Competitive Strategy & Innovation †Free Samples for Students

Question: Discuss about the Module Competitive Strategy Innovation. Answer: Introduction GE has one of the most extraordinary success stories in terms of turning around the organization into a profitable one and various economists and scholars continuously strive to study deep into thinking the wide range impacts, strategies taken up by leadership at GE for the upcoming entrepreneurs to learn, interpret and implement (Hill et al, 2014). The case study covers four major analysis on Immelts strategies mainly covering how he redirected GE towards growth despite adverse economic conditions and in midst of recession. The relevance of those decisions taken in 21st century, how did GEs resources and capabilities assist Immelt and how he has led progressive growth. How the changes necessitated an organizational change and finally what other strategies could be taken by Immelt for GE. This is a very interesting insight into why some companies really succeed at what they do. Discussion On the 14th AGM with shareholders, Immelt specified on his vision for GE as a well connected industrial firm. At present, when the world is in middle of crossing dimensions to digital world from a physical world, Immelt stressed on GE to gain finesse on speed, scalability and flexibility. In 2001, upon taking over the post of CEO, Immelt was drawn into a lot of environmental factors which disturbed the business environment in GE. A series of events took place. To begin with, 9/11 took place which overwhelmingly crushed the business environment. Then, there were a series of high profile cons Enron; which led to questioning of ethics, corporate governance and financial reporting at GE. Jack Welchs highly generous retirement package becoming public, financial crisis of 2008-2009, which affected GE Capital-the leading financial institution of America. Bad debts accumulations along asset write-downs threatening survival of GE. The economic growth further slowed at domestic level, catastr ophe struck investors, fidgeting for confidence and added furthermore global competitors on list of GE. If we try and apply Barneys VRIN model here, we may get an insight into what Immelt may have thought to start creating his vision for GE. Barneys VRIN Model says that assets of competency of the organization should be valuable, rare, inimitable and non substitutable. For Immelt, post identifying the opportunities in his environment, he needed to create GE all of what VRIN represented. Considering the huge infrastructure and the leading position it had already created in market under Jack Welsh, he needed the back up of innovation and focus of customer service to provide inimitable products. He needed to penetrate quickly to new markets to dominate them till other players arrived. Immelts observation pointed to a need to adapt on seeing the changes rapidly taking place in the business environment. From cost cutting, deal making to new product innovations, mining for new markets and opening new service business avenues, he changed directions for GE. With use of innovation, well sought out organic growth and renewed customer focus, he attempted to reinvent GE strategically. With help of his assertive team, he identified opportunities in age-struck population of world, future upcoming demands of sustainable and alternative energy sources, infrastructure development and new high potential markets in developing nations. He targeted on value creation for GE customers and planned to do so by leveraging GEs core competencies. At core of his strategy was growth platforms which were either an extension of present business or development of new commercial areas. He wanted to deliver superior, custom-made products and services especially to high-growth markets. Execution of the new growth platform was to be done by tools of divestment and tactical acquisitions in high potential sectors. For all the growth that he envisioned for GE, he understood technology was the key driver. This was made obvious with later launches of Imagination Breakthroughs. For such innovations and quality improvements, GE invested in its RD and increased its capacity with required financial push. As indicated earlier, customer focus was another phase of his growth strategy. GE created a Commercial Council to energize its marketing functions. Also, plentiful customer-oriented programs were launched. These steps led to value creation just as Immelt wanted as it exploited linkages across many companies of GE. Product bundling along with cross selling led to enterprise sales. Sales teams seeked customers who would benefit from wide portfolio of GE businesses and offered customization to them. This rendered a differentiation advantage to GE with offerings of top quality innovative bundles of products and services focussed on value creation. Immelt accelerated the change in business environment by disassociating itself from shareholder value maximization, an obsessive trend since 1990s. He pointed out that his job was to strategise for long-term growth plans which would subsequently lead to high stock prices. 2 a. After taking over reigns of GE from Jack Welch, under whom GE saw prosperity and tremendous growth, the platinum era of market economy was about to go downhill. Amidst poor financial performance he had the humongous task of turning things around for GE. He need to meet the new age business essentials before it perished. All he need was good planning and implementation, obstacle primarily being recession. The economic instability was his challenge as he stood at the face of a clouded future of GE. He needed to build the business not only sustainable but as prosperous as it was before. He had to identify well worth trying opportunities for growth in such times. GEs problem are most relevant to 21st century ageing population, global warming, sustainable and alternate sources of energy, new emerging technologies like biotechnology, nanotechnology etc. Also, he foresaw that GE could be capitalizing on potential of emerging markets in developing nations like China, India etc. He made persistent efforts and finally was able to pull out GE from slow growth businesses such as GE Capital to redirect its resources to where areas of potential growth tapping the emerging global trends during that time. A six-part growth process strategy was brought in place to combat the business environment woes: Innovation generation of new ideas and plans to make the ideas a reality (Curry, 2013. 54(4), pp.746-781) Leadership in the technology leader in technology, processes, content and services Commercial Excellence To drive One GE by having in place top marketing and sales functions for perusal Globalization create new markets as well as business openings in emerging markets Growth Leaders Work on building strong and powerful leadership to drive GE (Tett, 2016. (221), p.98) Customer Value use developmental intelligence to create value for customers and channelise growth Over here, particularly, we can say that Immelt tweaked Mintzbergs 7S framework for application in building a six part growth process strategy. Minstzberg states 7S as Structure, Systems, Style, Staff, Shared values, Skills Strategy. As for structure, Mintzberg changes the business units counts to 5 and got rid of unsuccessful business units, he put customer service as part of systems that were further created as part of systems and shared values, he made technology improvements and innovation as style for growth, he changed the key responsibilities of staff and intertwined them with other units performance as staff and skill strategy, he made growth itself the strategy of growth with use of the four pillars of GE. He realized the need to create and work on growth platforms built on either extension of current business or mine new commercial avenues to make the changes he envisioned a reality. He focussed mostly on organic growth but did not lax on repositioning. He understood that it was vital and tactical acquisitions were going to be essential to achieve this. Subsequent to identification of growth platforms using marketing, technical and management resources, business was taken over expeditiously post acquisitions. In 21st century where people have kept technology at heart, Immelt had already recognized and emphasized its importance within organization. GE greatly invested in its RD. He wished to use RD projects in high potential emerging markets through his idea of Imagination Breakthroughs Immelt sensed in 21st century customers wish was going to be the order of the day. Hence he launched practices for IT redesigning keeping customers as centre point. Also, customization for product offer ing were provided as option to customer along with their technology services. Enterprise sales were fixated to enhance customer experience and add value to his business. By launch of such customer centric products, GE started stirring international markets. He offered local product development to suit the customers own market needs. (Popescu, 2013.5(2), p.15). Immelts strategies were tuned to external business environment development as much as could be turned in favour of GE. The organization was in a cycle of continuous evolution to match the 21st century requirements. In phase when investors had started questioning its business ethics, it brought in further transparency and started sending detailed financial reporting to increase brand accountability and confidence. Using its diverse portfolio as a vehicle, it aggressively marched towards growth in emerging markets in the globe to tap new markets all during recession and its recovery period. Rapid inter-linking business was happening, but, subsequently, it kept on investing in its RD aggressively to launch new products and services into new entered -specifically in untested business areas. (Yip and McKern, 2014. 9(1), pp.2-10). Immelts intuition to integrate customer orientation was also a reason to put customer value creation as part of growth plans to meet the needs of 21st century. He recognized the impact of spending valuable time with customers, building strong working relationships and customization. He needed to replan his marketing function keeping customer in the centre, this would involve hiring right people with the correct mindset to help him with his prowth platform vision. A key initiative was At the Customer, For the Customer, a six-sigma programme deployed in marketing, sales, and customer relations departments. GE also applied the same six sigma methodology to customers own businesses and used metrics to track their satisfaction and attitude levels. Here, we can safely say that Porters model of Value Chain is greatly reflected. Porters generic value chain suggests that by creating value in business we create margins for profit. Through use of primary activities such as logistics (inbound and outbound), operations, marketing sales and services and support activities such as infrastructure, HRM, technology development and procurement, a careful amalgamation could lead to good profit by way of value creation. Immelt did the same thing. He used the strength of the organization and channelled them for growth. He had in the strength side-the technology, huge infrastructure, strong inbound and outbound logistics, good RD, skilled resources etc. In the business environment of 21st century, Immelt knew that he needed to identify pockets to create profit so that he could make GE sustainable and profitable GE strives to excel in profit making using its four pillars of organization. They are Wide portfolio of innovative products and services GE uses its resources and capabilities well to continuously inflating its product and service offerings. Healthcare: world leader in diagnostic imaging: X-ray equipment, CT scanners, and MRI scanners. This has been area of growth. Continuous expansion is happening. Energy: oldest business was power generation. Along with this, it had a steady business of supplying equipment to the oil and gas sector. Immelt had recognised that energy sector was going to change for better with need of alternate and sustainable energy sources. This has been the core of growth platform strategies of Immelt. key acquisitions included Enrons wind energy business, ChevronTexacos coal gasification business, and AstroPower, which supplied solar energy products. In conventional power generation, the Alstom acquisition made GE the undisputed world leader in turbines. In oil and gas, a series of acquisitions established GE as a key player in supplying oilfield equipment and services. Broadcasting and entertainment: GE did go beyond NBC broadcasting and cable business but, by 2009, it became clear that NBC Universal did not fit with Immelts identification of GE as a technology-based industrial company. Technology infrastructure: This was the umbrella under which GEs growth initiatives took wings. In 2003, he announced that they were taking the company to new heights with few competitors. This was to happen with competitive advantage in big, fundamental, high technology infrastructure. GE also acquired Alstom along with its own electricity generation business to grow new platforms such as: security systems; water treatment and aerospace, where GE had already built a vital position in market in making jet engines as part of its strategy to venture into avionics. built upon its strong position in jet engines to diversify into avionics. the utilization of extensive research and development GE realized that the only path to change was by adopting the change by picking up new technologies and innovating them. It has strong RD.the implementation of an aggressive acquisition and expansion strategy (Leavy, 2014,42(2), pp.30-39) in order to grow and expand its presence it took over important vantage points. This rendered GE a tactical competitive edge. In healthcare, key acquisitions - Amersham (a UK-based diagnostics and medical equipment company) and Abbott Diagnostics (the worlds leading provider of in vitro diagnostics). In energy sector, key acquisitions included Enrons (wind energy), ChevronTexacos (coal gasification and AstroPower (solar energy). In entertainment sector, key acquisitions were Telemundo (Spanish-language broadcasting) and Vivendi Universal (film studios and theme parks). Alstom in electric generation and Smiths aerospace in avionics. the maintenance of the quality of their products and services by holding them to a Six Sigma Quality standard- Immelt stressed on quality and through Six Sigma embedded deep into the organization the value spread to customers too (Hinterhuber and Liozu, 2014. 57(3), pp.413-423). GEs success could be attributed to the fact that despite huge size, it smoothly adopts change in its internal environment. Through GEs Imagination breakthroughs started by Immelt, GE proves its ability to create and launch new ideas and innovations through RD and convert them to products. Technology improvement, innovations and strategic plans around it proves Immelts belief that only great products sell. Immelts assessment of his macro environment showcases his understanding of emerging global trends and selection of direction to businesses. Technology adds GE its competitive advantage. Not only that, Immelt also used the organizations human resources from different business units within GE to good use as well. He brought them together and intertwined their key responsibilities around the organizations goals and objectives to combine their strengths into a single focussed drive to achieve the growth goals planned by him. He revitalized the marketing functions at GE. Increased focus on customer experience, service and value creation and organic growth combined with innovation, helped enhance GEs business structures realign to complex diversified business while maintaining efficiency and performance throughout. Cross-integration across businesses, in-growth platform strategy added to enterprise sales changed GEs structure by 2002. The big units under Jack Welsh were grouped and brought down to 5 in numbers all of them focussed on broad scalable markets and had customer offerings of superior nature. The industries targeted were technology, infrastructure, healthcare, GE Capital, NBC Universal, commercial and industrial. GE built Commercial Council thinking about the benefit of its customers. As part of six part growth process, marketing and sales goals were also introduced, a lot of metrics driven analysis based on customer service were given importance. Such changes needed assistance of Immelt in the form of acquisitions to get a headstart. Development of such opportunities required expertise, coordination and involvement of several cross functional experts and cross functional units. These activities made the business environment further complex specifically in terms of gauging performance management as linking individual contribution to organization goals and objectives to individual incentives was not easy to implement in the organization. In terms of sales, Immelts strategy to integrate and make use of integrated cross functional business as part of strategy for growth made coordination complex and converted to enterprise sales instead of cross-selling. New acquisitions to fuel growth in technology and energy sections of business made the organization structure further complex. Thus, as is understood increasing complexities in business environment forced Immelt to adopt growth strategies but this left the internal environment quite complex to handle that solving situations required good planning and strategy execution. Also, GE needed to exit slow growth business and reallocate its resources to new businesses or existing business with high prospects. Divestments were also important part of Immelts growth strategies at organizational level. Immelts strategy is considered well planned out, hearty and visionary. In opinion of many economists, he should continue his pursuit of greater emphasis on growth with implementation of various initiatives and changes taken place in fields of customer service, technology and cross linked sales (Fawcett and Fawcett, 2013). The development of leadership opportunities with GE has poised GE to confront the changes in times of adversity with skills and foresightedness. GE has always been the CEO Factory as it has trend of filling this position from within its organizations. It builds its top management itself and worldwide businesses. When the time comes, GE would be ready with manpower and acute skill sets in its own people to lead the organization to growth. GEs already has excellent appraisal and promotion systems in place along with robust financial and planning systems in place which together form the core of its performance management processes. GE should target more risk taking erudite management and RD led innovations in todays business scenario. Also, it should make further plans to incise and enter new markets. Immelt should also continue divestments of some units (with low growth percentage) to concentrate on those units with higher competencies and potential to tap the future growth platforms of business. For a stronger position in market, it needs to get rid of slow businesses, redirect its resources to prospective business units without fail. The exercise by Immelt increased the complexity in business environment to gauge individual performance. GE could introduce competitive pay that would link all types of workers, help collaborate the corporate ladder vertically as well as horizontally. The combination strategy of Immelt to intertwine innovation and efficiency will provide GE the added space better than others to exploit the demands of changing business scenarios globally. (Campbell, 2016. Volume 31, Issue 2, April 1998, Pages 308314). GE must continue its focus on imagination at work and remain a high on technology organization. To drive innovation and customer orientation (Davenport, 2013), GE required a level of teamwork across divisional boundaries. Hence, it was not possible to match up the performance management system and internal culture of competitiveness. Hence, the relationship between GEs corporate headquarters and the businesses were altered. This is an important step to continue foster performance with right rewards. Immelts emphasised on value creation through exploitation of linkages between different businesses. This is one of the progressive strategies adopted by GE to assist in gaining competitive advantage but results are still to be checked out. (Hinterhuber and Liozu, 2014. 57(3), pp.413-423). GE under Immelts leadership became all about value creation (Cameron et al, 2014) using the different business units networks. GE adopted this impressive strategy to help gain competitive advantage but only time will tell the final results. Other things that Immelt could opt for would be preparing for strategies to protect GEs environment in case another crisis of financial nature struck the world economy. Add to this, new plans to venture and make new markets still as there are lot of untapped markets still around! Also may be look for new businesses altogether. Conclusion The report has covered various aspects of strategies opted for by the leadership at GE. It has proved that emerging markets among other factors has tremendous growth opportunities and this was well interpreted by GE and he dared to go to unchartered territories and paved way for others to follow (Yip and McKern, 2014. 9(1), pp.2-10). Innovation was not the word of the day during the times when Immelt decided to set up a strong RD front to counter barriers but as a visionary he deserves respect. In the face of recession and recovering from it, he directed to dissolve the established section of GE, GE Capital and chose to reallocate its resources. Immelt focused his efforts to build on customer experience. He had a forward thinking and improved upon marketing and sales functions in the organization. Also Immelt properly assessed his environment and made strategic choices for a progressive GE.( Doyle and Von, 2015. 55(1), pp.6-18) References: Cameron, K.S., Quinn, R.E., DeGraff, J. and Thakor, A.V., 2014.Competing values leadership. Edward Elgar Publishing. Davenport, T.H., 2013.Process innovation: reengineering work through information technology. Harvard Business Press. 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