This document analyzes General Electric (GE). It identifies GE's key resources as human resources, financial strength from GE Capital, brand reputation, global presence, technology and innovation capabilities, and customer service/integrated solutions. The document examines GE's organizational structure and strategic changes under Welch and Immelt. It determines GE's core competencies that provide competitive advantages are its human resources, financial strength, brand, global presence, technology and innovation capabilities, and customer service/integrated solutions.

1. General Electric
analysis
Lorenzo Gorga – student number 15406827
Case analysis for the assignment of the module STRM043 ‐ Competitive Strategy and Innovation
Year 2015
Course ERASMUS

2.
1 General Electric analysis
Index
Executive summary ........................................................................................................................................... 2
1. I Question .................................................................................................................................................. 3
1.1. Resources........................................................................................................................................... 3
1.2. Capabilities ........................................................................................................................................ 4
1.3. Core Competences ............................................................................................................................ 6
1.4. Effectiveness ...................................................................................................................................... 6
2. II Question ................................................................................................................................................. 8
2.1. Strategic options ................................................................................................................................ 8
2.2. Strategy monitoring ......................................................................................................................... 10
3. III Question .............................................................................................................................................. 11
3.1. Welch VS Immelt ............................................................................................................................. 11
3.2. VUCA’s best manager ...................................................................................................................... 11
Reference list ................................................................................................................................................... 12
Bibliography ..................................................................................................................................................... 13

3.
2Executive summary
Executive summary
The first chapter is based on internal analysis (resources and capabilities), the use of Hamel and Prahalad
test and VRIN model helps to find the core competences of GE (Human resources, Financial strength, Brand,
Global presence, Technology & Innovation, Customer service & integrated solutions), which give
competitive advantage to the company; it is then explained their effectiveness considering their fitting with
the external environment, both micro and macro, studied with Porter’s Five Forces and PESTLE model, using
a SWOT analysis.
The second chapter is based on a renewed external analysis to update the SWOT analysis, considering
latter updates and new considerations such as CSR to discuss strategic options with the help of some
academic tool such as the BCG Matrix or the Ansoff chart. The outlined tactic is continuing the focus on
core competence except for the financial strength, in which is foreseen a strong divestment from GE
Capital. This could be placed in the general strategy of diversification, with both development of new
markets, through global presence, and new products through innovation, this two important aspects are
then monitored with models such as Rummelt’s analysis and Balanced Scorecard.
The last chapter recapitulate the differences between Welch and Immelt, considering also Four Actions
Framework and Grant’s New Management Style, and then proposes Immelt as the most suitable manager
for the VUCA world.

4.
3 General Electric analysis
1. I Question
1.1.Resources
To identify core competences is required an internal analysis, the first point of that is the identification of
key resources, what the company have (Pryce, 2015). The resources of a company could be divided in
different categories, pursuant to Grant those are tangible resources, which are subdivided in financial and
physical resources, intangible resources, subdivided in technology and reputation, and human resources
(Pryce, 2015).
Starting from the intangible resources, GE’s financial strength is huge, indeed one of the businesses is GE
Capital, a world leading financial service company, which generated half of the total GE’s revenues of 2001
and which could give support to the other business of GE (Bucifal, 2009). GE Capital was developed
incredibly under Jack Welch (1981‐2001), who took advantage of the economic growth of the late 20th
century (Grant, 2012).
Regarding physical resources it is possible to consider the location of offices all over the world, his global
presence (Bucifal, 2009). Recently, under the guidance of Jeff Immelt, which started from 2001, even the
headquarters were repositioned, for example healthcare in the UK and X‐ray department in China, but it is
also important to consider the larger number of foreign employees (Grant, 2012). This open up possibilities
of different collaborations, like the works for the Beijing Olympic games, or the partnership with Mubadala
(the investing arm of Abu Dhabi), or the direct collaboration with governments in what is called the
Company‐to‐Country strategy (Grant, 2012). Another interesting consequence of GE’s global presence is the
possibility of reverse‐innovation, that is the capacity to develop products for emerging markets and then
bringing them back to old economies such as US, as happened with some cheap healthcare devices (Grant,
2012).
Technology resources are one of the most important of GE since its foundation, which was born from
Edison’s patent exploitation, it is therefore very important in GE culture and history (Grant, 2012). Welch
amplified this with acquisition of technology based company and developing a technical leadership (among
the few nuclear power builders, advanced health science, smart grids) (Bucifal, 2009). But great results
were achieved by Immelt, his strategic view was based on technology and innovation, therefore 6% of the
revenues were invested in R&D with a focus on few, big and long term projects (Grant, 2012). Some
initiatives supported it, such as the imagination breakthroughs and ecomagination and brought a
leadership in molecular imaging and diagnostic, nanotechnology, energy conversion, advanced propulsion
and sustainable energy (Grant, 2012).
Reputation is a great resource of GE, which could rely on a good brand image based on excellence and
innovation, high customer value, even measured with numeric system, and customer retention, given also
by integrated services (especially under Immelt) (Grant, 2012).
Finally another fundamental resource, the human capital. GE is a talent machine, with a management
development centre (in which Immelt was moulded) and a corporate university (Grant, 2012). Welch, who
was focused on performance and internal efficiency, brought to the limits his employees using an internal
environment of constructive conflict in which every year the best 20% were rewarded and the worst 10%
fired (Bucifal, 2009). He supported the development with delegation, incentives and stock options (which
linked the singular reward with the company performance) (Bucifal, 2009). Immelt opted for a more
friendly leadership style being motivational and inspirational and relating with the employees at their level
(Bucifal, 2009). He found the growth traits for a manager: “external focus, imagination and creativity,
decisiveness and clear thinking ability, inclusiveness and deep domain expertise” (Grant, 2012). The
expertise was required for a cross‐businesses integration, therefore was required to give people more time
in each job and then a good a career planning (Grant, 2012).

5.
4I Question
1.2.Capabilities
After identifying the resources is required to consider the capabilities, how the company manages these
resources (Pryce, 2015).
The management structure of such a big and diversified company is clearly complex, one of the Welch
objective was creating a more direct and responsive company, to do so it was required to modified that
structure (Grant, 2012). He attacked the bureaucracy, eliminating layers of management, delegating power
directly to CEO of business units (Bucifal, 2009) and organising the company in more smaller divisions
(Grant, 2012).
Figure 1: GE’s Organizational Structure, 2001 (Grant, 2012).
On the other hand, Immelt main objective was creating a cross‐business company to offer highly integrated
services to customers, therefore he had to change again that structure, reducing the number of sectors and
giving to divisions a broader base (Grant, 2012). The headquarters, from being supporters and supervisors
under Welch, became the promoters of different initiatives inside the units and were seen as partners
causing a blurring distinction and a more complex coordination (Grant, 2012).
Figure 2: General Electric Organizational Chart, February 2012 (Grant, 2012).

6.
5 General Electric analysis
Also the portfolio was modified, from being focussed on a limited number of promising sectors (but still
retaining diversified possibilities) under Welch (Bucifal, 2009), to being extremely focussed on two core
businesses: infrastructures and specialty financial services under Immelt (Grant, 2012). Immelt promoted
the extension of existing businesses and the exploitation of new commercial areas through several focused
acquisitions, the retaining of low‐growth businesses as cash generators (appliance and lighting) (Bucifal,
2009), but also some important divestments such as plastic (for the growing petroleum price) and financial
services (from 2004, before the next financial crisis) (Grant, 2012).
Both the last two managers developed different initiatives to endorse their vision, Welch created Work‐out
to let cross section employees discuss about management, Boundary‐less Organisation to promote the
sharing of information through the whole company, Globalisation to exploit the opportunities of
international economies, Six Sigma to give a numerical methodology to evaluate almost everything
(performances, targets, costumer satisfactions … ) and Digitalisation to exploit the possibilities given by
internet (Bucifal, 2009). Immelt added Imagination Breakthrough to individuate promising businesses,
incubate them and protect them (Grant, 2012), Ecomagination to find response to clean and efficient
energy, Costumer Focus to revitalise marketing, create customer oriented programs, develop bundling
product combined with services across businesses (Bucifal, 2009).
Customer focus & integrated solutions after Immelt could be considered as a very important capability,
himself was devoted in spending time with customers, build relationships and work on their problems
(Grant, 2012). Customers were a big part of his strategy and therefore also customised and integrated
solutions, to do so he had to invest in marketing, hiring more sales people, engineers and designers and to
expand services such as technical, financial, training and general support (Grant, 2012).
Immelt also introduce the six‐parts growth process to clearly communicate his vision through the whole
company (Grant, 2012).
Figure 3: General Electric's six‐part growth process (Grant, 2012).

7.
6I Question
1.3.Core Competences
After the analysis it is possible to understand which are the core competences, that are the linked set of
skills, activities and resources that, together, deliver costumer value and differentiate from competitors
(Johnson, et al., 2014) providing a competitive advantage and not only operational effectiveness (Porter,
1996).
These have been in bold type in the previous text, and they are now recapitulated:
‐ Human resources;
‐ Financial strength;
‐ Brand;
‐ Global presence;
‐ Technology & Innovation;
‐ Customer service & integrated solutions.
All together they pass the Hamel and Prahalad test, firstly they give access to markets, actually to many
international markets and in different growing businesses (Grant, 2012); secondly they generate customer
benefits, the brand is well considered (also considering Welch ambition of being first or second in every
business) and quality is recognised (even with numerical evaluation) (Bucifal, 2009), finally it is hard to
imitate, the human resources developed internally, the financial power and the advanced technology are
almost impossible to be imitated (Bucifal, 2009).
A similar result could be achieved using the VRIN model to assess if core competences are Valuable, Rare,
Inimitable and Non‐substitutable.
1.4.Effectiveness
The core competences effectiveness is clear considering that GE is one of the most successful company on
the world, and that could be explained because the internal environment, within the company, was always
trying to fit in the best way with the external environment, both micro (the different industries) both macro
(the wider business environment). It would be clear the fitting using the SWOT model, considering
Strengths, Weaknesses, Opportunities and Threats. Opportunities and threads could be more easily found
studying the external environment using academic models such as the Porter’s five forces (Potential
entrants, Suppliers, Buyers, Substitutes and Firm rivalry adding Digitalisation, Globalisation and
Deregulation) and the PESTLE model (Pryce, 2015).
The external environment is widely changed from the ‘80s of Welch till the first 2000s of Immelt, but GE
was always capable to adapt and to take advantage of opportunities. Welch lived a macro economy of
optimism, confidence and growth this gave opportunities in different growing industries and brand new
businesses created by digitalisation and with new markets (Bucifal, 2009). Thanks to GE’s core competences
he caught these opportunities focusing on the economic growth of the company, acquiring new businesses
which were first or second in their industry, maintaining a technology based culture but exploiting also
other industries such as entertainment and finance (Bucifal, 2009). Welch strategy anyway was not free
from weaknesses, for first his employees were so much under pressure to expose dangerously the company
to risks and scandals, then his focus on efficiency and performance compromise other aspects such as
customer services, quality, safety and prevent an easy internal communication, conditions that Immelt
tried to improve (Bucifal, 2009).
Immelt’s environment was much more complex, volatile and full of threats such as the 11/9 and the
corporate scandals which create a situation of uncertainty and a crisis of confidence among investors and
resentment in the community (Bucifal, 2009). Furthermore GE had to face the global financial crisis of 2008
and the petroleum price growth (Grant, 2012). Nevertheless he individuate some global trends: ageing
population, energy demand, global warming, bioscience and nanotechnology , emerging markets (Grant,

8.
7 General Electric analysis
2012). Immelt’s strategy based on core competences like technology, innovation, customer care and global
presence was perfect to find opportunities in this environment such as demand of clean energy and energy
efficiency, healthcare and entertainment for old people, country infrastructure, emerging markets and
response to global issue such as global warming, water scarcity and conservation (Grant, 2012). However
there are some weaknesses in his approach, to create a cross‐business company during the financial crisis
there is a big risk of contagion (problems in any business affect the others), there are coordination
problems due to a complex structure in which is difficult to integrate services because of a limited
understanding of the different business units by the employees and a reluctance in sharing customers
(Grant, 2012).

9.
8II Question
2. II Question
2.1.Strategic options
To evaluate the possible strategic options it is important to consider how they fit among internal and
external environment (Pryce, 2015). Therefore it is required to evaluate if the core competences
individuated are still important in the most recent world, adding the new threats and opportunities to the
SWOT analysis done previously.
Human resources are a historic GE’s resource and its HR management is a core competence of high value
which is probably at the base of GE success (Grant, 2012), it is important in this highly volatile environment
to maintain loyal and trustful employees and develop them within the company, mostly if GE will bring on
the strategy of cross‐business customer services integration because of the need of more time spent by
people in each district (Grant, 2012). A weakness of Immelt management is the complex administration, it
is therefore fundamental the recent war to bureaucracy, centralising the worldwide back‐office functions in
few locations, which moreover could cut costs (The Economist, 2014). Digitalisation and Silicon Valley high‐
tech industry give a new idea of management, agile, capable of launch a product, get costumer feedbacks
and improve the product very quickly; this is tried to be imitated by recent initiatives like FastWorks (The
Economist, 2014).
The brand and the reputation is clearly a good core competence in every environment, but in these time of
strong request of Corporate Social Responsibility (CSR) and sustainable development it is also more
important (Pryce, 2015). GE’s effort in gaining a good environment friendly image all over the world is
evident even in the most recent strategic choices such as the acquisition of Alstom, a French engineering
group specialised in green energy like wind turbines. Another tactic is finding a response to global issue
such as poverty and diseases, an example is the development of an affordable testing kit for Malaria
(Murray, 2015).
The previous examples are useful also to confirm the necessity of global presence and the opportunities
created by this through partnership and collaboration with whole countries. A clear example is the
possibility to move easily entire business to respond to the fast changing condition of the external
environment, as happened about Connecticut, from which GE is thinking about to move because of tax
changes (Pramuk, 2015).Emerging market can be exploited with collaboration with country governments
founding long term partnerships that will give great competitive advantage in the future as it is happening
in Africa and China (The Economist, 2014). Having a wide geographical distribution by the way could also be
a protection from financial crisis (Barron, 2011).
Technology and innovation are both very important because they are the way to find new opportunities, to
develop new products for the old markets and to penetrate new markets to implement a diversification
strategy, which could be clarified using an Ansoff matrix (Ansoff, 1988), and to answer global issues
empowering the brand (Pryce, 2015). An example is the collaboration with Statoil to launch an R&D
partnership to work on energy efficiency and reduction of greenhouse gas emissions (Crooks, 2015).
Therefore it is consistent to proceed in focused innovating investment such as ceramic material for extreme
temperature or super strong composite materials (The Economist, 2014). Digitalisation could be an
enormous opportunity, GE is working to develop the industrial internet, the connection of machineries in a
digital network (The Economist, 2014).
The customer services and integrated solutions are still valuable and useful to lock customers. On the other
hand dividing the company and distribute them equally could produce a great amount of money for
shareholders, therefore the real strategic value of this core competence could be argued in the future
(Barron, 2011). Nevertheless, the history of a company is to take in great consideration for the evaluation
of a strategy (Rumelt, 1993); therefore, considering the effort spent for them and the new solutions in HR

10.
9 General Electric analysis
management and corporate structure, probably it is more convenient to continue implementing this core
competence.
Finally the most critical core competence, the financial strength, particularly in the business unit of GE
Capital. Nowadays a good retirement, especially from a dangerous business like finance, is seen even more
positively than a growth from investors, therefore it is almost forced a sort of divestment from GE financial
arm (Jenkins, 2015). Using the BCG matrix, GE Capital results the dog of the company having low share and
low growth, then this could be a reason for a strategic retirement from the business, but this could be slow
or fast (Barron, 2011). The market assessment to revenues generated by an industrial company are much
more high than those from a financial one, then it is clear the enthusiasm shown by stakeholders when
Immelt, after years of slow divestment from the financial services decided to give a strong shifting
premising to reduce contribution of GE Capital from the 60% pre‐crisis to 10% (Jenkins, 2015).
All this considerations show that the direction in which is moving GE is consistent and adequate to the
external environment, therefore the chosen strategy seems to be effective. In general it is clear a
diversification strategy based in development of new products and penetration of new markets and an
investment/divestment tactic to develop a portfolio strategy consistent with Immelt vision.

11.
10II Question
2.2.Strategy monitoring
Probably one of the strategies that should be monitored the most, considering the Volatile, Uncertain,
Complex and Ambiguous (VUCA) environment and the risks related, is the penetration/creation of new
markets in emerging countries, such as Asia. To evaluate it, it is possible to use Rumelt four fundamental
principles (Rumelt, 1993).
First of them is Consistency, create new markets is completely consistent with the idea of having a
competitive advantage in global presence and develop a diversification strategy, furthermore it could be
implemented in every business‐unit at the same time without management disarray (Rumelt, 1993).
Consonance is the fitting with external environment and it is clearly included considering the fast
globalisation of modern world (Rumelt, 1993).
According to Rumelt (1993), strategy should provide a competitive Advantage, and global presence gives a
great amount of opportunities, from exploitation of economies to tapping optimal location for resources
and activities (Gupta & Govindarajan, 2001).
Finally Feasibility, which is clear considering the past successes of GE, the ability in HR management,
therefore it would not overtax available resources neither create unsolvable problems (Rumelt, 1993).
An additional academic model for strategy evaluation is the Kaplan and Ross’ Balanced Scorecard (Kaplan &
Norton, 1993). An example of how it could be used is shown below, it could be interesting using it for
another important strategy to be monitored which is the focus on technology and innovation.

12.
11 General Electric analysis
3. III Question
3.1.Welch VS Immelt
Immelt’s and Welch’s strategies are different in several aspects and most of them have already been
explained in the previous paragraphs, therefore now it is enough to recapitalised them.
Welch Immelt
Guidance Immediate profit Long term growth
Business of interest Finance Infrastructure
Markets US, EU Emerging countries
Focus Performance & efficiency
(insight)
Innovation
(outsight)
CSR ‐ Part of DNA
Management style Pushing to limits Friendly
Structure Delayering, more units Cross‐sections, less units
Aim of acquisitions Diversification
(being 1 or 2 in every business)
Consistency
(tech and innovation)
Stakeholders of interest Shareholders Customers
Main risks Scandals, too much pressure on
employees
Missing opportunities
Contagion
Coordination problems
General source of
advantage
Cost leadership Differentiation
Immelt’s vision is based on Welch’s work and the direction is always the growth of the company, obviously
with different strategies because of the changing environment. It is possible to unite the two kind of
leadership in the same Four Actions Framework, while Welch seems to be more focusses on Reducing and
Eliminating; Immelt, because of the good implementation in these ambits by his predecessor, shifted the
efforts in Creating and Raising (Pryce, 2015). This give continuity to the path of GE and, therefore, more
consistency to Immelt’s strategy which seems to be perfectly settled between GE’s past and the future
aimed.
3.2.VUCA’s best manager
Immelt’s leadership had reoriented the focus from shareholder to stakeholder, with a long term vision and
sustainability. The focus on innovation and the ability to understand global trends bring new opportunities.
He is trying to simplify the structure and raise the internal collaboration and coordination. His leadership
reflect the Grant’s New Model of Leadership, thanks to ability in build confidence, enthusiasm, cooperation,
form networks, use information. All these are reason for Immelt to be considered a very suitable manager
in the VUCA world (Pryce, 2015).

13.
12Reference list
Reference list
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13 General Electric analysis
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