Porter’s Industry Analysis
For this activity, you must analyze General Electric (GE) using Porter’s approach to industry analysis. Obtain annual reports and financial reports from public sources as well as trade, business, and journal articles for information. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document in a bibliography using APA style.
Part A Describe GE, what the company stands for (its slogan), what makes it unique, the direction of its market, its products, and the ways in which the company’s products and strategy are integrated. Include a bibliography of at least six (6) trade or journal sources that you use for your description and the analysis which follows.
Part B Discuss Porter’s approach to industry analysis in relationship to GE using all six (6) forces.
Part C Provide one (1) suggestion for each of the following as it relates to the future of GE: what to watch closely (threats and weaknesses), what to assess for change (opportunities), and what to maintain and build upon (strengths). Then make one (1) recommendation for GE’s next strategic move.
PART A
General Electric, also called GE, is considered the most prominent international organization in the US, with a unique culture regarding its innovation and tradition. Further, the firm is prestigious and reputable, with above ten decades of history in the diversified industry, financial, and infrastructural services. The firm dropped its 25-years advertising slogan, ‘We bring good things to life,’ and introduced a novel, ‘imagination at work’ (Hutchison, 2020). The change in slogan has allowed the company to continuously change its corporate practices and pride itself as a reputable participant in corporate governance and desirable business strategies. However, what makes the company to be considered unique is aligned to its entrepreneurial spirit linked to its facilitation of bottom-up innovation. Most well-established organizations such as GE often require their workforce to behave like entrepreneurs. The creative innovation and the ongoing development of GE are among the unique components explicit within the periodic awards that the firm enjoys (Hsu, 2018). Besides, the firm’s leadership realized that the market was rapidly changing. Business success within the 21st century would only be for the organizations that go beyond the market trends, innovate, move swiftly, and operate as a team to deliver effective outcomes (Pino, 2014).
GE’s services and products portfolio consist of aircraft engines, industrial products, power generation, business and client financing, water processing, medical imaging, and oil and gas equipment. Also, it operates primarily through eight reportable business segments: lighting, aviation, GE capital, oil and gas, healthcare, transportation, power, and renewable energy. The firm published concrete results in 2012 despite the unstable economic climate, with about $16.9 billion in earnings. Also, the commercial cash flow from different operating activities for the year remained solid, approximated at $ 17.4 billion (Flannery & Miller, 2018). Overall, the company has continuously set the standard of its management practices, which other firms have followed, and its remarkable market leader record is remarkable (Colvin, 2006). Also, GE prides itself in the market pace-setting by imaging things that other firms do not, building components that others cannot, and ensuring the delivery of outcomes that change the world. The company brings the physical and digital worlds together in various ways that other organizations have not (African Business, 2015).
PART B
Competition with the existing companies substantially influences a company’s capability to generate adequate margins. However, the level to which the industry has remained monopolistic has a significant impact on the activities of the rivals. Therefore, because of the intense rivalry and price pressure, two US-based companies, Part & Whitney and GE, consented to joining forces against their British competitors, making the competition for market leadership limited to GR and Rolls Royce. Further, the competition among existing rivalries has pressured GE to reperceive and create alliances with a few of its present rivals (Kissinger, 2017). The aspect of new possible entrants to the industry adds the capability. However, if the capacity added is considered highly substantial compared to the demanded development, which would reduce its profitability level. The new entrants often do not reproduce the value of the existing companies; however, they focus on particular activities. This is done to deter possible new entrants; hence, pricing is perceived as a critical weapon when the economies matter. When EMI health entered the CT scanner business, it had no experience manufacturing imaging and medical diagnostic equipment, making it easier for GE to dominate it in the US market, with EMI experiencing significant losses (Donzé, 2022).
Alternative products are essential products that perform a similar function, and the decline from a substitute product could be severe if the alternative product is more price effective. The approach to handling competition resulting from alternative products is manufacturing or supplying the alternative. GE created a fiscal service corporate by acquiring business capabilities over a period. It initially partnered with GE units that manufactured client products like refrigerators and dishwashers, acquiring adequate sales and expertise to provide financial services for GE’s intricate industry products like jet engines (Gisuser, 2008). Within the industry with various distributors and limited significant clients, the negotiation power of the suppliers is often weak. GE opted to create a joint venture with Thomas Publishing as a strategy for changing the buying function. The internal project initially intended to enhance the company’s several interactions with its suppliers and established that the online trading network was extremely profiting. It started providing this service to other firms.
The buyers’ power is considered strong when the threat of backward integration is very high or cost-sensitive; thus, the level to which a product can be distinguished would directly influence the costs. GE inspires B2B and internet marketing to ensure that clients are always aware of the product functionalities and costs to impact their decision-making and buying behavior. Additionally, it has a vast array of buyers, mid-sized firms, end clients, and large organizations. The significance of the shareholder’s impact is essential and has a central role in different approaches the company implements. The merger between GE and Honeywell presented numerous challenges concerning the shareholders and antitrust factors, which led to a government power struggle due to GE being a mega-enterprise. Hence, this led to the transaction being assessed and scrutinized by the justice department.
PART C
Organizations constantly face numerous threats in the market. Amid the uncertainty within the fiscal markets, the company should cut back its over-dependence on its financial services and opt to make other acquisitions within its health care and infrastructure segments. The firm has always been a strategically-led portfolio firm with a mixture of organizations in various stages of their development cycles that enables the company to deliver consistent revenue. Hence its over-reliance on the financial services implies that economic decline would substantially impact GE because over 40% of its revenue is generated from this sector. The main weakness of GE is aligned with its acquisition of Honeywell International, which the EU rejected. Thus, GE should opt to sell units rail services units, creating revenue of about four billion. Also, the company should reduce its vulnerability to the low-margins firms after realizing poor first-quarter financial reports. GE’s foremost opportunity is to increase its investment in building R&D abilities. Although the firm has built R&D centers in countries like Germany, China, and India, investing more in such a sector is beneficial since more opportunities are coming up in nations like India and China, for instance, the merger between Vivendi and NBC.
