Question

Backstory: General Electric Co. decided sustainability was a business opportunity rather than a cost and pushed into the field in 2005 with its new initiative. But the products and services weren’t only for its customers they first transformed GE.

Key moves: GE began looking at sustainability as part of a demographic trend, realizing that scarcity would increase with population growth. Energy and water use, waste, carbon emissions all would decline among the most efficient and sustainable companies. GE saw a profitable business opportunity in helping companies along this sustainable path to offer environmental solutions.GE also gambled that carbon would eventually be a cost, following the implementation of previous regulatory regimes such as limiting acid rain. Although the precise way carbon would be regulated was unknown, as it still is, the company had little doubt that regulation would happen rather than wait, GE joined a climate coalition with nongovernmental organizations to press for a cap and trade system to build certainty into the future.

Within the company, GE began engaging employees to see where energy savings could be found. That might include turning off the lights when a factory was idle or even installing a switch so that lights could be turned off. Ecomagination sold solutions within GE, whether the project involved installing LED lights on a factory floor, recycling water at a nuclear facility or offering combined heat and power generation units at a plant in Australia. Within GE, managers began to be measured on how much energy savings they had achieved.

Impact: The company so far has saved $100 million from these measures and cut its greenhouse gas intensity — a measure of emissions against output — by 41%, according to the company’s sustainability report. The work inside GE became a proof of concept to external customers grappling with similar issues. Ecomagination targeted C-level executives to build this business since most problems cut across divisions (improving energy efficiency, for example). So far GE has invested $4 billion in this effort, much of it in research and development. But it reaped sales of $17 billion in 2008, up 21% from a year earlier, and is striving for $25 billion in sales in 2010.

1. Describe the 3 Strategic Management Process GE used.

2. Explain the need for integrating and the use of strategic management for GE (Give 3 examples).

3. Please list 5 examples of strategic management that GE either can use or already is using.

4. What are the strategy formulation, implementation, and evaluation activities that GE can potentially use to make its innovation better than what it is now (Give 3 recommendations)

5. If you were brought in as a consultant, what is the 1 recommendation you would make that would set GE apart from all its competition?

Answer 1

General Electric Company (GE) has a generic strategy for competitive advantage that, along with intensive growth strategies, ensures the conglomerate’s growth in global markets. Michael Porter’s generic strategies are used to develop and maintain firms’ competitive advantage. In this case, GE uses its generic strategy for competitive advantage in the energy, oil and gas, aerospace/aviation, transportation, healthcare, and electric lighting industries. On the other hand, a company’s intensive growth strategies are employed to support and sustain business growth. For example, General Electric relies on diversification as a major growth factor through the years. The combination of intensive strategies used in GE’s business facilitates continued growth despite changing economic conditions and competitive challenges, considering competitors like 3M and Siemens. These strategies boost the company’s resilience as one of the biggest diversified businesses in the world. Nonetheless, for long-term growth and competitiveness in its industries, General Electric’s intensive strategies and generic competitive strategy must remain relevant to industry situations.

General Electric’s management personnel use the company’s generic strategy and intensive strategies to determine the appropriateness of tactics and operational approaches. For example, GE’s operations management approaches are evaluated based on how they contribute to the competitive advantage and growth of the business. The managerial aim is to address the external forces coming from General Electric’s competitors, such as Siemens and 3M.