Analysis on the Shift of Business Strategy for Ge Into the 21st Century

Topics: Innovation, Economics, Strategic management Pages: 7 (2349 words) Published: April 15, 2012
Question 1: In what ways has Jeff Immelt redirected the strategy of GE? In 2001, shortly after Jeff Immelt became the CEO of GE, a series of events changed and impacted the corporate landscape. The immediate challenges that he faced included 9/11, and a subsequent series of high profile corporate scandals (Enron, WorldCom). In 2008, the financial crisis hit and had a severe impact on GE’s primary growth source, GE Capital causing it to accumulate bad debts and asset write-downs. These events caused slow domestic economic growth, crisis of confidence among investors and more global competitors. Due to the change in environment and the need to adapt Immelt shifted the focus of GE from cost cutting and deal making to new products, services and markets. He particularly focused on redirecting the strategy of GE through: organic growth, customer focus, and innovation. In 2002, Immelt committed GE to an organic growth rate of 8% per year. He identified a number of emerging global trends - the ageing population, the demand for sustainable energy, the necessity of improved infrastructure, and opportunities in the emerging markets. He aimed to create value for customers by leveraging GE’s core competencies particularly in advanced technology and related service by delivering superior, customized products and services to high-growth markets. A core component of his growth strategy was to create new ‘Growth platforms’ which could be either extensions of the existing businesses or entire new commercial areas. Through identifying a new growth platform, it would then be executed through a series of divestments and strategic acquisitions in sectors with high growth potential. Technology was seen to be a key driver of GE’s future growth which led to the launch of Imagination breakthrough. New technologies were seen as an essential ingredient to successful product innovation and quality improvement. GE expanded its research and development capabilities and supported them with adequate financial backing. Another vital part of Immelt’s growth strategy has been the implementation of the Customer Focus initiative. This lead to the revitalization of GE’s marketing function - most notably through the creation of GE’s Commercial Council and a number of customer-oriented programs. Through this customer focus imitative it became one of Immelt’s value creation strategies: exploit linkages across GE’s many companies. His efforts started off with product bundling and cross selling, which eventually led to enterprise selling. This meant seeking out customers that would benefit from GE’s broad portfolio of businesses and deliver highly customized solutions. The strategic focus was on creating differentiation advantage through innovative product-service bundles and enhanced customer focus

Question 2: To what extent is this strategy well aligned:
(a) with the requirements of 21st century business environment Jeff Immelt took over the reins of General Electric at the end of an Era where the Market economy was buzzing with optimism, confidence and growth, and was now heading into a downturn. This shift in the Business environment and economic instability instigated a crucial issue for Immelt, which was to identify the likely sources of profit for the future. Under Jack Welch the potential for value creation through cost reduction and the elimination of under performing assets had mostly been completely utilized. So from Immelt’s view, in the current Market situation, the primary driver of growth was going to be organic growth. With the poor state that the world economy was in, the central challenge for Immelt was going to be identifying where the most promising opportunities for profitable growth would lie. He identified a number of key significant emerging global trends—the ageing population, the conflicting forces of growing energy demand and concerns over global warming, the advent of biosciences in conjunction with global warming and...
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