Strategic Management Process

Strategic management process is a clear-cut definition of an organization strategy, which is used by an organization management when coming up with a set of strategies that are meant to help in achieving its goals. This is a continuous process driven to appraise an organization and business. Also, it entails setting particular goals that are channeled to business success. In essence, a strategic management process involves planning, analysis, assessment and monitoring of all activities in an organization aimed at fulfilling the objectives of the organization.

Goal Setting

This is the process where the organization or business visions are set depending on the long term or short term objectives. Secondly the business looks in the ways that these objectives can be achieved. These set of goals ought to be detailed realistic and easily understandable.

Environmental Scanning

Environmental Scanning, on the other hand, is the process where a business or organization collects, reviews, and provide information for its strategic purpose. It is essential in helping the organization or business in scrutinizing the internal and external factors facing the business. The organization and business initiate its analysis process, and it reviews it with the plan of striving to improve it. This stage entails the collection of data or analysis that helps in the improvement process. The last action of this process is goal setting in line with the information being scrutinize.

 

 

Strategy Formulation

It first requires scrutinizing the set goals and using the information acquired from the analysis conducted. Additionally, it means measuring the resources and opportunity in place for the business plan to succeed. Therefore, it will help in prioritizing the goals and visions that the business is geared towards. Strategy formulation comes next where the actual plan is put in place to carry out the particular business plan. Due to many considerations in this particular stage, identifying the economy situation is critical. The business should also come up with alternative strategies for its business.

Strategy Implementation

This step comes after strategy formulation. However, it is important for a business to succeed. It is the stage where the strategies are put into action, therefore, in case a particular strategy does not work a business borrows an alternative business strategy from the formulation. The organization strategies must also be clearly laid down and implemented by the business workers. Strategy execution comes last after the business has accumulated the required funds.

Evaluation and control

These are the final steps involved in the strategy management process. Evaluation stage has critical activities that include; measuring performance, appraising internal and external factors that are the root of present strategies and taking corrective and remedial actions. Evaluation and control steps ensure that the organizational strategy, as well as the implementation process, meets the organizational objectives.

 

1. Current Situation
2. Current Performance

GE has had an excellent performance over the years.  For instance, the company’s profitability has been on an upward trend over the years.  Last year, the company’s revenues stood at $148.6 billion which was a significant increase from previous year. Increased profitability has enabled the organization to remain competitive over the years. The company has also had a reasonable market share which has resulted in increase in revenues from $27 Billion in 2010 to $43 B in 2014.  Countries with revenues of over $ billion also increases from 18 to 22 in the same period. Return on investment and other efficiency ratios clearly indicate a strong financial position of the company.

Last year General Electric dividends paid out amounted to $10.8 Billion this meant in made a $30 million to shareholders every day. It was also declared the winner of the energy businesses of Alstom business battle, and this is a French engineering group. In the same year its profits per share accumulated to $27, and a P/E ratio of 16, this was slightly above the average.

1. Strategic Posture

Strategic posture is defined by the organizations’ vision and mission statements. These are essential statements that outline the core purpose, values, identity, business aims and principles. GE has clearly defined mission and vision statements that involve organizational growth and development through a capital provision, expertise services and infrastructure to the global economy. The organization has a strong belief in innovation towards increased electrification through embracing technology.  The strategic position of the organization is in agreement with the provision of the vision and mission statement and bases its operations on this premise.

 

1. Corporate Governance
2. Board of Directors

The success experienced at General Electric is attributed to the able leadership and management of the organization. The company’s management is lead by a board of directors. All members of this board have an obligation of focusing on major areas that are of concern to shareholders, regulatory matters, and risk management. Board members consist of both internal and external employees all of whom are expected to have a feel for the company. All of these board members are professionals from different fields where some been on the board since 1994 or earlier.   The board members contribution towards the management of the organization is active where they play a significant role in decision making and implementation of the company’s policies. Some members of the board owned shares while others did not.

1. Top Management

• Top management promoted from GE Company, recruit brightest minds and cultivate leaders through training.
• They are experienced professionals with different knowledge and background information regarding the company.
• Responsible for the current situation in the dynamic industry.
• Patience instrumental in top management at the company.
• Well documented systematic approach to management.
• A good relationship between top management and other players in the company.

 

III. External Environment: Opportunities and Threats (SWOT)

1. Natural Physical Environment: Sustainability Issues

• Need for a sustainable energy major issue.
• Increased global warming increases demand for green energy where there are less burning of fossils.

These are universal problems in all parts of the world.

1. Societal Environment

Economic

• The accumulated debt has put the company into indebtedness; this means that the company future is unpredictable due to the limited fund channeled for expansion and development.
• The companies also faced fluctuating currencies and economic recession, especially in European countries.
• In some countries, the company faced high taxation and limited markets which were in line with that particular countries regulation on foreign companies operating there.

Technological

• Diverse business portfolio at the company is the major strength of GE Company. The company ventured into different segments and in many countries to enhance its product flow and the diversification is based on innovation and technology.

Political-legal

• In some countries, the company faced high taxation and limited markets which were in line with that particular countries regulation on foreign companies operating there.
• Some oil and other energy sources have different regulating bodies such as OPEC that have strict regulations that govern the energy sector.
• Environmentalism being reflected in laws on pollution and energy use.
• In its course in various countries and economies, the company faced strict policies and regulations. This was hugely noted on its oil and water department.

Socio-cultural

• The modern society has a preference to non-choking energy in cooking and lighting.
• Increased construction of modern houses and use of automobiles has increased demand for energy.

Task Environment

• The European market mature and extremely competitive_ the demand for quality and environment-friendly product is eminent in the European market.
• Need to tap other unexploited markets such as the Middle East and North America where competition is less stiff.
• Innovations and technology are critical to the market expansion and sustainability of the market.
• Rivalry High. CITIGROUP INC, KONINKLIJKE PHILIPS ELECTRS, and SIEMENS AG are major competitors and have a global presence.
• Buyers power low. GE has almost monopoly powers that help increase the bargaining power of the buyers.
• The power of suppliers high. The demand for high-quality product and technology has resulted in super retailers.
• The threat of substitutes low. The quality of products and brand image associated with GE has substantially reduced the threats of substitutes. Most of the consumers are convinced of high-quality products from the company.
• The power of other stakeholders medium. GE has taken a leading position in most of its businesses in various fields thus limiting the powers of other stakeholders in the industry.

1. Summary of External Factors (EFAS TABLE)

opportunities
O1 Expected number of customers connected to power grids is expected to grow substantially by 2050.	.25	5	1.25	Increased demand for reliable gas and wind turbine solutions, and related equipment and services
O2 Expected number of customers connected to power grids is expected to grow substantially by 2050.	.25	5	1.25	Increased demand for energy, transportation, industrial equipment, services etc.
Threats
T1 Current fiscal situation comprised of huge debts and tax reforms have adverse effects on capital investment.	.1	5	.50	50% of GE revenue comes from the financial industry
Total scores	.55		3

 

Some of the external factors will be of great importance to the company and the industry at large. Political uncertainty and subsequent uncertainty in the use of wind energy will be of great importance to the company and the industry at large. An increase in demand for reliable gas and wind turbines, solar solutions and related services and equipment will be of paramount importance to the company and the industry. It s expected that the number of people connecting to power grids will grow substantially in coming years.

1. Internal Environment: Strengths and Weaknesses (SWOT)
2. Corporate Structure

• Different business units with presidents who reports directly to the CEO.
• Has increased leadership outside the United States to support the emerging markets.

1. Corporate Culture

• GE has developed a culture of training executives to reach the desired level of expertise.
• Six Sigma, e-business and globalization are some of the critical initiatives that form corporate culture at the company.
• The corporate has a strong environmental initiative where the CEO holds different networks, forums and groups to sensitize the employees on the environmental friendly nature.

 

1. Corporate Resources
2. Marketing

Over the years, GE has been lacking in a marketing organization. The management of the organization was in self-deception that the company’s products were special and of high quality, and thus there was no point in extensive marketing exercise. Most business units under GE found it a surplus requirement to engage in intensive marketing exercise. Nevertheless, as innovation and emergence of new products in the company increased, the organization understood the importance of marketing the new products to new markets. Marketing operations have been increasing in this organization has been on the rise over the years. This became an essential aspect of the organization such that all marketers were given a common framework for measuring success; principles, process, and people.

2. Finance

• The issue of dividends at the company is increasing every year. In 2012, GE issued dividends of $7.2 million.
• Most of the earned profits is used in strategic acquisitions in the coming years.
• Despite the global economic recession of 2008, the company has done exceptionally well with the market capitalization currently at $243.74 billion and also a notable increase in assets and profitability in the company.
• Major financial ratios such as ROA, ROE, and net margins were at slump after the recession but are currently in a stable condition.

3. Research and Development (R&D)

• Research and development at GE have been the main source of competitive edge over the competitors for over 100 years.
• Research center headquarters in NY and similar facilities in other parts such as India, Bangladesh, China, Germany, and Bangalore.
• Budgetary allocation to R&D is increasing every year.
• Industrial Internet essential to interconnectivity used in monitoring usage and allocate power more efficiently.
• Use of GE smart grid.

4. Operations and Logistics

• Job and methodology common in GE’s manufacturing centers.
• Process improvement program at the company saved amount totaling $800 million in the year 2012.
• Heavy reliance on the third party for raw materials, parts and components exposes the company to price fluctuations and availability of these products.

 

5. Human Resources Management (HRM)

• The Company has well-defined career development programs that help develop core competencies essential to its employees.
• Company’s employees and executives make annual trips to Crontoville, NY for a transformative learning experience. This makes them special from the competitors.
• Culture of leadership and diversity critical to GE’s productivity and innovation.

6. Information Technology (IT)

 Information systems at GE essential in speeding up the innovation and product development processes.

 It is an expensive exercise that uses a substantial amount of the GE’S budget. For instance, GE spent $ 4 billion in 2008.

 IT instrumental in the interconnectivity between the different business units in different parts of the world.

1. Summary of Internal Factors
2. Appendices
3. FIG 1.0. SUMMARY OF INTERNAL FACTORS ( IFAS TABLE)

Internal factors	Weight	Rating	Weighted score	Comments
Strengths
S1 Revenues from emerging markets have been in an upward trend since 2010	.10	5	.5	Focusing on serving customers in new markets is critical for sustainability and future success at GE.
S2 the company’s expertise in energy, transportation and health care is essential for developing economies	.07	5	.35
S3 Over the years, GE energy has double in size every year and the aim is to double it again in future	.07	5	.35
S4 The company controls more than 44% of the gas turbine toping its competitor SIEMENS.	.03	5	.15
S5 Aviation backlog increased 24% to $99 billion at the end of 2011, reflecting strong pipeline fueled by demand in new developing markets.  This could be largely due to years of research and development investment.	.03	5	.15
S6 The company’s transportation income grew by 45% in 2011. Health and energy are secondary to transportation.	.03	5	.15
S7 GE advantage, its ongoing process-improvement program which is improving on 40 big processes throughout the company, has realized $800 million of margin improvement in 2012.	.07	.05	.35
S 8 The company’s capital’s revenue reduced between 2010 to 2011 but profitability doubled to $ 6.5 billion within this period, representing 31% of total segments profits largely because focusing on middle market lending boosts margins and increase stability	.04	5	.20
Weaknesses
W1 retirees’ benefits and pension costs are too high and this could hamper cash flow at the organization.	.10	4	.40	Strengths and opportunities have by far outweighed this weakness. opportunities
W2 Low stock prices due to financial down turn	.20	4	.80	Strengths and opportunities have by far outweighed this weakness. opportunities
W3 corporate and brand image likely to suffer adversely as a result of the ongoing legal proceedings.	.10	4	.40	Strengths and opportunities have by far outweighed this weakness. opportunities
W4 bad loans have adversely affected the company’s capital’s commercial lending and leasing operation.	.10	4	.40	Strengths and opportunities have by far outweighed this weakness. opportunities
Total scores	.94		4.2

 

From the table, it is evident that there are more strengths than weaknesses in the company. In summary, the greatest strengths are;

 Expertise in healthcare, transportation and energy.

 The size, scope and focus of the company’s research and development.

 Its focus and success in tapping emerging markets.

 Growth and success in business units and energy businesses relating to infrastructure growth.

Core competencies of the organization are;

 The IT system of the company is critical to fast innovation and product development process.

 Research and development prowess at GE is critical to quality management experienced n the organization.

 Different business units in the organization and diversity in the HRM department is essential to employee motivation and retention.

 The organization has also been able to invest in resource-rich and high-growth countries that have potential markets.

1. Analysis of Strategic Factors (SWOT)
2. Situational Analysis

Strategic Factor Analysis Summary (SFAS) Matrix

Strategic factors	Weight	Rating	Weighted score	Comments
Strengths
Revenues from emerging markets have been in an upward trend since 2010	.25	5	1.25	Focusing on serving customers in new markets is critical for sustainability and future success at GE.
Weaknesses
Possibility of low stock prices is likelihood as a result of the increased debt and low dividend pay outs.	.15	4	.60	Strengths and opportunities have by far outweighed this weakness. opportunities
opportunities
Expected number of customers connected to power grids is expected to grow substantially by 2050.	.25	5	1.25	Increased demand for reliable gas and wind turbine solutions, and related equipment and services
Expected number of customers connected to power grids is expected to grow substantially by 2050.	.25	5	1.25	Energy, transportation, industrial equipment, services are in increased demand.
Threats
Current fiscal situation comprised of huge debts and tax reforms have adverse effects on capital investment.	.1	5	.50	Over 50% of GE income comes from the financial industry
Total scores	1.00		4.85

 

 

From the matrix, it is clear that there are various factors that affect the present and future performance of the company. The number of people connecting to the power grid and the amount spent on infrastructure in the emerging markets in coming years will be of great importance. Serving clients in the emerging economies will be essential to present and future success of the company.

1. Review of Mission and Objectives

As earlier mentioned, the operations and logistics at GE are governed by a mission statement that is clearly outlined at the company’s website. The company has distinct objectives of creating value and competitiveness over the years. The company has invested a lot in R&D and customer oriented outcomes to gain a competitive edge and create value. This strategy will change over time as the level of competitiveness changes in the industry.

1. Strategic Alternatives and Recommended Strategy
2. Strategic Alternatives

TOWS MATRIX

	Strengths S 1 Revenues from emerging markets have been in an upward trend since 2010. S 2  the company’s expertise in energy, transportation and health care is essential for developing economies S3 Over the years, GE energy has double in size every year and the aim is to double it again in future. S4 GE advantage, its ongoing process-improvement program which is improving on 40 big processes throughout the company, has realized $800 million of margin improvement in 2012.	Weaknesses W1 possibility of low stock prices is likelihood as a result of the increased debt and low dividend pay outs.
Opportunities O1 expected number of customers connected to power grids is expected to grow substantially by 2050.  O 2 there is need for $60 trillion of infrastructure spending in emerging economies by 2030. 03 need of over 33,000 more airplanes by 2030	SO Strategies S1, S2, O1, O2. GE to heavily focus in health care, energy and transportation sector especially in developing markets. S4, O1, O2, O3, continue to develop increasingly durable and energy efficient technologies to gain a competitive edge over its competitors in emerging markets. S4, O1, O2, O3, increase efficiency in emerging markets by investing heavily in its process-improvement program regarding energy, healthcare and transportation sector.	WO Strategies W1, O1, O2. Continue to seek a wider profit margin from businesses in new markets, repurchase stocks, have a dividend yield of at least 3%, and boost confidence among GE’s stockholders.
Threats T 1. Current fiscal situation comprised of huge debts and tax reforms have adverse effects on capital investment. T2. Increased supply in solar panels has resulted to increased prices since 2009. T3. Tendency to increased pension obligation is a future threat to the company. T4. Great uncertainty in wind energy industry and in political and legislation are threat to the company.	ST strategies S4, T2, T4. GE to continue in research and development of new technologies in areas of solar panels, aircraft engine, wind turbines, software, analytics, communications technologies and more.	WT Strategies W1, T2, T3. Take care of stock prices that are likely to be greatly affected by presence of advanced solar panels and wind turbines. W1, T3. Stock price increase can be realized through payment of pension obligation.

 

Over the years, the company has been actively acting on a strategy that will meet the healthcare, infrastructure and energy demands in the emerging markets. The following are suggested alternatives;

• The company should seek price leadership and product differentiation in a way that rivals cannot match given the context of competition.
• Strive to meet customers’ needs depending on the capabilities of the organization.
• Cary out feasibility study to get a market niche that suits the firm’s internal and external environment.

Recommended Strategy

• Continued use of differentiation strategy which has worked positively with the company.
• Searching for a suitable market niche in an untapped market using R&D as well as the massive technology advances to meet customers need in an exceptional way.
• A joint venture would also be a wise step towards fulfilling the objectives of the organization.

VII. Implementation

It is the role of the company’s executive to fulfill the desired outcomes of the GE. The organization has an objective of being a global leader in healthcare, energy and infrastructure.  Corporate executives should work towards ensuring that the organization is structured in such a way that the various business units in the organization realize their potential. Rotation of the various managers to various destinations will be instrumental in ensuring strong background information and strong knowledge of different markets all over the world. The implementation process is an inclusive process where every player starting from top executives to the normal employees has a role to play.

In my opinion, the programs are financially feasible. Over the years, GE has been making profits that are more than enough for the restructuring process. Pro forma budgets can be prepared and agreed upon as it has been successfully implemented before. Timelines are also critical in the program implementation process.

Evaluation and control

GE is known to use various control measures such as SAP, PeopleSoft, and various ERP systems in its various business segments. It is, therefore, possible to carry out an effective evaluation and control measures in different business segments in different parts of the world. It would also be instrumental for the company to set different profit goals for the various business units within the organization. It is also prudent to note that there reward systems capable of identifying and rewarding good performance. It is the culture of this organization to reward good performance as it is evidence from the website. I am convinced that GE is in the route to market dominance in the dynamic energy, healthcare, and infrastructure industry.

 

References

Crainer, Stuart.(2009). From edison to immelt:The GE way. Business Strategy Review 20 (3): 18

Derek Lehmberg, W Glenn Rowe, Roderick E White, and John R Phillips. (2009). The GE paradox: Competitive advantage through fungible non-firm-specific investment. Journal of Management 35 (5).

GE: Summary for General Electric Company Common- Yahoo! Finance. (n.d.). Yahoo! Finance. Retrieved on July 24, 2015, from http://finance.yahoo.com/q?s=GE

Goldsmith, Marshall, and Louis Carter. (2010). Best practices in talent management: How the world’s leading corporations manage, develop, and retain top talent. Hoboken: John Wiley & Sons, Inc

 

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