This essay concerns General Electric Capital and its dual goals of diversification and growth. The study makes the point that the company has diversified too far and needs to refine its future acquisition efforts to companies that are sufficiently aligned with its core competencies and corporate culture to overcome the barriers to synergy.
¶ … Strategic Recommendations
Started in 1973 as an addition, General Electric Capital (hereinafter alternatively "GE Capital" or "the company") is currently one of the largest divisions of General Electric. The company competes in the commercial lending and leasing sector, and provides a wide range of financial services for healthcare, media, communications, entertainment, consumers, real estate, and aviation. The company has more than 50,000 employees working in 55 countries. Following the Great Recession of 2008, the company revised its primary strategy of vertical expansion through a series of fairly unrelated major acquisitions to an approach that focuses on forging strategic partnerships and joint ventures to achieve its dual corporate goals of diversification and expansion as described further below, followed by a summary of the research and important findings in the conclusion.
Review and Analysis
Evaluation of strategy recommendations and business case for implementing recommendations
Given the company's current diversification into disparate components, the strategic recommendation to follow certain risk management procedures and to reorganize as part of its strategy to consolidate its gains represent timely and valuable enterprises. Part of achieving this requisite diversification is exercising the company's strategic relationships along the entire the supply and value chains as well as throughout the internal organization. It is these relationships that will help reorganize the company's unrelated structure become more streamlined and responsive to changes in the operating environment and achieve a competitive advantage.
Integration of practical approaches and scholarly research
The Great Recession of 2008 adversely affected the sector in which the company competes. For instance, according to Edmonds and Stevenson (2011), "The Great Recession of 2008 has taken a toll on American households. The economic turmoil, which included a loss in investment and retirement wealth, falling housing values, and widespread job loss, has led to an increase in personal bankruptcy filings" (p. 37). Therefore, the recommended diversification and expansion strategies are considered to be the most straightforward approach to recovering from this economic downturn and realizing the company's strategic goals of increased market share through improved knowledge management practices.
Evaluation of the strategic analysis tools and supporting theories and their role in mitigating the risk and uncertainty of the recommendations
The company's dual strategy of diversification and expansion requires a strategic analytic tool that can measure the effectiveness of these initiatives in achieving the company's goals. On the one hand, the company expects to continue a growth strategy through diversification; on the other hand, though, the company's vertical acquisitions to date have not contributed to its core competencies, making the need for improved coordination at the top management levels an essential element for future success. To its credit, the company has succeeded in this area in recent years. In this regard, Beinhocker and Kaplan (2009) report that, "GE Capital has consistently proved quicker to react and better able to value acquisition opportunities than have its competitors. Part of this success is due to a strategy process ensuring that GE Capital's executives have a strong grasp of the strategic context they operate in" (p. 119).
Evaluation of how recommendations regarding creative organization definition and diversification build a competitive advantage for the organization
In sum, GE must reorganize part of its strategy in order to demonstrate a sense of related diversification that promotes greater synergy within the company. Part of reaching this level of related diversification is exercising the company's strategic relationships within the supply chain, value chain, and internal organization. It is these relationships that will help reorganize the company's unrelated structure to a more streamlined notion.
Evaluation of how knowledge management and organizational learning recommendations help support ongoing improvement of strategy formulation, implementation, and communication
Although it has not transformed itself into a true learning organization yet, GE Capital has taken steps to improve its knowledge management and organizational learning recently by launching a knowledge management portal for their employees and customers. The new portal is known as GE Access provides company employees with best practices, insights and expertise of GE experts in an effort to facilitate achieving the company's goals to "work harder, go farther and do more."
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