In management, a core competency is an aspect that results from a particular set of production or skills and techniques that deliver additional value to the customer. The strategy is significant because it drives the company in a global perspective. C.K Prahalad and Gary Hamel, argue that core competency is described as a management strategy that combines multiple resources and the skills to make the firm unique in the marketplace. Furthermore, C.K Prahalad and Gary Hamel argue that core competencies result in the development of core products within the organization. The core products can then be used to build other useful end products. It is known that core competencies result from the continuous improvement over a period. Companies develop core competencies to succeed in the global market. Through the core, competencies, Prahalad, and Hamel argued that executives can develop the industry foresight necessary to adapt to global market needs (Prahalad & Hamel 2006, Pg. 67). The company through the core competencies can develop a strategy for controlling the resources that make the company attain its strategic goals and objectives despite the constraints befalling it. Capability refers to the condition of being with the capacity to do something. The capability is known to improve the skills and technical competencies of the individuals in the organization. The capability may result in competency within the organization. The managers of an organization can learn skills and technical competencies by practicing them. An organization that aspires to be competitive in the global market can develop competency and capability based strategies. For the company to realize long term long term profitability, it needs to come up with a strategy platform that distinguishes it with other companies operating in the same market.
The most significant core competency of GE Company is the long-term transformation strategy that was developed by Immelt. The business portfolio was redefined, and these were mainly the financial and infrastructural strategies. Furthermore, to grow the revenue of the company, Immelt had to reorient and redefine the goals and objectives that were significant in the growth of the enterprise. This gave the company a competitive advantage in the global market. Furthermore, the company also had the technical innovation as its core competency. This was important in that it facilitated the customers service. What is more, the company adjusted the GE management strategy to form the core competencies to the enterprise. The management structure was adjusted to ensure that the competitive nature of the organization is strengthened to that all that is being undertaken by the management conforms to the great plans of the company (Schmidheiny 1992, Pg. 73). During Jack Welch's leadership, the company had the performance culture as one of its core values. The performance culture was supported by the comprehensive systems for setting and monitoring the performance targets of the company. Welch had powerful incentives for all the employees of the organization. The management had the changing culture where opening up of the quantum change was considered. This involved the strategy of constantly asking how fast the company can market its products. The electronics and another infrastructural equipment produced by the organization was to be marketed in a global perspective. The strategy adopted the use of dreams to set business targets. Strategic planning of GE Company was also another core competency whereby all the employees were given the opportunity to give their opinions on how the organization can realize its goals and objectives. Welch knew that by integrating the employees objectives, the company will be in the position of tapping the skills and technical know-know how of its human resources. Through this, the capability of the organization was realized.
The strong management that the GE Company had was significant as it formed one of its capabilities. Welch, for instance, had well-coordinated management skills and techniques. He believed in the low bureaucracy in the firm for it to achieve its goals and objectives. Unlike many companies that have long bureaucracy, the company had a direct communication system. The employees, for example, were commutating and interacting with the manager without necessarily following the long bureaucracy. This made the company gain reputation globally. It gains recognition in such matters as turning around troubled units, driving customer services and also exploitation of new technologies (Prahalad & Hamel 2006, Pg. 91). Welch also had the capability of motivating the employees as believed that human resources are significant drivers of the goals and objectives of the company.
The balanced scorecard model coined by Dr. Robert Kaplan requires that a company's strategic management and planning system should be extensively used to improve the overall business operations (Kaplan &Norton 1996, Pg.33). The scorecard model is significant because it assists the organization to align different business activities with the aim of gaining popularity globally. Through the scorecard model, the company's vision, mission, goals, and objectives are realized. The scorecard model is also important because it recognizes the competencies and capabilities as important in that:
It is also used to make significant contributions to the customers benefits of the companys products.
It is used in the provision of potential access to a wide range of markets which in turn ensure that the company sells its goods and services to the wide geographical area.
The core competencies also ensure that the strategies developed by a company are difficult to be imitated by the competitors in the market (Kaplan &Norton 1996, Pg.56).
Therefore, Kaplan argues that if the enterprise can have sound management approaches, it will be in the position of realizing its global goals and objectives. Through the model, the firm will be in the position to improve the internal and external communications and therefore, can easily monitor its performance measures which include the financial and non-financial measures. The financial measures of the company can be determined through the return on capital, return on investment and also the profitability index of the organization (Kaplan &Norton 1996, Pg.66). On the other hand, non-financial measures can be determined through the sales volume of the organization, the rate of selling particular goods in the organization, the employee growth rate and also the immediate market served by the company. Kaplan came up with the model to ensure both financial and non-financial measures are integrated while determining the growth of the organization. The model according to him is significant because it gives the executives and managers to view the companys performance in a wider perspective.
Therefore GE being the world's largest infrastructure company has large mid-markets that enable it to market its products over a wide geographical area. The main business of the GE Company was mainly to expand the infrastructure as the only way of beating the competition in the market. The firm, for example, had more than $ 100 billion sales proceeds, and this made it valuable regarding the specialty finance worldwide. Furthermore, as one of its core competencies, the company has invested heavily in the research and development department that makes the primary contributor to the growth of the company. The skills and technical know-how of the employees have been utilized in the creation of goods and services that are unique from those producing by other companies in the same market.
The financial competencies have enabled the firm to achieve its success as the planning and execution of the activities are smoothly undertaken as the company is endowed financially. With the capabilities of the finance manager, the firm allocates its resources equally among all the activities of the company (Prahalad & Hamel 2006, Pg. 98).
Strategic Options for GE Company
Company's strategic plans should be well-coordinated for it to become a core competency and drive the organization towards higher levels. When the organization comes up with a well-coordinated strategic plan, it will be in the position to achieve its objectives and goals. In addition to financial, technological and infrastructural strategies, GE firm can develop other strategies which include:
This involves the growth option matrix. Through this, GE Company has to evaluate its existing products and the market. The business strategy is significant regarding the marketing capability of GE Company. It has been known that those companies that adopt this strategy are in the position to increase their sales and thus gain a higher market share. By understanding the existing market, the company will be in the position to know which products have been continuously used by such enterprises (Chadwick & Cappelli 1999, Pg. 132). It will also be in the position to identify the price of the products that the existing market customers are willing to pay and therefore can adjust such price of their goods and services based on the needs and requirements of the current market. Through the corporate strategy, the GE firm will also be in the position to identify the new products that are required in a particular market and thus can embark on research and development to produce such goods and services. Since the GE Company has been using the financial and technological strategy to grow and expand the organization, it can increase its market sales by adopting the corporate strategy.
Furthermore, the corporate strategy will enable the company to gain market penetration in new areas and thus increase the ability of the company to sell a high volume of their goods. Market development is another key importance as far as corporate strategy is concerned. New market development is realized through the partnership with other companies in the same market. The partnership enables the GE Company to have the conglomerate diversification and thus can produce a variety of goods and services that meet the new customers' requirements and needs. When an enterprise penetrates into a new market, it will be in a position to sale more of its goods and services and thus increase the profitability index of the organization (Chadwick & Cappelli 1999, Pg. 146). This eventually sees the growth of the company in global perspectives. When the company has high sales, it will be in the position to build strategic capabilities and thus leverage greater economies of scale. Furthermore, it will assist it to have more working capital that will see the company expand into new areas. With the product development approach, GE firm will be in the position to develop new products through either the modification of existing products or coming up with new products as far as the customer needs and requirements are concerned.
Even though the strategy is risky, it will assist the organization to gain more customers after it has been fully implemented and thus the company will rapidly expand. Because GE Company has the strategic capabilities and employees know-how, the strategy will be suitable for further improvement of the existing operations (Chadwick & Cappelli 1999, Pg. 75). Furthermore, diversification is significant to the company because it increases the range of products that are marketed to existing and new markets. Diversification will enable the company to learn and adapt new technological methods as it will realize the value of innovation and can thus invest heavily on such technological advancements. Corporate strategy will enabl...
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