Module 3 Group Case Study - General Electric
Module 3 Group Case Study - General Electric
Module 3 Group Case Study - General Electric
Calvin Shelly, Alisandra Alzaghtiti, Brianna Holtzer, Nicholas Zambo, Tayyab Mohammad
1. Explain how GE is creating a “fit” among its activities at its factory in India.
Nick: Recently, GE has been working to improve their efficiency and performance in what they
manufacture. A factor that has a major impact on the company’s sales in the demand of the
products they are making. If a major product of the company is not in high demand, it is
possible that the company may begin to lose potential revenue, which could otherwise be
obtained by producing something else. However, most companies have lines which can only
produce one product, making this shift difficult. In order to combat this, GE developed a new
factory in India capable of producing multiple products on the same line with very little changing
time. This is done by using flexible 3D printers. If one product is not in high demand at the
time, the company can shift production to a different industry by telling the same 3D printer to
produce a different product. This allows for very little downtime, increasing efficiency and
allowing for the company to take advantage of quick swings in the market. This system allows
for the many different industries of GE to be developed in the same location and on the same
lines, regardless of the product. In theory, this will help GE to recover financially and continue
to thrive afterwards.
2. Using the steps in Figure 6.1, describe how GE should be transforming the way it
does business.
Tayyab- General Electric needs a transformation in the way it does business to prevent any
further losses. Previously with their first CEO Jack Welch, they were following the proper
strategic management at each level which was reflected in the company's financial performance.
When Jeff Immelt came into office he practiced corporate-level strategies, by managing their
acquisitions and making significant investments into newly arising markets. One of the mistakes
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Immelt made was he tried to manage business level strategies at a corporate level and he should
have assessed the current reality. General Electric was already performing well, they were the
leading maker of medical systems, commercial jet engines, etc. (Knicki,217) but Immelt focused
too much on trying to invest in stuff that makes products work instead of making great products.
Once they replaced Immelt with John Flannery he corrected his actions by halting large scale
additions to the company and he understands to learn from the past mistakes Immelt has made in
his statement “ Complexity hurts us… Complexity has hurt us”( Knicki, 218), GE Should be
transforming the way they conduct their business from Immelt to Flannery by trying to limit
spreading the resources they have, focus and improve on what they already have and conduct
Calvin Shelly:
Strengths: Weaknesses:
-General Electric has high levels of marketing -They have accumulated high levels of debt,
experience since its foundation and has a especially since the global pandemic.
industries are in healthcare, renewable energy Mergent, their net income as of 6/30/2021 is
and power, financial services and aviation. -2.441 billion dollars. They have been
This level of diversification allows them to reportedly resorting to selling some of their
have a safety net in the case one of their assets to pay off debts such as their jet leasing
-They are partnered with many governments -Their source of raw materials comes from
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globally including local, state and federal third party companies who ultimately control
countries and currently developing countries. generate. Dependence on third parties for raw
These customers use their services to “fulfill materials can be a concern in the case that
public policy objectives, and may request their operations are halted temporarily or
domestic preference restrictions, the value chain before their own may cause
socioeconomic provisions, and especially issues in the case there are government
stringent business ethics and compliance regulation changes, shortages of jobs or raw
profit from.
Opportunities: Threats:
-The field of artificial intelligence (AI) and -The cost of raw materials continually
robotics is a rapidly growing market that increases with inflation and supply and
General Electric could focus and expand on demand every year. This will, therefore,
more. In a world that is dependent on increase the cost to create their products and
technology for nearly everything that we do, increase the price their customers will pay for
this would be a great, profitable opportunity their products. This could potentially make
for them. They currently have research them lose business if a customer decides to
development and some programs already buy from a cheaper competitor. “Raw material
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created according to the research page of their prices are expected to average 10% higher
carbon emissions and other greenhouse gases -Their stock price has taken a major loss since
in hopes to slow down the rate of global its peak and this loss in market value does not
warming. Furthering their development of meet the needs of stakeholders who have
renewable energy and cleaner means of invested their money into the stock. They
production would greatly benefit the have little reason to believe that their
company’s reputation and make customers investment will make a return. If there are no
more likely to consume GE products. people investing their money into GE stock,
Bri: In 2017, GE replaced Immelt with John Flannery. Flannery is employing a stability strategy.
A stability strategy is a grand strategy that involves little or no significant change. The book
states that Flannery's first move was to “stop large scale acquisition...He also announced that GE
Digital would be scaled back and have basic strategy.” (Kinicki 218) This means that Flannery is
trying to regain stability by eliminating large changes within the company. Flannery’s strategy is
different from Immelt’s strategy. Immelt was implementing a growth strategy. He wanted to
grow outside of GE’s traditional businesses. Immelt was planning to expand the industry by
manufacturing both medical equipment and its supporting products. This is very different from
Flannery’s idea which was just to maintain the same and not expand and grow.
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Explain
Alisandra: Out of the four Michael Porter’s four competitive strategies, GE Company is trying
to follow the cost-leadership strategy. A company takes on this strategy if it aims to increase
profitability through selling to customers while keeping costs below those of competitors
(Kinicki, 2018). The ways in which to follow this strategy include creating products through
reducing cost of production, increasing market size, and achieving higher profit margins (Cost
leadership strategy). General Electric is specifically focused on selling as many units of their
products as possible. This shows that they are focused on keeping costs below those of their
competitors, while at the same time putting an emphasis on providing products to target a wide
market around the world. John Flannery wants to sell divisions that are not growing profits, even
if they make up a significant part of the company’s assets. This shows dedication for growing the
company through focusing on products that can make profit and not just because of uniqueness.
The differentiation and focused-differentiation strategies focus on offering unique products and
GE is not following these competitive strategies because they are cutting out divisions that are
not making profit, such as loco-motive building and industrial light manufacturing. (Kinicki,
2018).
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References
Baffes, & Wu. (2021, September 10). Raw material commodity prices continue rising amid
https://blogs.worldbank.org/opendata/raw-material-commodity-prices-continue-rising-amid-stron
ger-demand
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https://studyfinance.com/cost-leadership-strategy/.
Feuer, W. (2021, June 14). GE sheds finance assets as it focuses on industrial business and seeks
https://www.cnbc.com/2021/03/10/ge-sheds-more-assets-as-it-focuses-on-industrial-business-and
-strengthens-balance-sheet-.html
https://www.ge.com/sites/default/files/GEA33644_Government_Business_Feb_2020.pdf
Kinicki, A., & Williams, B. K. (2020). Management: A practical introduction (9th ed.). McGraw
Hill.