Ge Analysis

ADMN 703

Case: GE

Xiaoxue Liu

November 10, 2015

GE Analysis

Overview

A year ago, GE was a company that involved in many different kinds of business, including aircraft engines, power generation, oil and gas production equipment, and household appliances to medical imaging, business and consumer financing and industrial products. There is few companies that could have that diversified services. It should be an advantage for a large company like GE since it lowers the risk by reaching a number of industries. But the fact is that GE was hit deeply after the 911 attack and the recession in 2008 which indicated that their widely diversification didn’t help a lot. Instead, the shape of their business not only increased their cost significantly, but also exposed the company to the capital market. That’s one of the reasons that Jeffrey Immelt, the CEO of GE, decided to pull the company out of this business. GE is now trying to focus on their core business again, which should be producing instruments that require high technology skills and the healthcare segments.

VRIO

When looking at the resources that GE has, it is surprised that the company operates in such many fields.

Resources:

• The major resources GE has would be their technology in industrial zone. The resources are valuable and rare since GE has the high technology that other companies don’t have.
• And because it is GE’s own technology, it’s definitely hard for others to imitate.

Capability:

• Since GE has lots of business segments, it has a number of factories globally. After pulled out from the capital market, the company also has a huge amount of cash that ready to be invested. Therefore, the capability is valuable.
• GE has been in manufacture business for a long time and that gave it the experience in production goods. This put GE on a nice position considering it is going to focus on producing precision instruments.
• Even there is another company that is able to produce precision instruments, it is hard to generate that amount of cash to invest. Besides, most companies don’t have that many factories all over the world like GE does. So it is costly to imitate.

Generally speaking, GE has competitive advantage in producing high technology instruments. It’s not just for industrial use, giant machines are required by the pharmaceutical field as well.

Corporate Strategy

• Vertical Integration: GE is really a company that good at manufacturing. Considering the skill it has in high technology, it has the resources and the capability to do that. Therefore, GE should be participate just the production part.
• Horizontal Integration: Since GE has too many segments in different industry, it is more important to consider which market not to go in.

• Before the hit during 2008, GE generated their revenue from the GE Capital segment, which was weird and dangerous. It was a market that GE shouldn’t be in, even the segment brought over half of its gain. It is wise for GE to get rid of this segment in exchange of cash to reinvest. GE also has NBC Universal and other kinds of mass production in their segmentations. But the thing that really matter is that these segments are not supporting each other in any perspective. And that just causes distraction for a company from working on its core business.
• As the core business for GE should be in high tech, the markets they should involve in are clear to see, at least the direction is clear. Considering the two strategies, ecomagination and healthymagination, that GE launched, it is not only promoting its business, but it’s really having a segment that is related to its core business. The enomagination showed GE’s corporate social responsibility (PSR) by developing tomorrow’s solutions. The healthymagination is really a support to the pharmaceutical world as the cost for a giant machine is high but the population of elders in the world is growing.

• Joint Ventures/Alliances: For the production part, GE is capable enough to handle and produce the machines. But the raw materials would be expensive since they are used to build precision instruments. It is considerable for GE to have several joint ventures that would agree to provide materials at a discount price. It can help GE to reduce cost. As GE is also providing machines and high tech instruments for medical use, the machines needs to go through clinical test before they are formally used to public, which suggests possible ventures of hospitals. What’s more, having alliances with non-profit organizations like the Red Cross would bring more attentions to what GE’s doing.