IV. Trade-Offs
There were several trade-offs for GE to implement the shift in strategic focuses. To achieve organic growth, GE needed to increase output and sales based on customer needs, which was unlikely for GE to achieve in a short time. GE’s profit inflow would slow down in early years as a trade-off for sustainable profit in the future. Previously GE had many projects induced by merger and acquisition activities. They needed to decrease projects and more focus on long-term investment in order to achieve organic growth.
GE was also required to operate more efficiently to cover the high cost of long term investment. Not only built research centers in several locations around the world, GE also increased their research & development budget by 14%. GE started to do their R&D processes by themselves, instead of merger and acquisition. As it took longer time to develop products, GE’s profit could not be gained in a short term.
In order to become more technology and marketing driven, one of Immelt’s goal was to encourage employees to be more risk taking. Grant (1996) refers routine as interface pattern between individuals to build specific knowledge and transfer it to the organization. GE changed its previous routines and slowed down the job rotation. GE recruited external marketing leaders that demanded more employment budget. Multi-disciplinary divisions were created as GE aimed to be more customer-oriented, resulting in increase of training budget.
Becoming more global was also one of Immelt’s strategic focuses. To achieve that, GE gave priority to long-term investment that required new resources. Lastly, as GE wanted to become more socially and environmentally responsible, they needed more capital and resources. As GE could be...
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...isky for GE to lose their investments. In Welch’s period, it was less risky to lose investment as he really concerned about shareholders. Later, Jack admitted that shareholder value idea is insane and GE should more concerned about management and employees back then. He revealed that doing business in 1990s was different with current business conditions.
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During his absence, with John Sculley in power, the focus shifted to maximization of profit, and product design suffered. Steve Jobs theorized that is was one of the reasons companies decline. “My passion has been to build an enduring company where people… make great products… the products, not the profits, were the motivation. It’s a subtle difference, but it ends up meaning everything”.
S, Rawat 2001, Organisational Change and Forces Prompting Change, Academic Paper Review, Shovoong viewed on 2nd April 2011, on http://imgs.shvoongstatic.com/images/2011/_v_070420111027/scp.PNG">
The Myths of Innovation by Scott Berkun completely changed the way I view creativity. I noticed that we all have creativity inside of us; it is by means of expressing our deepest desires and ideas that we display our creativity to others. Burkun destroys myth after myth about innovation, which had me ready to start inventing my first million dollar idea! Berkun outlines ways to tap into innovation and pulls from history to guide us into the future. His simple and common prose gave me courage to tackle the tough problems. I now feel as though I have a firm grasp on what it means to be an effective creator.
Spector, B. (2013). Implementing organizational change: theory into practice. (3rd ed.). Upper Saddle River, NJ
N.V. Philips (Netherlands) and Matsushita Electric (Japan) are among the largest consumer electronics companies in the world. Their success was based on two contrasting strategies – diversification of worldwide portfolio and local responsiveness for Philips, and high centralization and mass production for Matsushita.
Cummings, T., & Worley, C. (2009). Organizational development & change (9th ed.). Mason, OH: South-Western Cengage Learning.
Diversification or further investing in the current portfolio would not have been the solution. Understanding the market needs is more than understanding technological advancement because innovation should be market driven. In this case, both strategies could still have been practical but with the customers’ needs in mind. Additionally, increasing production efficiency in retention of current business strategy could also have boosted its revenues by reducing wastage or idle time. Considering not all countries move at the same technological level, the company could still have invested in supplying the outdated products to places such as India or Africa. However, as the CEO there is a need to pursue the best strategy by focusing on what works our best but still have the customers ' mind at heart (Xerox Maps Business Service Strategy,
Jack Welch believed that all leaders need to have a reality of the organization 's mission. He believed that leaders don 't need to assume and stay ideal but that need to face the reality of the situation, and also work towards it. For instead when Jack Welch found the problems (losing of market value and a lot of bureaucracy) that the GE company was in, he did not just assume that things will turn around in a good way with time but rather, he developed some strategies to face the reality, to make things better. He first looked at the organization 's problem with fresh eye, he tried not to fall into the "false scenarios ' trap and finally he had several options in case
Jack Welch was considered to be a man of his vision. He believed in his vision for GE and he passed that belief down throughout the company. He passion for his vision changed the culture and structure of GE. In this paper we will analyze how Jack Welch developed his strategic plan, how he used his personal, political and positional power to shape GE. We will also look at how Jack Welch organized, built and planned his teams in keeping with his vision. In the end will look at how this all affected the culture of GE.
Kanter, R.M., Stein, B.A. and Jick, T.D. (1992) The Challenge of Organizational Change (New York: The FreePress).
Siemens have the resources and capabilities required to carry out this strategy. They have significant profits that they are able to feed back into the company, a highly capable workforce that have the necessary core competencies to continually innovate and grow the company and they have the experience and knowledge to compete in every sector that they engage in.
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From information gathering and research, organizational change management is similar in a way that psychology explores people’s behaviors in the workplace by creating theories and set of principles to compliant with the o...
The case looks at prescriptive strategy as applied to multi-product group of companies. Unilever is based in over a hundred countries where multiple products are being made in each. However, the market is mature which means that growth is stagnant and innovation is almost non-existent. In order to improve on growth and sales, the strategies that are needed look at how to come up with new products that have high profit margins and penetrate new markets. The prescriptive approach was used to come with a strategy to improve growth and profit. In order to improve on innovation, both the prescriptive and emergent strategies can be used since both support innovation. From the case study, not much profit was made when the ‘Path to Growth’ strategy was first implemented (2001-2004). The strategy was initially based on cost cutting. There was a need to also build volumes through existing portfolio of branded products through innovation and marketing. By focusing on increasing sales in developing countries where growth prospects were high and increasing investment in personal care products where profit margins were higher, it was possible to improve the profit portfolio.
Cummings, T. G., & Worley, C. G. (2009). Organization development & change (9th ed.). Australia: South-Western/Cengage Learning.