Sustained profits come from building a competitive advantage. This advantage can be accomplished not only through good financial return on a specific process but also through the correct capacity decisions that must be integrated into the organization’s mission and strategy.
Jack Welch, former CEO of General Electric (GE), understood this better than anyone else. Although GE was a profitable and respected company when Welch took over, its financial results during the1970s were troubling to both its investors and senior management. Welch immediately made changes to the company’s structure and management practices. From the beginning, he stressed the importance of being one of the top players in the industry. He told his colleagues that GE should always be number one or number two in all its businesses; if it was not, then their only options would be to fix, sell, or shut down.
Because of this strategic direction, GE today usually dominates the markets in which it participates; and if it does not, then it divests. A major part of GE’s strategy is to be the first or second in every market. As you review the module readings for this week, consider the complexity of GE’s products and its emphasis on vertical integration and capacity planning.
The General Electric Company, or GE, is a diversified company that offers
infostructure, media and finance products and services. The company was
originally founded by electrical innovator Thomas Edison. It is also listed as one
of the most admired companies, ranking as number one in electronics and 16th
overall according to Fortune Magazine. For the company’s innovation focus, it was ranked as one of the world’s most innovative companies by Business Week.
The General Electric Company is organized into 5 divisions including
“’NBC Universal”, “Technology Infrastructure”, “Consumer & Industrial”, “Energy
Infrastructure” and “Capital Finance”. The company functions in over 100
countries and has over 300,000 employees. For 2009, the company achieved
$11.2 billion in earnings and an industrial cash flow of $16.6 billion. Effective
January 1, 2011, it reorganized the Technology Infrastructure segment into three
segments: Aviation, Healthcare and Transportation.
Chemicals, Petrochemicals, and Fertilizers
Food & Beverage
Government & Public Administration
Metals and Metals Fabrication
Mining (Coal, Minerals, Metals)
Oil & Gas Upstream
GE. (2013). The History of General Electric. Retrieved from http://www.ge.com/about-us/history/1878-1904.
GE. (2013). GE fact sheet. Retrieved from http://www.ge.com/pdf/news/GE-Fact-Sheet.pdf
Using the information above, the module readings, online library resources, and the Internet, respond to the following:
How does GE’s framework give it the opportunity to be at the forefront of the markets in which it participates?
Examine your own firm or a firm you would like to work for in the light of GE’s framework and respond to the following:
Does this firm have the means to execute like GE?
Which type of resources would the firm require?
How could GE’s lessons be applied to this firm?
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