A core competency according to C.K Prahalad and Gary Hamel is the harmonized combination of skills and multiple resources which distinguish a firm in the market. The core competency is used by the organization to fulfill the following criteria (Prahalad and Hamel 2006, p.23).
It is used in the provision of potential access to a wide range of markets which in turn ensure that the company markets its goods and services to the wide geographical area.
It is also used to make significant contributions to the customers benefits of the companys products.
The core competencies also ensure that the strategies developed by a company are difficult to be imitated by the competitors in the market.
Company's core competencies are important for the provision of specific skills and techniques that will result in the delivering of additional value to the customers. When the company's value of the produced is guaranteed, it enables it to access a wide variety of markets. According to Prahalad and Hamel, core competencies results in the development of core products that are used further develop more end quality end products that meet customers requirements and needs. A company develops core competencies through the process of continuous improvement over a length of time. For companies to succeed in the market, it is important to develop core competencies rather than developing vertical integration. On the other hand, capability-based strategies depend on the notion that internal resources and core competencies germinate from the capabilities that are distinctive and provide strategy platform that is important for organization's long-term profitability. The capabilities of the company begin from company capability profile; that is used for the examination of the organization's weaknesses and strengths in such areas as managerial, financial, marketing and also technical areas. After the review of the company capabilities, it is important to use the SWOT analysis to determine if the company is contained that are necessary to address specific external forces from the external environment (Prahalad and Hamel 2006, p.23). The study is important because it enables the company to identify the external threats and opportunities and come up with competencies that can fully address the threats and even compensate for the company's weaknesses. Therefore, the company's core competencies should have unique capabilities or characteristics that provide a competitive advantage in the market place, contributes to the continued organizational growth and delivers value to the clients of the company.
For GE its portfolio of core competencies is seen when Immelt develop a long-term transformation strategy. Through this strategy, Immelt reconsiders the business portfolio of core competencies that surrounded infrastructure and specialty financial services. Another responsibility of Immelt regarding the core competencies and capabilities of GE Company was also the development and reorienting the goals and objectives towards the growing of company revenue. Another core competency of the GE Company was the refocusing of the GE competitive advantage around such aspects as technological innovation and customer service. The adjustment of the GE management structure also formed the core competencies and capabilities of the GE Company (Kasper et.al, 1997, p.67). Furthermore, the corporate culture was also viewed as one of the core competencies that could transform the company and enabled it to acquire a wide geographical market.
GE being the worlds biggest infrastructure company has a huge midmarket that enables it to sell many products over a wide geographical area. The core businesses and the goal of the GE Company were to expand the infrastructure as a footprint. The company had more than $ 100 billion globally, and it also builds valuable specialty finance business all over the world. The company has superior technology that which assists in the effective and efficient production of goods and services. This strategy is important because it ensures that the corporation the needs of the customers. The company has invested heavily in the research and development department since it is one of its primary department. The services from the firm are quality, and this has made the organization to earn about 70% from the sale of goods and services as its revenue. Furthermore, the industrial growth regarding regional market is significant because, through it, the company has achieved global recognition.
According to a balance scorecard model, a company should have a strategic planning and management system that will be used extensively to improve the business operations of the organization. The scorecard model is important because it assists the company to align business activities to the strategy and vision of the company. Furthermore, through the model, the organization will improve the external and internal communications and thus can monitor the company's performance against strategic goals and objectives. Dr. Robert Kaplan came with the model to ensure that non-financial measures are added as one of the strategic plans by the companies (Kaplan and Norton, 1996, p. 33). This according to him is important because it gives managers and executive personnel to view an organization's performance in a wider view. According to the balanced scorecard model principles, the GE Company core competencies are effective since it ranges from financial to a non-financial performance by the GE organization. The financial strategies that the company has developed are important because it assists in identifying the challenges facing the company and how such challenges can be amicably addressed. Financial competency developed by GE is significant since any business thrives only if its strategic financial plans are in line with the overall strategy of the organization. It supports the success of the company as it allows for smooth operations of the planned activities.
The financial competencies have assisted the company to achieve its success as the planning and execution of activities is smoothly undertaken since the financial resources will have been appropriately allocated properly. Furthermore, the infrastructural portfolio developed by the GE Company is significant since it allows for the achievement of goals and objectives set by the management. When the infrastructural development is well coordinated, the movement of goods and services in and outside the company will be made easy (Kasper et.al, 1997, p.67). Furthermore, well-coordinated infrastructure is significant for company communications with the customers and other partners. This strategy is efficient in GE Corporation and has assisted it to reach a huge number of customers from a wide geographical area. Therefore, the company was in the position to make huge sales which are important for company growth.
The technological innovation being the core competency of GE organization has also assisted it to grow through the production of high-quality goods and services. The successful transformation of GE, for example, was enabled through the technological advancement. One of the importance of the technological to GE Company is the connectivity with the outside world. The strategy ensured that the company stays effectively competitive in the market. The connectivity created by the technological advancement assisted the company to come up with the best solution to the problems that are pertinent within the enterprise. After GE sales had gone down, the management realized that the company had not invested heavily in the technology, and this became a wake-up call for the company to improve its communication and technology department. The leadership finance the communication and technology department and this made the department have well-coordinated research on how to improve the quality of the products of the organization. There was, however, need for in-depth domain expertise for senior managers who are well knowledgeable on the importance of technology. The technological strategy, competencies, and capabilities were used by the company as a benchmark for other companies whose technologies are advanced (Kaplan and Norton, 1996, p. 33). The significance of this strategy was seen when the company improved the shape and characteristics of such goods as General Millers to meet the competition in the market.
Strategic Options for GE Company
The well-coordinated strategic plan becomes the core competency for any company as it enables it to achieve the set goals and objectives (Kasper et.al, 1997, p.107). Apart from the technological, financial and infrastructural strategies developed by GE company, it can also use other strategies such as the:
Many companies have become successful after undertaking the cost strategies. Costs strategies focus on the economical provision of goods and services to the customers. When a company utilizes the cost strategies, it will be in the position to pass along a lot of benefits to the customers and this, in turn, increases the number of customers who visit the organization. The benefits of are passed to the customers in the form of low cost. Because GE company deals with infrastructural related goods and services, it will increase the number of customers using these products if the company it establishes the cost strategy in its operations. A significant portion of the low cost will be achieved through the incredible efficient operation and the benefits achieved by the company as a result of the low cost will be retained within the organization. The retained earnings are important because they become company profits, and this will be used to improve the growth opportunities of the company. Because the GE firm has achieved economies of scale, it will be important for it to lower the cost of its products to ensure that it attracts more customers. The company can do these through the geographical and psychological pricing of its products. Since the core competencies of the company include financial and infrastructural competencies, it will be an opportunity to lower the prices based on the geographical characteristics of the customers. In places where the population is dense, it means that the company has more customers in such places, and the pricing in such areas can be done based on the social characteristics of the customers. When customers deem rich in a particular place, it is the company's responsibility to have high pricing strategy in such places unlike the in areas where the customers are deemed poor (Kasper et.al, 1997, p.122). Through this strategy, the GE firm will be in the position of increasing its sales and thus guaranteeing the growth of the business in global perspective.
The key important thing that GE company needs to understand regarding the cost strategy is that the savings are retained as the capital of the company and can also be ploughed back to expand the business. When GE is branded as a low-cost producer, it does not mean that the products will be too low for the company to realize its sales objectives. It, however, will still be in the position to price services and products at a level that meets the sales objectives of the company. If GE firm adopts these strategies, it will be in a position to grow and expand within the next five years. When the GE firm develops cost strategy, it will have the direction of strategic research which is parallel and a primary paradigm shift for the next five years. In this case, therefore, the company will shift from focusing on production to focusing on the market. Furthermore, because there will be high demand from the market, the company will create products of hi...
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