Strengths

(Innovation) – General Electric is a company with a strong foundation dedicated towards innovation and new technology. Matter of fact, GE was founded by inventors that were ahead of their time. “The original version of GE was founded by Thomas Edison himself, who ran the firm then later worked as an inventor and researcher in its labs. This company marketed the first light bulb, the vacuum tubes for the first TVs and experimented with America’s first jet engine.” (Reed, 2018) A lot has changed since GE’s inception. New technology and dedication towards innovative design and manufacturing have been a focul point of the company. “Inspired by four decades of U.S. Army rotorcraft experience, GE responded to this need by designing the new T901. Building on an unparalleled record with the U.S. Army’s Apache and Black Hawk helicopters, the T901 meets all ITEP requirements with fewer parts, a simpler design, and proven, reliable technology. GE stands ready to take the U.S. Army into the future of rotorcraft aviation.” (General Electric, 2019)

(Product & Service Diversity) – It’s a fact that General Electric has a future business model that includes divestures of various business segments (discussed further in the opportunities section of this analysis). However, GE still has a very diverse product and services portfolio. John Flannery (past CEO) made a comment that “we (GE) are aggressively driving forward as an aviation, power and renewable energy company – three highly complementary businesses poised for the future.” (Kim, 2018) GE also has business segments in areas such as oil & gas, healthcare, transportation, lighting, and capital.

(Brand Recognition) – GE’s brand recognition is one of their strongest strengths. It really does not take much research or analysis to emphasize this point of view. As a way to validate this, I thought it would be interesting to identify GE brand products within my own home. After a brief walk around, below are a few items that I found with the GE logo.

In addition, the company that I work for (Doyon Utilities) owns and operates a power plant largely made up of GE power generation equipment and components. GE’s “We bring good things to life” is a historic and trendy slogan that many people are familiar with to this day.

Weaknesses

(Stock Prices & Debt) – General Electric’s stock price as of September 20th, 2019, was $9.37 per share. In 2016, GE stock prices hovered around $30 and have been on a steady decline ever since. “So, from a valuation standpoint, GE — even after it’s 75% stock price slide over the past three years — doesn’t look like much of a bargain.” (Bromels, 2018) GE’s overall value is considered one of their weaknesses because it hinders investment which leads to future uncertainty. GE’s total assets dropped from approximately $800B in 2009 to $312B in 2019. This is a huge reduction especially when compared to GE’s current total liabilities of $212B ($92B long-term debt). Some market analysts are optimistic that GE’s financial outlook will improve. However, until this actually happens, I would consider this a weakness as it pertains to this SWOT analysis.

(Leadership Culture) – GE was a organization that once set out to expand and grow it’s business at any cost. This typically meant that GE’s top leadership team was focused more on bottom-line results than employee development. Jack Welch served as GE’s CEO for almost 20 years starting back in 1981. Welch’s “fix it, close it or sell it was a favorite slogan. Welch wanted to get out of any businesses where GE wasn’t a market leader.” (Gryta & Mann, 2018) “While it’s true that Welch presided over a period of unprecedented growth, he also created a dog-eat-dog culture.” (Davis, 2018) In recent years, GE underwent new leadership. Jeffrey Immelt replaced Jack Welch as GE’s CEO until his recent retirement in 2017. “Immelt claims that he continued to promote a culture of debate and external competitiveness. But people who worked there say that there was just as much competitiveness inside the walls of GE, and that, to be successful, you could never let anyone see you sweat.” (Davis, 2018) GE’s leadership culture has been hard pressed with a nose to the grind stone mentality for nearly forty years. This has allowed for GE to overlook internal management struggles that ultimately resulted in a weak leadership culture.

Opportunities

(New CEO) – GE’s new CEO, Larry Culp, could be a breath of fresh air for the organization. Along with GE’s focus towards effectiveness, there is also now an opportunity to run a more efficient business. “Right now, GE needs to execute better, and improve the productivity and cash flow from its existing assets. Fortunately, this is exactly the kind of strategy that Culp’s tenure at Danaher suggests he’s highly qualified to deliver.” (Samaha, 2018) Culp, who is an outsider to GE, has proven to be a more “hands on” leader which is a step in the right direction compared to previous leadership. “In his previous life at the much smaller Danaher, Culp was known for immersing himself in its various companies. Rather than bringing executives to headquarters for reviews, he would travel to their offices and walk the factory floors.” (Gryta & Mann, 2018)

(Restructuring Plan) – Rather than the older GE strategy centered around growth, GE plans to focus more on their core businesses. GE leadership and stakeholders feel that focusing on a simpler portfolio would be beneficial for future sustainability. “We (GE) will now move forward with purpose to make our company simpler and stronger and accelerate growth across our businesses. I’m confident that today’s actions, in conjunction with other changes we have already made, will produce improved operating results and increased shareholder value going forward.” (Kim, 2018) GE also plans on minimizing corporate costs as part of the their restructuring plan. “GE’s restructuring plan involves stripping down the company to three main businesses: power, aviation, and renewable energy. Here GE has an opportunity to significantly cut corporate costs, and focus on improving productivity in the remaining businesses.” (Samaha, 2018).

(Aviation) – GE has a stronghold on the aviation industry, worldwide. Business opportunities with manufacturers such as Boeing and Airbus have propelled GE’s future in the aviation industry. In reference to Boeing and Airbus, “The two aircraft are set to dominate the narrow-body market for years to come, and GE has a great opportunity to profit from servicing the LEAP engine in the long term.” (Samaha, 2018) GE offers a vast number of products and services within their aviation segment. They also support both commercial and military aviation markets allowing for a broader network of business opportunities. “GE aviation continues to be a leader in the aviation industry. GE technology powers two out of every three commercial departures around the world and GE’s global installed base includes more than 65,000 engines. (Kim, 2018)

Threats

(Legal) – GE has recently been accused of financial fraud and market manipulation. Harry Markopolos, a financial advisor and financial fraud investigator has accused GE of various fraudulent activities. “Markopolos dropped a 175-page report alleging all sorts of fraud and misrepresentations at GE.” (Bezek, 2019) GE’s stock was impacted as this caused uncertainty to GE’s investors. As more analysis is performed by outside entities, it appears that Markopolos was not completely accurate and errors were identified in his report. Regardless, this type of attention towards GE can only have a negative impact and be seen as a substantial threat. “GE operates at the highest level of integrity and stands behind its financial reporting, the company said in a statement. We remain focused on running our businesses every day, following the strategic path we have laid out.” (CBS, 2019)

(Competition & Technological Shortcomings) – What appears to be one of GE’s major opportunities could also be a threat to the organization. The aviation industry is highly competitive and is clearly a realm that GE dominates. However, technological shortcomings could make a huge difference on relationships with aircraft manufacturers thus allowing competitors to make a presence. “Boeing has become a potentially larger issue for GE’s turnaround plans and not only because the airplane maker’s troubled 737 MAX jet is still grounded. Boeing said in June that it had pushed back flight plans for its newest 777 model because GE9X engine issues discovered during testing. The GE9X, which powers the new 777 planes, is the most powerful aircraft engine GE has built.” (Root, 2019) GE leadership is optimistic that these type of technical issues will be resolved and mitigated. In addition to technological shortcomings, GE aviation is also threatened by other competitors that have successful R&D programs. For example, Pratt & Whitney and Rolls Royce both offer comparable engine technologies similar to GE. “Pratt and Whitney built all the engines for the Air Force’s F-22 fighter, and now it’s building all the engines for the tri-service F-35 fighter.” (Thompson, 2018)

References

New beginning, (2019, September 21). Retrieved from General Electric: https://www.geaviation.com/military/engines/t901-turboshaft-engine

Bezek, I. (2019, September 11). General Electric is a buy despite the Markopolas Report. Retrieved from Investor Place: https://investorplace.com/2019/09/general-electric-is-a-buy-despite-the-markopolos-report/

Bromels, J. (2018, November 28). General Electric: What the bulls are missing. Retrieved from the Motley Fool: https://www.fool.com/investing/2018/11/28/general-electric-the-bull-case-from-a-bear.aspx

CBS/AP. (2019, August 16). General Electric accused of fraud “bigger than Enron” by Madoff whistleblower. Retrieved from CBS News: https://www.cbsnews.com/news/general-electric-accounting-fraud-bigger-than-enron-alleged-by-madoff-whistleblower/

Davis, A. (2018, February 22). 3 lessons every leader can learn from GE’s downfall. Retrieved from INC.com: https://www.inc.com/alison-davis/3-lessons-every-leader-can-learn-from-ges-downfall.html

Gryta, T. & Mann, T. (2018, December 14). GE powered the American Century-Then it burned out. Retrieved from the Wall Street Journal: https://www.wsj.com/articles/ge-powered-the-american-centurythen-it-burned-out-11544796010

Kim, T. (2018, June 26). Retrieved from CNBC: GE shares pop after it reveals plan to spin off health-care unit, post best day in 3 years. https://www.cnbc.com/2018/06/26/ge-shares-rise-after-it-announces-plan-to-spin-off-health-care-unit.html

Reed, E. (2018, November 27). General Electric’s history and what to expect in 2019. Retrieved from TheStreet: https://www.thestreet.com/markets/general-electric-history-future-14791857

Root, A. (2019, August 1). GE CEO Larry Culp on the Company’s Turnaround,Boeing, and China. Retrieved from the Barron’s: https://www.barrons.com/articles/general-electric-ceo-larry-culp-speaks-out-on-the-turnaround-china-and-boeing-51564588114

Samaha, L. (2018, September 9). 3 big opportunities for General Electric. Retrieved from the Motley Fool: https://www.fool.com/investing/2018/09/09/3-big-opportuniites-for-general-electric.aspx

Samaha, L. (2018, November 26). What GE investors can expect from new CEO Larry Culp. Retrieved from the Motley Fool: https://www.fool.com/investing/2018/11/26/new-ge-ceo-larry-culp-what-investors-can-expect.aspx

Thompson, L. (2018, July 2). The big threat to GE Aviation isn’t corporate breakup — It’s a resurgent Pratt & Whitney. Retrieved from Forbes: https://www.forbes.com/sites/lorenthompson/2018/07/02/the-big-threat-to-ge-aviation-isnt-corporate-breakup-its-a-resurgent-pratt-whitney

Mission Statement (Original)

At Blast from the Past Power Sports, we provide restoration of older off-road vehicles by creating the nostalgic feel of yesterday through utilization of today’s innovation and technology.

New Product & Service Line

Through much success restoring older motorcycles, Blast from the Past Power Sports (BPPS LLC) made a decision to increase their service line. In addition to off-road vehicle restoration, BPPS will now include services involving engine machining and rebuilds. Not only will this compliment the restoration facility financially but it will create a niche that is expected to bring in a much larger customer base. The new service line will also improve overall revenue by an estimated 25%.

International Expansion

BPPS has always focused on restoration of all types of off-road vehicles. Interestingly, the majority of the business’ demand has been centered around motorcycle restoration. Even more interesting, the motorcycles have been primarily Spanish makes and models (i.e. Bultaco, Derbi, and Gas Gas). Coincidently, the owner of the company is an avid soccer fan and his favorite team is Real Sociedad located in San Sebastian, Spain. Through further research and cost analysis, BPPS identified opportunities that look to be positive in this region of Spain. Plans are to expand their operation and start-up a new shop just outside of San Sebastian.

Business Merger

The owner of BPPS and some of the management team have really become integrated in the Spanish community. BPPS has made a name for itself through excellent customer service, marketing strategies, and community involvement such as sponsorships of youth organizations. Often BPPS would sponsor local soccer teams and organizations. Networking with soccer club owners and stadium representatives became a normal way of business. Matter of fact, BPPS became a major sponsor of the Real Sociedad soccer team that the owner so much admired. Motorcycles and small scooters are a typical mode of transportation throughout San Sebastian and the nearby Basque country of Spain. Even the elite soccer athletes desire motorcycles over the traditional cars and trucks that we have here in the United States.

Through the owner’s own interests, it was decided that BPPS would diversify and purchase a nearby soccer club along with all of their brand logo and player contracts. Most of the organization did not necessarily understand why or how this would benefit the mission and long-term success of BPPS. The owner’s savvy business experience and recent MBA at the University of Alaska allowed for brainstorming and thinking out of the box. The purchase of the soccer club was the beginning of a huge marketing campaign. What once use to be a mom and pop business, has now evolved into an international organization with multiple products and services.

Organizational Structure

BPPS is now challenged with creating an organizational structure that will best suit their business and geographic locations. The owner is a firm believer in maintaining a centralized hierarchy but also understands that diversified products and services may cause a knowledge gap with its traditional structure. As a result, BPPS will develop a hybrid structure that is separated by divisions (Sports Division & Restoration Division). The restoration division will maintain centralized functions (i.e. financial, marketing, and administrative) while the production functions will be divided into geographic sections (i.e. Spain & USA production facilities). Below is the hybrid organizational chart. The owner still plans to keep the original name of the business (BPPS LLC).

General Electric Company (GE) is an American multinational conglomerate that originally started as a New York based manufacturing company of electrical components such as lighting fixtures, lamps/bulbs, electric motors, and other lighting devices. Since the early 1900’s, GE has been primarily involved in a large number of industrial related divisions. Throughout the years, GE has always took pride in being a company of innovation. “For more than 125 years, GE has invented the future of industry.” (General Electric, 2019) Today, GE has it’s headquarters located in Boston, Massachusetts. “General Electric Company operates worldwide as a high-tech industrial company through its five industrial segments, Power, Renewable Energy, Aviation, Healthcare, Oil & Gas, and through its financial services segment, Capital.” (General Electric, 2019).

Based on your research, how does the organization score on efficiency? Defend your answer.

The idea of efficiency within an organization can apply to many aspects of a business. A company the size of General Electric has many product divisions and levels of hierarchy. The efficiency of one division can be much different than that of another based on what they are striving to achieve. However, the company as a whole is driven by strategies developed to ensure important stakeholders (i.e. investors) are satisfied. Historically, the overall drive of GE has been focused on large acquisitions, investments, and being ahead of the market through innovation of technology. “GE’s future was an unlimited supply of large, interesting companies to buy at fair prices, delivering seemingly endless growth possibilities along with operational results.” (Schrager, 2019) With this being said, GE’s focus was more about diversified company growth rather than efficiency. I would give GE a 2 out 5 for an efficiency rating. However, in recent years the world has looked very different for GE’s success and future outlook. Many of GE’s divisions were not performing well and 2017 stock prices kept falling.

“GE increasingly seems to be in crisis mode, with the need for swift execution on cost cutting to offset continued declines in the global power market.” (Layne, 2018) Investors and GE’s top management were reluctant to change their future strategies but knew something must be done. GE’s most recent CEO (Lawrence Culp) is very focused on the future of the company, “particularly in implementing new lean-management techniques, which emphasize continuous improvements and cost reductions.” (Root, 2019) GE certainly recognizes that in order to survive the future, they must rethink how they manage their businesses at all levels.

I feel that GE’s new direction will be more focused on efficiency than past years. My overall efficiency rating for GE is 3 out of 5.

Based on your research, how does the organization score on effectiveness? Defend your answer.

General Electric has always been a company that measures effectiveness through the “strategic constituents approach.” (Daft, 2016) Key stakeholders such as investors, owners, and customers are who ultimately define success for GE. The original founding owners of the company paved the way on establishing long-term goals centered around innovation, inventions, and technological advancement. These goals are still the company’s main focus today. “After a century at the forefront of industrial manufacturing, GE is transforming its portfolio of businesses to continue that pioneering leadership in the new technological era.” (General Electric, 2109) GE is striving to become a conglomerate that is less complex but still motivated to increase growth across their different divisions. GE is also focused on ensuring that their customers are fulfilled and that the company remains driven towards achieving results. “High effectiveness in satisfying business needs and customer expectations is a criterion that managers use in evaluating business performance at General Electric Company.” (Thompson, 2017) This gives GE an edge over many of their larger competitors.

GE’s current stock price ($9.34) is certainly nothing to write home about. However, GE is still figuring out how to best position their business for the future. GE appears to be more flexible on how they can manage market changes without redefining their overall strategies of innovation and technological advancement. This makes me believe that they are still very focused on effectiveness. My overall effectiveness rating for GE is 4.5 out of 5.

Where would the organization like to be on the graph? Why? How do you know?

GE would like to eventually be in quadrant D of the graph. This is primarily due to the realization that maintaining their historic drive towards effectiveness will now allow complete fulfillment of their company goals (and they realize this). The world’s market is always changing and unpredictable, GE becoming more efficient will offset much of the uncertainty of the future. This efficient mentality coupled with their strong foundation based on effectiveness will prop them for future success and longevity.

Does the current positioning of the organization correspond to its vision and mission statements? Support your answer.

GE does not necessarily have an all inclusive vision statement traditional to what we may see in many organizations. Rather, GE has a vision outlined as a company goal, “Our goal is to run more empowered, accountable businesses that are in the best possible position to create value for their customers.” (General Electric, 2019) GE’s current positioning towards meeting this vision is heading in the right direction. They have a new CEO that appears to be genuine and focused towards meeting the expectations of all key stake holders. What once use to be a very robust company built on effectiveness is now an organization that also understands the benefits of efficiency. I believe GE’s current positioning based on efficiency and effectiveness directly corresponds to their vision.

References

About us. (2019, September 14). Retrieved from General Electric: https://www.ge.com/about-us

2018 Annual Report. (2019, September 14). Retrieved from General Electric: https://www.ge.com/investor-relations/annual-report

Investor Relations. (2019, September 14). Retrieved from General Electric: https://www.ge.com/investor-relations/sites/default/files/ge_webcast_10Q_07312019.pdf

Daft, R. (2016). Organization Theory & Design. (12th ed.). Boston, MA: Cengage Learning.

Layne, R. (2018, October 1). Lawrence Culp, new GE CEO, faces tall task reviving aging conglomerate. Retrieved from CBS News: https://www.cbsnews.com/news/lawrence-culp-new-ge-ceo-faces-tall-task-reviving-aging-conglomerate/

Root, A. (2019, August 1). GE CEO Larry Culp on the Company’s Turnaround, Boeing, and China. Retrieved from the Barron’s: https://www.barrons.com/articles/general-electric-ceo-larry-culp-speaks-out-on-the-turnaround-china-and-boeing-51564588114

Schrager, J. (2019, August 14). Three strategy lessons from GE’s decline. Retrieved from Chicago Booth Review: https://review.chicagobooth.edu/strategy/2019/article/three-strategy-lessons-ge-s-decline

Thompson, A. (2017, October 20). General Electric’s (GE) Organizational Culture for Customer-Centric Simplification. Retrieved from Panmore Institute: http://panmore.com/general-electric-ge-organizational-culture-customer-centric-simplification

Organizational Theory (MBA 617)

September 2019

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Welcome to Blast from the Past Power Sports (BPPS LLC).

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• (Resources Goal): Increase business relationships with fabrication facilities capable of replicating older model vehicle parts while using modern materials and design. (Measure): Establish fabrication facility redundancy pertaining to rare parts production for common makes and models of motorcycles (1974 – 1980).

• (Production Efficiency Goal): Provide employee training that allows for cross-training opportunities across multiple manufacturing departments. (Measure): 50% of all manufacturing employees to develop skills in painting, assembly, and engine tuning responsibilities.

• (Marketing Goal): Establish a dominant niche business environment through aggressive marketing and sales initiatives. (Measure): Increase West Coast and Midwest sales by 25%.

• (External Environment/Change Goal): Develop methods that will allow for greater production flexibility with minimal cost. (Measure): Identify and list specific customer needs through feedback and survey studies.

• (Innovation Goal): Strive to enhance new and improved technological processes and systems. (Measure): Identify and replace obsolete production techniques and manufacturing equipment by year end.

Organizational Structure

In 2015, Blast from the Past Power Sports (BPPS) originated as a “mom & pop” organization located in Fairbanks, Alaska. The entire restoration operation was performed by family members and was considered more of a hobby rather than an actual business. Although the original purpose of the business remains the same, increased demand and heightened interest changed the overall direction. It became very evident that in order to sustain long term success, BPPS must become more structured with a clear vision and well established goals.

In 2019, a third party consultant was hired to help determine the best organizational structure to meet BPPS’s vision and long term operational goals. As a result, BPPS became a limited liability corporation and adopted a more rigid and traditional organizational structure (i.e chairman (owner), president, and departmental managers). BPPS LLC believes that they are now on track to achieve great success and future growth.