GeneralElectric Company Strategy
As a contemporary business environment continues to be dynamic andvolatile, the competitiveness of a company is born on its generic andcomplementally strategies. International companies strengthen theirpresence in the international market by adopting different foreignmarket entry strategies as acquisition, franchise, merging, directinvestment and forming strategic alliances. The success of thestrategy adopted depends on how well it is executed and the marketpotential. The international strategy of the company is affected bybusiness laws and restrictions of different jurisdictions. The changein business restrictions, which is aimed at fostering businessgrowth, has led to a change in structure and strategies used in TVbroadcast and cable networks industries as well as other industries(Jacques, 2008). This study analyses the strategy used by Generalelectric Company to compete locally and in the international market.
Background toGeneral Electric Company
General Electric Company is a multinational conglomerate, which hasits headquarter in Fairfield, Connecticut (United States of America).The company operates in three main industries, that is, capitalfinance, technology infrastructure and consumer industries. Thecompany has primary business in many industries with businessdivisions that include GE Transportation, GE Aviation, GE Capital, GEOil & Gas, GE Home and Business Solutions, GE Healthcare and GEPower and Water. These business units offer services as generationand distribution of electricity, industrial automation, railwaylocomotives, medical imaging equipments and developing aircraft jetengines (Hamel & Prahalad, 2009). The company had also investedin media broadcasting industry where it owned big Media houses asNBCUniversal, NBC Universal Digital Media, Universal Studios, and hasthe minority interest in LIN Television. By the end of the financialyear 2013, General electric was operating in more than 100 countries,had 305 000 employees, total assets valued at US$ 656.56 billion andnet income of US$ 14.055 billion (Grant, 2014).
General ElectricStrategic Moves
General electric Company was established as a merger betweenThomson-Houston Electric Company and f Edison General ElectricCompany in the year 1896. The merger aimed at bringingtogether resources that will facilitate the generation, transmissionand distribution of electricity. The company diversified its businessfrom dealing with electricity only by incorporating lightingbusiness. The company strengthened its presence in this new industryby acquiring National Electric Lamp Association in the year 1911,which led to the establishment of the lighting headquarter at NelaPark in Ohio (Grant, 2014). The company started Radio Corporation ofAmerica in order to boost marketing of its products however, itdisposed of the radio after 11 years owing to its failure ingenerating sustainable revenue.
General electric underpinned its diversification strategy byemploying competent and highly qualified employees. The companydeveloped its engineering knowledge through usage of power generationturbines. The knowledge made the company move to the aircraftsuperchargers development during the World War 1. During this period,the need for aircraft superchargers was very high which made thecompany grow very fast in this field. The company then ventured inthe manufacturing g of aircraft engines during the Second World War.After the World War 2, General electric started GE Aviation to dealwith the production of aeroplane engines becoming the second largestcompany in the world in aeroplane engine development after UK’sRolls-Royce plc (Grant, 2014). The company has invested in theweapons development as a nuclear weapon.
Over the years, General electric expanded its presence in theAmerican market by acquiring other companies and direct investment.General Electric acquired Enron wind Power Company, following itsbankruptcy. After the acquisition, the company established a winddivision, which grew at a high rate leading to further acquisition ofScanWind Company in the year 2009. The company has made directinvestment in the consumer market by developing consumer goods likerefrigerators. The main strategy of the company over the years hasbeen to enter the market at its onset, for example, in the year 1952,General electric ventured in computer development industry and exitedin 1985 when the industry started to be saturated. Since itsinception, General electric has developed its local market byacquisition where it has acquired more than 20 companies operating indifferent industries (Cantwell, 2010).
General ElectricInternational Markets Competing Strategies
General electric Company has employed different strategies inentering the international market. The strategy adopted depends onthe industrial inherent factors. The range of strategies used mostlyby General electric to enter the international markets is asdiscussed below (Cantwell, 2010).
Acquisitions: General Electric Company enters theinternational market through acquisition of local firms. Currently,General Electric Company operated in 150 countries where it hasacquired more than 10 companies. These companies are scattered indifferent industries such consumer goods development, electricitygeneration and transmission and health care. The company uses thisstrategy to enter saturated markets like European Markets.
Export: General electric company exports the products that aremanufactured locally to many areas around the world. Most of thecompany is electronic and consumer goods are manufactured in USA andexported to outside countries located in Asia, Africa, Europe andother parts of the world. The company uses its regional offices tofacilitate the supply chain flow of the goods exported. Export goodsare introduced in the countries supply chain by collaborating withdifferent distributors, retailers and wholesalers. Through thestrategy, GE has been able to reach many countries that do not havepotential to of producing goods as well as those that have localfirms producing goods.
Licensing: In the year 2012, General electric company set aGGO (Global Growth and Operations) in China. The main objective ofthis GGO is to set business models, which will be used acrossindustries in many countries. The GGO will support the development ofbusiness and licensing of some entities in 13 regions worldwide. TheGGO will be formulating IT strategy, which will be used in allregions where the company has a presence. General electric haslicensed business operations in more than 100 countries across theworld in different sectors.
Strategic Alliance: General Electric Company has usedstrategic alliances to develop its IT unit. The company collaborateswith companies mainly from, Mexico, Brazil, Russia, South Africa andUAE to develop its IT sector innovation. According to the company, astrategic alliance acts a major way of succeeding inthe modern market.
In order to remain competitive, General Electric Company has investedheavily in advertisement, for example, GE sponsored China Olympicsand launched a marketing campaign in the country that was aimed atstrengthening its entry in the country’s cooking gas market. Thecompany also uses high innovation to position itself in the market.The company has launched very competitive products like highefficient Stethoscope that is manufactured in its China plant. Thecompany can adopt other entry and positioning techniques likepartnering with governments to develop some industries, having globalharmonised marketing campaign and giving partially manufacturedproducts to be finished by foreign local companies.
General ElectricCorporate Strategy
The aim of the General Electric Company is to maximize theshareholder`s wealth. As many companies try to be more focused intheir market, General Electric has been diversifying across manysectors. Diversification has helped the company to spread its riskacross many sectors. The company’s corporate strategy isunderpinned in two core concepts, diversification and conglomerateoperations (Cantwell, 2010). The company continues to buy and disposeof business lines making its operational complex. The success ofthe GE in the international market is vested in thecompany’s decentralized way of governance where the regionaloffices are tasked with the mandate of making strategic decisions intheir region. The company central governing authority makes decisionson the key strategies such as acquisition and strategic alliance.
General electric has a well-established market in a multi sectormarket around the world. Sustained innovation and timely marketentry, has kept general electric afloat over the years. As the marketcontinues to be competitive, General Electric maintains itscompetitiveness by tapping in innovation and making strategicalliances with other companies. The company Market growth isaccelerated by its global image, innovation, consumer confidence,marketing campaign, competent staff and timely internationalstrategy. As the world market continues to change, the effectivenessof GE international strategy is put on a scale especially given thepoor performance of its stock at New York Stock Market.
Cantwell, J. (2010). The globalisation of technology: what remains ofthe product cycle model?. Cambridge Journal of Economics19(2), 155-155.
Grant, R. M. (2014). The resource-based theory of competitiveadvantage: implications for strategy formulation (pp. 114-135).California: University of California.
Hamel, G., & Prahalad, C. K. (2009). To revitalize corporateperformance, we need a whole new model of strategy. Harvardbusiness review 7(4), 63-76.
Jacques, V. (2008). International outsourcing strategy andcompetitiveness: study on current outsourcing trends, IT, businessprocesses, contact Centres. Paris: Publibook.