved results for customers by speaking the industry language. The company employs differentiation strategy where it centers on innovation over cost reduction (Hitt et al., 2016).

Part B: Portal’s Approach to Industrial Analysis in Relation to GE

New Entrants Threat

GE experience comparatively small threat to new entrants. This is due to the large company size and the repeating market requirement trends that the company employs. The company is considerably big which implies that new entrants will need to employ a lot of capital to equal the GE Company which is considerably expensive. The industry also has high sunk costs which limit the new entrant ability to compete. The industry need the economy of scale and advanced technologies. It is considerably difficult to attain this and thus, the company does not experience new entrant threat (GE.com, 2015).

Supplier Power

The GE suppliers bargaining power is comparatively low. This is due to the small quantity of goods that the company purchases from its suppliers. Suppliers thus have limited aptitude to bargain. Some suppliers only have GE as its main purchaser of their goods and thus, they may not manage to survive without the business provided by GE.

Intensity of Rivalry

The company is facing strong rivalry from Siemens which is one of the biggest GE competitors in the world. However the company has managed to expand its market shares internationally through joint-ventures, mergers, and acquisitions. The company is facing rivalry from various companies at a varying rate per section. The Capital section is experiencing stiff competition from various financial institutions in the world. As results, this section has been performing poorly compared to others. The company has been trying to minimize the rivalry level by enhancing technological improvement and innovation. These together with its high brand recognition, customer loyalty, access to competencies and assets have highly enhanced the company competitiveness in the industry (Amatulli et al., 2011).

Substitutes Threat

GE is highly diversified such that the substitute’s threat in almost each market is at risk of failure. Most of the possible substitutes do not meet the quality standard of GE products and thus, they are less likely to satisfy the customers. This means the company still experience minimum threat to substitutes.

Bargaining Power of Buyers

The buyers bargaining power in the company varies based on the unit to be considered. The section with a higher buyers bargaining power is the capital section. However, generally, GE is one of the most diversified and the largest world companies. It contains eleven varying segments, and thus, the company contains a strong hold of various different markets. GE buyers need special customization, which is provided by the company. Thus, customers are less probable to change to other producers who can hardly meet their demand. In addition, the company has a large number of customers and thus, no single customer can earn the bargaining leverage (Strokes et al., 2005).

ComplementorsThe company has strong complementation power where its energy sector can easily complement the transportation sector by providing the power needed for effective operation of transportation equipment. Moreover, the power, renewable energy, and the energy sections highly complement each other by providing products that can be used to enhance effective operation of the products in another sector. Capital section also acts swiftly in enhancing customers’ ability to access other products from other sections in the company (GE.com, 2015).

Part C: Suggestion

The company’s main strength is the global recognition and competitiveness where its products are well known and regarded for their quality and the level of sophistication they demonstrates especially with integration of new technology in most of its products. The company also has excellent management which enhances innovation, workers growth, and efficiency in the company. The diversification of operation line is another main company’s strength. This ensures that the company does not experience financial challenges when one product is doing poorly in the market. Environmental initiatives give the company a chance to give back to the society, an aspect that helps in building great company image in the market. The company needs to maintain this to ensure effective future performance. However, the company has a number of weaknesses and limitation which need to be addressed to enhance its performance in the future. The company is currently underperforming in the energy sector which makes it hard for the company to reach its financial target. The company bets financial market has put it in an awkward financial situation since they have been confirmed to be unsuccessful with economic chaos. The company is also underachieving in the Asian markets forcing the company to use revenue collected from other regions to sustain its operations in Asia market.

The company is also experiencing a number of threats which may affect its growth and effective operations. Some of these threats include increase in competition, exposure to financial crisis and markets, slowing down of the world economy especially in Eurozone and US which acts as the main market for the GE products. More efforts need to be employed to overcome these weaknesses and threats. Some of the opportunities that the company has to maximize on its revenue, growth and development and to enhance its competitiveness include infrastructure development, regeneration and servicing commercial airplanes across the globe initiative of customer services. The company can also take advantage of aviation industry development, and increasing global production and exploration. The company can as well employ the aspect of research and develop to expand to maintain its innovative ability and to be able to create more advanced products that are of high quality and highly competitive in the market. The company can also consider growing extensively by use of mergers and acquisition. This is an expansion strategy that can enhance successful venture into various international countries in the world. Based on this review, GE would be recommended to comprehend the growth ability of every division so as to push all sections to be able to lead in their market niche. The company should consider employing new strategies in Asian market to be able to rule, based on its cultural aspects.

References

Amatulli, C., Caputo, T., & Guido, G. (2011). Strategic analysis through the General Electric/McKinsey matrix: An application to the Italian fashion industry. International Journal of Business and Management, 6(5), 61-75.

GE.com. (2015). Digital industrial GE 2015 annual report. Retrieved from < https://www.ge.com/ar2015/assets/pdf/GE_AR15.pdf>

Hitt, M. A., Ireland. R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and cases: competitiveness and globalization. Cengage Learning.

Kranhold, K., & Silverman, R. (2003). GE plans new ad slogan to replace ‘good things.’ The Wall Street Journal. Retrieved from < https://www.wsj.com/articles/SB1042724804259679064>

Reuters.com. (2017). General Electric Co (GE.N). Retrieved from < http://www.reuters.com/finance/stocks/companyProfile?symbol=GE.N>

Strokes, B., Harris, A., Kochwelp, C., & Whitsitt, W. (2005). General Electric. Retrieved from < http://mmoore.ba.ttu.edu/ValuationReports/GeneralElectric.pdf>