Download the original attachment
General Electric (GE) is a global market leader which is well known for its technological innovation, leadership and world class quality in the conglomerate industry. For the purpose of analysing strategic management in action, this report focuses on its Aircraft Engines (hereinafter referred to as “AE”) and Medical Systems (hereinafter referred to as “MS”) business units – a subset of its ‘Technology’ segment. Its macro-forces (sluggish economy, advent of e-business, ageing demographics) combines with the industry forces (where degree of rivalry is intense and degree of attractiveness to entrants is low-moderate) to identify 3 sets of critical success factors (CSFs) in each industry. Findings from the internal analysis identified GE as pursuing a successful related linked diversification strategy. Results from the VRIO assessment and value-chain analysis suggest that AE and MS pursue a differentiation strategy which strongly matched the industry CSFs. The ESC gap analysis contains insights and potential gaps, derived in relation to its: environment-strategy; strategy-performance; strategy-capability. Overall, GE’s remarkable performance and brand prestige has put them in good light. However, the gaps identified (slow conformance to e-business; inadequate preparation to meet future medical demands; inconsistent strategy to fend off rivalry and entrants) needs to be addressed to concretize its market standing. Finally, a brief recapitulation on issues identified therein completes the analysis.
General Electric is the world’s leading diversified industrial firm widely recognised for its world class quality, innovation and technological expertise, leadership, and brand prestige. Under Welch’s leadership, it has endured massive restructuring efforts (i.e. acquisitions, divestitures, retrenchments, shaping GE’s culture) – the pillar for its success today. Its AE unit – operating within the aviation industry – faces competition from Pratt & Whitney and Rolls-Royce (Society of Manufacturing Engineers, 2001). On the other hand, its MS unit operates within the healthcare industry and faces major competitions from Siemens, Toshiba, Philips and Marconi (Medical Imaging, 2000). The acquisition of Thomson (a medical imaging business) and the development of its online diagnostic technology (which can be integrated into all of GE’s businesses) illustrate some of its rewarding milestones. Both units – being part of its ‘Technology’ segment – are constantly challenged to stay on the leading edge by investing in R&D. In brief, this report attempts to assess GE’s extent of environment-strategy-capability fit through an analysis strategic element within its external and internal environments. Corporate information are drawn from Hill and Jones (2007, pp. C481-C500) and the timeframe from 1981 to 2001 sets the boundary for analysis. In view of the apparent lack of information provided by the case fact, this report is, in part, derived by means of logical assumption and personal judgment.
2.0 External Analysis
According to Kotler (1988), the external environment is made up of the macro-environment that affects all firms and a micro-environment that affects firms within an industry (see Diagram 1: The External Environment). The former is made up of forces which are close to the firm and affect its ability to serve its customers, while the latter (see Table 1: Macro-Elements) refers to the larger societal forces that, in turn, affect the whole micro-environment. Diagram 1: The External Environment
Source: Hubbard (2000, pp. 26)
2.1 Macro-Environmental Analysis
The macro-environmental analysis will help to identify an array of potential opportunities and threats (Kotler, 1998). Table 1: Macro-Elements
Concerned with a...
Bibliography: Allyn, D.S. 1985, ‘Conglomerate Mergers, Mutual Forbearance Behavior and Price Competition’, Managerial and Decision Economics, September, 6(3), pp. 153.
Anderson, J.C. and Narus, J.A. 1991, ‘Partnering as a focused market strategy’, California Management Review, pp. 95-113.
Ansoff, H.I., and McDonnell, E.J. 1990, Implanting strategic management, 2nd edn, Prentice-Hall, New York.
Antony, J. 2006, ‘Six sigma for service processes’, Business Process Management Journal, Mar, 12(2), pp. 234-248.
Aruskeviciene, V., Salciuviene, L. and Trifanovas, A. 2006, 'A comparison between recent and prospective critical success factors in Lithuanian printing industry ', Managing Global Transitions, 4(4), pp. 328 - 346.
Barney, J.B., 1991, ‘Firm resources and sustained competitive advantage’, Journal of Management, 17, pp. 101.
Boardman, A.E., and A.R. Vining. 1996, ‘Defining Your Business Using Product-Customer Matrices’, Long-Range Planning, 29(1), pp. 38–48.
Brotherton, B., Heinhuis, E., Medema, M., and Miller, K. 2003, ‘Critical success factors in UK and Dutch hotels’, Journal of Services Research, 2(2), pp. 47–78.
Buckley, A. 1975, 'Growth by acquisition ', Long Range Planning, August, 8(4), pp. 53-60.
Byers, C., and D. Blume, 1994., ‘Tying Critical Success Factors to Systems Development’, Information and Management Amsterdam, 26(1), pp. 51–61.
Chattopadhyay, P., Glick, W.H., and Huber, G.P, 2001, ‘Organizational actions in response to threats and opportunities’, Academy of Management Journal, 44, pp. 937-955.
Chi, T., 1994, ‘Trading in strategic resources: Necessary conditions, transaction cost problems, and choice of exchange structure’, Strategic Management Journal, 15, pp. 271 – 290.
Combs, J.G., and Ketchen, D.J., 1999, ‘Explaining interfirm cooperation and performance: Toward a reconciliation of predictions from the resource-based view and organizational economics’, Strategic Management Journal, 20, pp. 867 – 888.
Daniel, R. 1961, ‘Management information crisis’, Harvard Business Review, 39(5), pp. 111-21.
Deeds, D.L., DeCarolis, D., and Coombs, J., 2000, ‘Dynamic capabilities and new product development in high technology ventures: An empirical analysis of new biotechnology firms’, Journal of Business Venturing, 15, pp. 211 – 229.
Deephouse, D.L., 1999, ‘To be different, or to be the same? It’s a question (and theory) of strategic balance’, Strategic Management Journal, 20, pp. 147-166.
Dev, C.S. and Klein, S. 1993, ‘Strategic alliances in the hotel industry’, The Cornell H.R.A. Quarterly, February, pp. 42-5.
Eden, C., and Ackermann, F. 2000, 'Mapping distinctive competencies: A systemic approach ', Journal of the operational research society, 51, pp. 12-20.
Gerald, F.D, Kristina, A.D., Catherine, H.T. 1994, ‘The Decline and Fall of the Conglomerate Firm in the 1980s: The Deinstitutionalization of an Organizational Form’, American Sociological Review, August, 59(4), pp. 547-570.
Geroski, P.A. 1999, ‘Early warning of new rivals’, Sloan Management Review, 40(3), pp. 107-116.
Ginter, P.M., and Duncan, W.J. 1990, ‘Macroenvironmental Analysis for Strategic Management’, Long Range Planning, December, 23(6), pp. 91-100.
Grant, R. M. 1998, Contemporary strategy analysis: Concepts, techniques, applications, 3rd edn, Blackwell, Malden.
Hall, R., 1992, ‘The strategic analysis of intangible resources’, Strategic Management Journal, 13, pp. 136 – 139.
Hanson, D., Dowling, P.J., Hitt, M.A., Ireland, R.D., Hoskisson, R.E. 2005, Strategic Management: Competitiveness and Globalisation, Thomson Learning, Victoria.
Hill, C.W.L., & Jones, G.R. 2007, Strategic Management, 7th edn, Houghton Mifflin, Boston.
Hitt, M.A., Keats, B.W., and DeMarie, S.M
Hubbard, G. 2000, Strategic management: Thinking, analysis and action, Prentice Hall, NSW.
Hubbard, G., Pocknee, G., and Taylor, G. 1996, Practical Australian strategy, Prentice Hall, Sydney.
Ireland, R.D., and Hitt, M.A. 1999, ‘Achieving and maintaining strategic competitiveness in the 21st century: The role of strategic leadership’, Academy of Management Executive, 13(1), pp. 43-57.
Johnson, S. and Scholes, K. 2002, Exploring corporate strategy: Text and cases, 6th edn, Prentice-Hall.
Kotler, P. 1998, Marketing Management – Analysis, Planning, Implementation, and Control, 9th edn, Prentice-Hall, Englewood Cliffs.
Kumar, V., Simon, A
Learned, E.P., Christense, C.R., Andrews, K.R., and Guth, W. 1969, Business Policy, Homewood, Irwin.
Leidecker, J.K., and Bruno, A.V. 1984, ‘Identifying and using critical success Factors’, Long Range Planning, 17(1), pp. 23–33.
Lowendahl, B., and Revang, O., 1998, ‘Challenges to existing strategy theory in a postindustrial society’, Strategic Management Journal, 19, pp. 755-773.
Medical Imaging, 2000, ‘Business Profile: GE Medical Systems’, Ascend Media, November, viewed 15 March 2007, .
Porter, M. E. 1979, ‘How competitive forces shape strategy’, Harvard Business Review, March / April, 57, pp. 137 - 45.
Porter, M.E. 1980, Competitive Strategy, Free Press, New York.
Porter, M.E. 1985, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York.
Porter, M.E. 1988, ‘Managing Value: From Competitive Advantage to Corporate Strategy’, The McKinsey Quarterly, pp. 43-59.
Porter, M.E. 1994, ‘Toward a dynamic theory of strategy’, in R.P. Rumelt, D.E. Schendel and D.J. Teece (eds), Fundamental Issues in Strategy, Harvard Business School Press, Boston, pp. 423 – 61.
Prahalad, C.K., and Hamel, G. 1990, ‘The Core Competence of the Corporation’, Harvard Business Review, 68(3), May-June, pp 79-93.
Prior, V. 1999, ‘The language of competitive intelligence, Part Four’, Competitive Intelligence Review, 10(1), pp. 35-70.
Quesada, H., and Gazo, R. 2007, 'Methodology for determining key internal business processes based on critical success factors: A case study in furniture industry ', Business Process Management Journal; Feb, 13(1), pp. 5-20.
Ramaswamy, K., 1997, ‘The performance impact of strategic similarity in horizontal mergers: Evidence from the U.S. banking industry’, Academy of Management Journal, 40, pp. 697-715.
Reeds, R. and DeFillippi, R., 1990, ‘Casual ambiguity, barriers to imitation, and sustainable competitive advantage’, Academy of Management Review, 15, pp. 88 – 102.
Riyad, E., Ibrahim, E. and Mohamed, Z. 2006, 'Making Business-to-Business International Internet Marketing Effective: A Study of Critical Factors Using a Case-Study Approach ', Journal of International Marketing, 14(4), pp. 87-109.
Rochart, J.F. 1979, ‘Chief Executives Define Their Own Data Needs’, Harvard Business Review, 57(2), pp. 81–92.
Rumelt, R.P. 1974, Strategy, structure and economic performance, Harvard Business School Press, Boston.
Spillman, B. & Lubitz, J. 2002, ‘New estimates of lifetime nursing home use: Have patterns of use changed?’, Medical Care, 40(10), pp. 965-975.
Thompson, A.A., Strickland, A.J., and Gamble, J.E. 2005, Crafting Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases, McGraw-Hill, New York.
Varadarajan, P.R. and Jayachandran, S. 1999, ‘Marketing strategy: an assessment of the state of the field and outlook’, Journal of the Academy of Marketing Science, 27(2), pp. 120-43.
Watlers, B.A., and Priem, R.L. 1999, ‘Business strategy and CEO intelligence acquisition’, Competitive Intelligence Review, 10(2), pp. 15-22.
Wheelen, T.L. and Hunger, J.D. 2000, Strategic Management Business Policy: Entering 21st Century Global Society, 7th edn, Prentice Hall, New Jersey.
Willard, F.M. 1969, ‘Firm Conglomeration as a Market Structure Variable’, American Journal of Agricultural Economics, December, 51(5), pp. 1488-1494.
Williams, J.R., Paez, B.L., Sanders, L. 1988, ‘Conglomerates Revisited’, Strategic Management Journal, September / October, 9(5), pp. 403.
Please join StudyMode to read the full document