The report helps in the analysis of the business strategic review of the business organization named General Electric in different kinds of aspects such as macro and micro environmental aspects which can affect the growth of the firm in a negative manner. The cost benefit analysis is required to be analysed which will assist in analysing and estimating the weaknesses and strengths of the different alternatives in a proper manner. The business strategies along with the penetration aspects are required to be taken into consideration wherein the critical analysis should be regarding business organization and culture, growth along with leadership aspects which will be beneficial for the analysis of the strategic growth of the firm.
General Electric Company is one of the American multinational kind of conglomerate company which is incorporated in New York and the headquarter is in Boston. The company was founded in the year 1892 in the month of April wherein the founders of the organization were Thomas Edison and J.P. Morgan. The area served by the organization is the entire world and the number of employees and the number of employees working in the organization is 313000 till the year 2017. Moreover, the total assets of the company are US$ 377.95 billion till the year 2017 and this has helped them in becoming highly competitive in the entire market as well (Ge.com 2018).
The General Electric Company has generic strategies for gaining competitive advantage which is inclusive of intensive growth strategies that helps in ensuring the growth of the conglomerate in the entire global market. The Porter’s Generic Forces are being utilised in order to develop along with maintain the competitive advantage of the firm in a positive manner.
The differentiation strategy is being used by General Electric Company for gaining the competitive advantage in the entire market. In this respective strategy, the goal of the organization is to attract the different target customers towards the products which are unique in nature (Bolden 2016). These are the different products which are being made special through proper research and development for which GE is known for. In this manner, GE tries to maximise the overall sales of the organization which is based on the large customer base. The major objective of the differentiation strategy is to intensify the research and development approach in which this will be helpful for retaining the customers in the market efficiently.
On the other hand, the product development strategy is the intensive growth strategy which is being adopted by General Electric Company’s growth and business. The usage of the intensive growth strategy is helpful for GE in maintaining high productivity process of research and development. The product development strategy is the primary approach which is being adopted by GE in order to focus mainly on uniqueness of the products.
The market penetration is the other secondary strategy in which the organization grows by increasing the customer base in the current market. Through the help of the different marketing campaigns, the GE company aims in adding new customers and trying to correspond accounts as well. In the respective manner, General Electric grows the revenue base in comparison to the competitive forces. Additionally, the generic strategy related to differentiation will enable GE in succeeding in implementing the penetration of the market effectively (Carasco-Saul, Kim and Kim 2015). For instance- With the help of the competitive advantage, GE tries in penetrating the electric lighting, aerospace along with healthcare industries. The strategic objective which is being based on market penetration helps in increasing the aggressiveness in marketing of the different products of the competitors such as Siemens and 3M (Leroy et al. 2015).
There are various competitors in the market of General Electric Company which are performing in the similar manner in comparison to the respective company. The name of the competitors of General Electric are as follows:
|
Earnings |
$15.63 |
$13.5 |
|
Cash Flow |
1.31 |
1.21 |
|
Price/Book |
1.72 |
0.76 |
|
Last Dividend |
42.97 |
0.33 |
|
Book Value |
11.38 |
– |
|
Revenue |
149.06 |
115.86 |
|
EBIDTA |
37.21 B $ |
27.26 B $ |
|
Operating Margin |
21.10% |
21.01% |
|
Gross Profit Margin |
51.89% |
– |
|
Quick Ratio |
7.80 |
9.40 |
|
Current Ratio |
1.03 |
– |
From the above table, this can be analyzed that the major competitor of GE is Siemens AG wherein the growth of the organization is being taken into consideration. This has been noticed that the core competencies of GE are inclusive of advanced technological capabilities along with skilled human resources aspect. Furthermore, in comparison to Siemens AG, the brand GE is equipped with different technological advancements which will be beneficial for the overall growth of the company in transportation, healthcare, oil and energy. The gross profit margin of GE is 51.89% which shows that the company is mainly focusing on the different skilled human resources which are essential for the global success (MacKie et al. 2014).
The General Electronic is one of the most iconic companies in the entire planet and the consequently at the forefront of the cutting-edge technology. The General Electric Company uses the innovative application which allows the managers to coach the different employees in an efficient manner. As per the CEO of the company GE, the major legacies which is being followed in the respective organization is rewarding the performing employees as this will be increasing the morale of the employees (D’Innocenzo, Mathieu and Kukenberger 2016).
Day et al. (2014), have commented that the decision-making process proves to be very efficient in nature in comparison to the other competitors. However, on the other hand, in GE this has been noticed that the decision-making process is informal along with inefficient in nature than the other competitors such as Siemens AG. Doz (2017), has opined that in order to make the entire process significant in nature, the ideas are required to be exchanged between the employees and the higher officials.
However, in leadership aspects of GE, this has been noticed that the exchange of ideas is being done between the officials and there is no such involvement of peers in the decision-making process (Carasco-Saul, Kim and Kim 2015). In comparison to Siemens AG, this can be analysed that leadership is participative in nature wherein all the employees are being involved in the process. In such cases, the leadership of Siemens is easier as this makes the process of decision-making more efficient in nature in solving the different issues (Ge.com. 2018).
The GE has divisional kind of organizational structure which is being shown in the diagram:
Figure 1: Organizational Structure of GE
(Source: Ladegard and Gjerde 2014)
GE is one of the divisional organizational structure in which the different aspects are decentralized wherein the different teams have their own management teams. Davis and Maldonado (2015), have commented that the divisional structure of the organization leads to different kinds of conflicts between the different teams and there can be duplicity of the various functions which are being performed in the organization (Sosik and Jung 2018).
In the case of GE, this has been noticed that there are various kinds of selfish attitude among the different employees which is affecting the overall profitability of the firm in a negative manner (Lussier and Achua 2015). On the other hand, there is inclusion of conflicts in the organization among the different employees wherein the operations of the organization are being affected in a negative manner as well. As per the organizational structure of the organization, this has been seen that the major disadvantage of the same is potential difficulty of streamlining the strategic development of operating segments or the divisions (Ge.com. 2018).
The General Electronic Company needs to analyse the economic and the environmental sustainability in a proper manner. There is a set up of the proper sustainability council which is helpful in analysing the different macro and micro environmental aspects which is affecting the organization in a positive manner. For the electrical companies, Frich et al. (2015), has commented that sustainability is essential for the maintenance of the value chain related activities. Furthermore, on the social level, the organization has tried in creating impact on the economy in comparison to the peers (Carasco-Saul, Kim and Kim, 2015).
There is a huge level of awareness regarding the sustainability functions wherein the prices of the different products have been reduced to 2% which helped in increasing the sales of the business (Ng and Feldman 2015). Furthermore, in addition to optimization of the services, this can be seen and analysed that the electric companies rely on productivity which has helped GE in developing the equipment and infrastructure of the company in a positive manner by investing $150 as to develop their infrastructure in such a manner.
In GE, this has been noticed that the first ethical issue which revolves around is the actual effort of the Chamber of Commerce in eliminating the whistle blowing program. However, the respective attempt has caused GE in firing employees due to whistleblowing. However, GE has claimed that these allegations are hypocritical and they feel that proper steps are being followed in solving the issue (Storey 2016).
GE never the checks the standards twice before firing the employees in the organization and this is affecting their overall efficiency in a negative manner as well. The proper steps are required to be taken into consideration which will be beneficial for the reduction of the issues in GE. There should be availability of the governmental actions and this will be helpful in managing the issue (Mendenhall et al. 2017).
Political Factors- The different kinds of political forces have been growing in a relevant manner in the business world. In the different parts of the world along with in Asian countries, the different government bodies along with the legal framework are aggressive in nature in protecting the domestic kinds of organizations (Ilac 2018).
General Electric Company have the supply along with distribution channels located in the different parts and due to the political instability in the market can have adverse effect on the distribution channel of the company in a negative manner. However, on the other hand the unfriendly political environment which can create adverse effect on business which is operating in the foreign countries (Hoch et al. 2018).
Economic Factors- There is no direct relationship with profitability and the business growth. The high economic activity relates higher unemployment along with increasing purchasing power are changing in a negative manner. In the different areas of power and aviation, GE has seen a sharp performance rise which is due to the better conditions in the economy (Shamir and Eilam-Shamir 2018).
Social Factors- The different social factors affect the business in different ways as the business operates based on the geographical segments. The GE has tried investing heavily on the research and development activities in order to make the different products which can create low environmental impact. Apart from these, this has formulated different policies in order to engage the stakeholders in sustainability (Zacher and Rosing 2015).
Technological Factors- The technological factors play a major role in affecting growth along with expansion of the international business. The General Electric Company has tried in investing huge amount of money in research and development which has helped them in becoming competitive in nature. The GE is brand dealing with the advanced technology in areas of aviation and power which will be helping them in the continuous improvement and remain ahead of the competitors.
Legal Factors- The environmental factors play increasingly in the context of the business and the GE is investing in different products and services which are environmentally friendly in nature. This is mainly focusing on the sustainability down the supply chain wherein there are different strict rules and regulations for the suppliers which are mandatory ton be followed by them. There GE company has faced several legal complications n the global environment in the past scenario. In the present scenario, the GE has faced different legal challenges.
Environmental Factors- GE is trying to invest in the different products and services which are environment friendly in nature and this will be beneficial for the overall success of the firm in a positive manner. The community development programs are the major part of the increased focus on sustainability which will be beneficial for the overall success of the firm in a proper manner.
With the help of the Porter’s Five Forces Model Analysis, the different kinds of threats and the bargaining power of the buyers and suppliers and the new entrants in the market effectively.
The bargaining power of the suppliers of GE is low in nature as this is due to the small size of the company. The GE helps in taking good care of the relationship with the suppliers and this is helpful for them to engage in different activities effectively (Hill 2017).
There has been significant rise in the bargaining power of the buyers in the present scenario which will be difficult for GE as there are different other competitors in the market which are providing similar kinds of services to the different individuals in the market (Nosek et al. 2015).
The threat of the new entrants in the market is low in nature GE is safe in the respective market as there is no such inclusion of the different kinds of entrants which can provide similar products. The growing brand is mainly focusing on quality along with customer satisfaction that can be beneficial for the success (Van Dierendonck and Patterson 2015).
The threat from the substitute products is moderate in nature as the main reason is due to the large size along with brand image of the company in the market. The major competitors of GE are Siemens AG and United Technologies.
The intensity of the rivalry in the industry is high in the respective aspect as there are different firms which are focusing mainly on the customer service. GE has created diversified kind of portfolio of product which reduces the competitive threat from the rival brands.
Conclusion and Recommendation
Conclusion
Therefore, this can be concluded that GE is one of the major and strong competitors in the entire market globally. As per the macro and micro environmental analysis, this can be analysed and identified that there is no such threat of the different substitute products which can never affect the overall productivity of the products. As per the leadership, business organization and culture, corporate governance and the business sustainability and growth can affect the overall efficiency of the firm in a positive manner.
|
FISCAL YEAR |
||||||
|
Cost Items |
2019 |
2020 |
2021 |
2022 |
2023 |
|
|
The hardware required |
$ 10,000 |
$ 15,000 |
$ 20,000 |
|||
|
The software |
$ 10,000 |
$ 20,000 |
$ 13,500 |
|||
|
The trainers fees and payment |
$ 10,000 |
$ 10,000 |
$ 34,000 |
|||
|
Tellecommunications services |
$ 15,000 |
$ 20,000 |
$ 50,000 |
|||
|
Other payments to be made |
$ 7,500 |
$ 15,000 |
$ 15,000 |
|||
|
Operations and Contingencies |
$ 15,000 |
$ 15,000 |
$ 10,000 |
|||
|
Project Total Cost by Year |
$ 25,000 |
$ 30,000 |
$ 72,500 |
$ 65,000 |
$ 112,500 |
|
|
PROJECT TOTAL COST |
$ 305,000 |
|
Fiscal year |
|||||
|
Benefit Sources |
2019 |
2020 |
2021 |
2022 |
2023 |
|
Cost Reduction in lieu of better leadership |
$ 100,000 |
$ 150,000 |
$ 350,000 |
||
|
Enhanced Revenues due to better leadership |
$ 20,000 |
$ 300,000 |
$ 350,000 |
||
|
Decreased Employee Overtime due to poor leadership |
$ 45,000 |
$ 10,000 |
$ 650,000 |
$ 450,000 |
|
|
Decreased external costs |
$ 40,000 |
$ 50,000 |
$ 60,000 |
||
|
Total Benefits Per Year |
$ – |
$ 65,000 |
$ 150,000 |
$ 1,150,000 |
$ 1,210,000 |
|
Confidence factor |
100% |
100% |
100% |
100% |
100% |
|
Benefits Claimed for Analysis |
$ – |
$ 65,000 |
$ 150,000 |
$ 1,150,000 |
$ 1,210,000 |
|
Project Grand Total Benefits |
$ 2,575,000 |
|
Fiscal Year |
|||||
|
2019 |
2020 |
2021 |
2022 |
2023 |
|
|
Undiscounted Flows |
|||||
|
Costs |
$ 25,000 |
$ 30,000 |
$ 72,500 |
$ 65,000 |
$ 112,500 |
|
Benefits |
$ – |
$ 65,000 |
$ 150,000 |
$ 1,150,000 |
$ 1,210,000 |
|
Net Cash Flow |
$ (25,000.00) |
$ 35,000 |
$ 77,500 |
$ 1,085,000 |
$ 1,097,500 |
|
Discount Factors |
|||||
|
Discount Rate |
7% |
||||
|
Base Year |
2019 |
||||
|
Year Index |
0 |
1 |
2 |
3 |
4 |
|
Discount Factor |
1 |
0.9346 |
0.8734 |
0.8163 |
0.7629 |
|
Discounted Flows |
|||||
|
Cost |
$ (25,000) |
$ (28,037) |
$ (63,324) |
$ (53,059) |
$ (85,826) |
|
Benefit |
$ – |
$ 60,748 |
$ 131,016 |
$ 938,743 |
$ 923,103 |
|
Net |
$ (25,000) |
$ 32,710 |
$ 67,692 |
$ 885,683 |
$ 837,277 |
|
Cumulative |
$ (25,000) |
$ 7,710 |
$ 75,402 |
$ 961,085 |
$ 1,798,362 |
|
Net Present Value |
$ 1,308,113.12 |
||||
|
Internal Rate of Return |
3.29 |
Hence, from the given it can be understood that, the returns which are being received by employing a good leadership program is much more than the costs of the firm. Hence, for this it is recommended that the firm takes up the leadership costs which will provide substantial benefits to the firm.
|
FISCAL YEAR |
|||||
|
Cost Items |
2019 |
2020 |
2021 |
2022 |
2023 |
|
Hardware to be installed |
$ 45,000 |
$ 25,000 |
$ 30,000 |
$ 23,000 |
$ 22,990 |
|
Sotware to be installed |
$ 22,900 |
$ 30,000 |
$ 22,300 |
$ 23,000 |
|
|
consultancy group fees |
$ 26,000 |
$ 22,890 |
$ 22,900 |
$ 20,000 |
|
|
Tellecommunications |
$ 37,900 |
$ 27,000 |
$ 47,000 |
$ 12,000 |
|
|
Training to the employees |
$ 8,900 |
$ 7,000 |
$ 78,000 |
$ 7,540 |
|
|
Maintainence Fee |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 10,000 |
|
Project Total Cost by Year |
$ 55,000 |
$ 130,700 |
$ 126,890 |
$ 203,200 |
$ 95,530 |
|
PROJECT TOTAL COST |
$ 611,320 |
|
Fiscal Year |
|||||
|
Benefit Sources |
2019 |
2020 |
2021 |
2022 |
2023 |
|
Cost Reduction in lieu of better governance |
$ 250,000 |
$ 120,000 |
$ 80,000 |
$ 95,000 |
$ 96,000 |
|
Enhanced Revenues due to better governance |
$ 450,000 |
$ 376,000 |
$ 654,870 |
$ 9,800,000 |
$ 105,000 |
|
Decreased Employee Overtime due to poor governance |
$ 100,000 |
$ 90,000 |
$ 400,008 |
$ 78,000 |
$ 190,000 |
|
Decreased external costs |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 10,000 |
$ 100,000 |
|
Total Benefits Per Year |
$ 810,000 |
$ 596,000 |
$ 1,144,878 |
$ 9,983,000 |
$ 491,000 |
|
Confidence factor |
100% |
100% |
100% |
100% |
100% |
|
Benefits Claimed for Analysis |
$ 810,000.00 |
$ 596,000.00 |
########### |
########### |
$ 491,000.00 |
|
Project Grand Total Benefits |
$ 13,024,878 |
|
Fiscal Year |
|||||
|
2019 |
2020 |
2021 |
2022 |
2023 |
|
|
Undiscounted Flows |
|||||
|
Costs |
$ 55,000 |
$ 130,700 |
$ 126,890 |
$ 203,200 |
$ 95,530 |
|
Benefits |
$ 810,000 |
$ 596,000 |
$ 1,144,878 |
$ 9,983,000 |
$ 491,000 |
|
Net Cash Flow |
$ 755,000 |
$ 465,300 |
$ 1,017,988 |
$ 9,779,800 |
$ 395,470 |
|
Discount Factors |
|||||
|
Discount Rate |
7% |
||||
|
Base Year |
2017 |
||||
|
Year Index |
0 |
1 |
2 |
3 |
4 |
|
Discount Factor |
1 |
0.9346 |
0.8734 |
0.8163 |
0.7629 |
|
Discounted Flows |
|||||
|
Cost |
$ (55,000) |
$ (122,150) |
$ (110,831) |
$ (165,872) |
$ (72,879) |
|
Benefit |
$ 810,000 |
$ 557,009 |
$ 999,981 |
$ 8,149,102 |
$ 374,582 |
|
Net |
$ 755,000 |
$ 434,860 |
$ 889,150 |
$ 7,983,230 |
$ 301,702 |
|
Cumulative |
$ 755,000 |
$ 1,189,860 |
$ 2,079,010 |
$ 10,062,240 |
$ 10,363,942 |
|
Net Present Value |
$8,116,719.66 |
Hence, from the given analysis, it can be stated that the organization will benefit greatly if it invests in a consultancy group which will then carryout a good corporate governance program. In this manner, it will successfully able to ensure long term success.
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