Strategicmanagement concerns the identification and description of approachesthat managers of organizations can carry out in order to realizebetter performance, as well as competitive advantage for theirentities. An organization can be indicated to have competitiveadvantage in case its profitability is considered to be highercompared to the average productivity of all other companies operatingin the industry. Strategic management helps a company to utilize itsresources better in the attainment of its objectives. The purpose ofthis report is to analyze the strategic management of GeneralElectric under the leadership of Jack Welch and providerecommendations based on the case presented about the company.
Theattainment of strategic objectives, set by an organization, isexceedingly crucial for enhancing the competitiveness of a company.However, the realization of a strategic goal is not withoutchallenges and an entity needs to go through the huddles in order tobe successful. CEOs in an organization must offer the best leadershipin order to oversee the attainment of proposed changes. Successfulleadership helps in the decision-making process and providing a guideon how the desired change is to be accomplished. Therefore, theheadship of an organization is perceived as being vital to theprocess of strategic management.
Fromthe case study, it is evident that General Electric was in a positionto realize successful changes under the leadership of two executivesJones and Welch. During the Jones era, the organization was capableof attaining success since the focus was on strategic planning. Aftertaking over from Jones, Welch transformed the organization for thebetter and desired to see that the organization reached a stage whereit would be perceived as the most profitable and highly diversified.The early results realized by the CEO were impressing however, therewere critics concerning whether the organization would be in aposition to go through different challenges in the development of thee-business model. The issue in this case is establishing whether thebusiness has the capability of adopting e-business model under theleadership of the successor.
GeneralElectric emerges as one of the globe’s largest, as well as mostdiversified organizations. The entity has eleven different units,which range from Advanced Materials to NBC Universal. As a whole, thechief competitor in the conglomerate industry is Siemens. Breakingdown General Electric into its constituent segments reveals howcompetitive the company is. Every distinct segment of the company hasits own degree of competition. Since there are few competitors in theindustry, the rivalry in the industry can be indicated to be low tomedium.
Threatof New Entrants
Inthe conglomerate industry, where the company operates, the threat ofnew entrants is low. This emanates from the size of the company. Manyof General Electric companies need a great deal of brand recognitionin order to remain successful in the industry. The threat of havingnew entrants in the finance industry that would compete in the levelthat General Electric competes is exceedingly small. Alternatively,technology is another area, where new entrants into the industry willrequire large capital investments. Furthermore, all of the GeneralElectric entities are in exceedingly large-scale economies, which arehard to break into.
Threatof Substitute Products
Almostevery product, which General Electric deals with has the threat ofbeing substituted by other goods. However, the financial unit ofGeneral Electric is not as susceptible to the threat of substituteslike the other segments of the company. This is because a consumer isnot as likely to make changes to his/her financial provider as he/shewould switch to another brand of lighting bulb. Nevertheless, despitethe existence of substitutes for most of the services and products ofthe company, the threat of substitutes can be indicated to be mediumbecause the company has a well-established brand, which could makeclients reluctant to change the brand in case new products andservices become introduced.
BargainingPower of Buyers
Becauseof the large size of the company, General Electric has considerablebargaining power for most of its products. In most of the segments ofthe company, the switching cost for buyers is remarkably high. Formost entities, such as GE healthcare, the volume per buyer isexceedingly large in both quantity of commodities and cost of goods.This makes the switching cost for the buyers to be high, whichprovides General Electric with a merit over the buyers. However, theswitching cost is low for buyers in some segments such as theconsumer industry. Therefore, the bargaining power of buyers can beindicated to be low to medium.
BargainingPower of Suppliers
Inthe industry, the bargaining power of suppliers can be indicated tobe relatively low. This emanates from the sheer volume of commoditiesthat General Electric purchases from the suppliers. The suppliers ofthe goods have no capacity of bargaining with the company. Most ofthe suppliers of the company cannot survive in case they losebusiness with the company. This offers the entity the merit of havingsuppliers fight for their business.
Oneof the key competencies of the company is that it has been inoperation for long, which implies that the company has come acrossdifferent challenges within the way and has learned how to get rid ofthem. Thus, in case it encounters a problem or a challenge that ithad earlier passed through, it will be in a position to sail throughbecause it will know the solutions that it will need to apply.Another competence of the company is that it has vast resources,which it can easily use in handling issues that may come on its way.
Analysisof the Fit Between Choices of the Firm and the External/InternalAnalysis
StrategicChoices and Core Competencies
Thestrategic choice that is under consideration in this case concernsthe adoption of the e-business model by general Electric. Theadoption of the e-business model matches the needs of the companyoriginating from its different segments. With the e-business model,the company can be in a position to effectively control theoperations of its different segments. The core competencies of theorganization are supportive in making strategic choices. Since thereare costs associated with the integration of e-business model forinstance, market research in order to ascertain the alternativesavailable in the market, creation of awareness, and implementation ofthe process, vast resources are required for the business to adoptthe model. Besides, employees need to be competent enough in order toembrace the adoption process. The company is in an excellent positionto implement the model because it has vast resources, which it cancomfortably utilize in facilitating the process.
Welch’sDecision and Options Not Pursued
Accordingto the case study, Welch acknowledged that although General Electricwas a large company, it was frightened by the unfamiliarity of thetechnology. However, as he thought more of the e-business, it came tohis realization that he had actually completed the hard work ofbuilding assets necessary in supporting the e-business model.According to the case, the organization had the assets required forthe adoption of the e-business model since it had strong brands, topranking product reliability, excellent service quality, and greatfulfillment ability. Besides, Welch realized that through theprocesses such as Six Sigma, he was on his way to adopting e-businessmodel. Therefore, the strategic decision of Welch can be consideredas timely since it came at a moment when the organization had thecapacity to support the strategic choice. However, despite Welchmaking this strategic choice based on the capacity of theorganization to support the initiative, there were some options thatwere not pursued. One of the decisions that were not pursued was theability of the CEO, who would succeed Welch, to support the ideathrough good leadership. Although the resources to support thee-business processes had already been explored by Welch, it wasdifficult to tell whether the leadership that will come after Welchwas capable of providing an environment that will ensure success ofthe initiative. In case the successor would not offer goodleadership, it would be hard to realize the strategic objectivelaunched by Welch. Another option that was not pursued is the abilityof the employees to use the e-business process without failure. Priorto introducing the e-business model, it is critical for theorganization to ensure that the employees are ready to embrace thechange. However, this was not done by Welch while figuring out tointroduce the process as part of the organization. This is criticalsince it can influence the manner in which employees perceive theprocess emanating from their ability to use it.
Analysisof Organizational Design
Analysisof the Firm Using the Star Model
Strategy–Before initiating the change, Welch clearly defined the strategyby indicating the direction that the organization was to take byadopting the e-business model. Further, this was evident afterobtaining the first results of the change process, where the digitalteam provided positive outcomes. In all the initiatives that Welchbrought to the table, he had a strategy since he desired to achieve agiven objective. For instance, in his first initiative to restructurethe organization, he developed the strategy of fix, sell, or close.In this case, the businesses that were not position 1 or 2 were sold.Thus, it can be argued that the strategies of the change processesdeveloped by Welch were clearly defined.
Structure– from the case, it is apparent that the decision-making powerbefore and after the change rested on both the leader and employeesof the organization. However, the head of the organization played agreater role in influencing the process. This can be learned fromdifferent scenarios in the case, where Welch was indicated to be incontrol of the decisions made, despite him involving employees. Forinstance, in the case, it has been pointed out that, in restructuringthe organization, Welch dissolved various units that had been createdbetween businesses and the CEO. He ensured that the decisions made bythe CEO could be implemented directly to the businesses without theintervention of other individuals in between the lines. Also, inmaking the decision concerning the adoption of e-business by theorganization, he came up with the decision and introduced it to theoperating managers.
Processes– before and after the change, the flow of information was criticalto the change process. The introduction of the processes such as SixSigma was vital to allow the flow of information as the companyintroduced the strategic change. The preparations that Welch wasinvolved in before bringing a change process to the organization werewell-suited to the realization of the strategic objectives of thecompany. For example, through Welch being directly involved in theoperations of the businesses, without involving unit managers, it wasfeasible to allow the direct flow of information from businesses tothe leader.
Rewards– there were different rewards provided to offer motivation andincentives for the desired change both prior to and after the changeprocess. In his attempt to globalize the organization, Welch ensuredthat the employees that were in the organization had 4-E’s energy.In order to meet this capacity, Welch told his top management thatthey needed to strong actions in order to upgrade the quality oftheir employees. This involved rewarding, promoting, and paying theemployees well. Such initiatives were perceived as critical inmotivating them. Thus, there were rewards in ensuring the pursuanceof strategic objectives of the organization.
People– the right people were selected for the change process, which isevident before and after the change. From the case, it is apparentthat a digital team was selected in order to oversee the changeprocess. Through Welch coming up with the characteristics of theemployees that were suitable for the organization (A players), he wasin a position to choose the right people necessary for therealization of change processes.
Analysisof the Fit Among the Elements of the Organizational DesignPost-Change
Fromthe analysis of the organizational design, it can be indicated thatfour of the elements were a good fit for the strategic change theseinclude strategy, people, processes, and structure. The provision ofrewards was not a good fit because the organization failed to providerewards that could offer a motivation towards embracing the strategicchange.
Analysisof the Strategic Leadership
Approachof Welch to Leading Change
Fromthe case study, it can be indicated that the approach of Welch toleading change is through participative leadership. First of all,Welch creates an organizational culture, which employees need tofamiliarize with. After the development of an organizational culture,the leader introduces it and makes it known to workers so that theycan identify with the culture. Once this happens, the leader thenlaunches a strategic change process, which he fully participates in.Furthermore, in leading change, Welch creates a favorable climatethat can support the change process. This is seen as critical in theprovision of appropriate leadership that can facilitate the changeprocess. Thus, he can be considered as an excellent strategic leader.
LeadershipDevelopment Within the Firm
Fromthe case, it can be indicated that leadership is strongly developedwithin the firm. This can be learned from the leadership of the twoleaders of the organization Jones and Welch. During the reign of thetwo leaders, each developed strong values that helped in enhancingthe running of the company. To show that leadership is stronglydeveloped in the company, each of the two leaders were in a positionto deliver successes in the organization through their leadershiptactics.
Fromthe analysis, it is evident that the organization has the ability toattain the strategic change of adopting e-business model emanatingfrom its resource capabilities. From the organizational design,people, strategy, processes, and structure are a good fit for theorganization in attaining the strategic change. However, there are norewards. Therefore, it is recommended that rewards should be offeredin the process in order to motivate individuals to engage in thestrategic change. Besides, the organization should choose a successorwho will have the ability to provide leadership that will oversee theattainment of the strategic objective initiated by Welch.
Inconclusion, strategic management concerns the identification anddescription of approaches that managers of organizations can carryout in order to realize better performance, as well as competitiveadvantage for their entities. The attainment of strategic objectivesset by an organization is exceedingly crucial for enhancing thecompetitiveness of a company and the leadership of an organization isperceived as being vital to the process of strategic management. Inthe case of General Electric, the resources are adequate for theattainment of the strategic change. However, there is a need toprovide rewards to the process.