Strategy of Ge

1. Introduction

General Electric Company (GE) was built in 1892 by merging between Edison General Electric Company and Thomson-Houston Company. It primarily operates in the US and Europe, and expanded its business into other continents, such as Africa and Asian, in the past few decades. At the beginning of its development, GE manufactured lighting, transportation, medical equipment, industrial product and power transmission (Inkpen, 2010). Some of which are still produced at present. In the following century, GE expanded its business to many other fields. Some of them are far from its original business, such as entertainment industry. In the 20th century, GE is one of the largest multinational conglomerates in the world. From 1980s, GE begins to reduce its business scope and transfer more resource to business which has more opportunities to grow. After the restructure in 1980s and 1990s, when Jeff Immelt took over GE at 2001, GE had already divested many businesses which are underperformed, such as oil exploration and injected more resource into other primary businesses. During Jeff’s CEO’s tenure, GE sold some business units again, including insurance, plastics and NBC universal. During this period, GE transfers its resources to its primary businesses, such as infrastructure and industrial business. By now, five main fields GE operates in are: infrastructure, finance, healthcare, transport and energy. Ten business units of GE are: aviation, electric distribution, energy, finance-business, finance-consumer, healthcare, lighting, oil & gas, rail, water (General Electric Company, 2014). However, GE is still a large company and has many diversified business. This essay uses Porter’s generic strategy to describe the type of GE’s strategy, and use PEST and SWOT models to analyse the suitability of GE’s strategy during 2001 to present.

2. Description of GE’s Strategy

2.1 Porter’s Generic Strategy

Corporate-level strategy is defined as “the overall purpose and scope of an organization and how value will be added to the different parts (business units) of the organization” (Johnson et al, 2008). Every company has to decide its corporate-level strategy to guide its economic activities. Corporate strategy has to be aligned with a company’s environmental force, management style, organizational culture, capability, and corporate mission.

Corporate-level strategy could be classified in to different types by theoretical models. In Porter’s Book “Competitive advantage: creating and sustaining superior performance”, he stated that there are four kinds of generic strategies: cost leadership, differentiation, cost focus, and differentiation focus, as shown in Table 1.

Table