Sustained Profits Come From Building A Competitive Advantage

Sustained Profits Come From Building A Competitive Advantage This Adv

Sustained profits come from building a competitive advantage. This advantage can be accomplished not only through good financial return on a specific process but also through the correct capacity decisions that must be integrated into the organization’s mission and strategy. Jack Welch, former CEO of General Electric (GE), understood this better than anyone else. Although GE was a profitable and respected company when Welch took over, its financial results during the 1970s were troubling to both its investors and senior management. Welch immediately made changes to the company’s structure and management practices.

From the beginning, he stressed the importance of being one of the top players in the industry. He told his colleagues that GE should always be number one or number two in all its businesses; if it was not, then their only options would be to fix, sell, or shut down. Because of this strategic direction, GE today usually dominates the markets in which it participates; and if it does not, then it divests. A major part of GE’s strategy is to be the first or second in every market. As you review the module readings for this week, consider the complexity of GE’s products and its emphasis on vertical integration and capacity planning.

GE’s Profile The General Electric Company, or GE, is a diversified company that offers infostructure, media, and finance products and services. The company was originally founded by electrical innovator Thomas Edison. It is also listed as one of the most admired companies, ranking as number one in electronics and 16th overall according to Fortune Magazine. For the company's innovation focus, it was ranked as one of the world's most innovative companies by Business Week. GE’s Reach The General Electric Company is organized into 5 divisions including “NBC Universal," "Technology Infrastructure," "Consumer & Industrial," "Energy Infrastructure," and "Capital Finance."

The company functions in over 100 countries and has over 300,000 employees. For 2009, the company achieved $11.2 billion in earnings and an industrial cash flow of $16.6 billion. Effective January 1, 2011, it reorganized the Technology Infrastructure segment into three segments: Aviation, Healthcare, and Transportation. Its sectors include Chemicals, Petrochemicals, and Fertilizers, Food & Beverage, Government & Public Administration, Metals and Metal Fabrication, Mining (Coal, Minerals, Metals), Oil & Gas Upstream, and Power Generation (GE, 2013).

Using the information above, the module readings, Argosy University online library resources, and the Internet, respond to the following: How does GE’s framework give it the opportunity to be at the forefront of the markets in which it participates? Examine your own firm or a firm you would like to work for in the light of GE’s framework and respond to the following: Does this firm have the means to execute like GE? Which type of resources would the firm require? How could GE’s lessons be applied to this firm? Write your initial response in 300–500 words. Apply APA standards to citation of sources.

Paper For Above instruction

General Electric’s (GE) strategic framework has historically positioned it as a leader across multiple sectors by emphasizing market dominance, operational excellence, and strategic resource allocation. The company's focus on being the number one or two player in each of its markets has fostered a competitive advantage that sustains profitability and market leadership (Barney, 1991). This strategy is complemented by GE’s extensive vertical integration and capacity planning, enabling control over its supply chain and production processes, which reduces costs and enhances quality (Grant, 2019). The integration of diverse divisions—ranging from healthcare to energy infrastructure—allows GE to leverage cross-sector innovation and shared resources, establishing a formidable market presence (Hill & Jones, 2012).

GE’s framework emphasizes strategic resource management, organizational agility, and continuous innovation. These elements create high entry barriers for competitors and sustain GE’s competitive advantage over time (Porter, 1985). The company’s diversified portfolio and global reach ensure resilience against market fluctuations, enabling GE to capitalize on emerging opportunities worldwide (Johnson, Scholes & Whittington, 2017). By systematically aligning capacity decisions with its strategic mission, GE maintains operational flexibility and readiness to exploit new technological developments and market trends.

Applying GE’s framework to a firm like Tesla reveals pertinent insights. Tesla’s innovative focus on electric vehicles and renewable energy aligns with GE’s strategy of continuous innovation and market leadership. However, Tesla may lack the extensive resource base, diversified portfolio, and global operational scale that GE possesses (Vance, 2015). To emulate GE’s success, Tesla would require significant resources, including advanced manufacturing capabilities, global supply chains, and substantial R&D investments. Additionally, cultivating organizational agility and capacity planning aligned with strategic missions would be essential for Tesla to sustain a competitive advantage akin to GE’s.

In conclusion, GE’s strategic framework—centered on market dominance, vertical integration, and strategic resource management—has enabled it to maintain technology leadership and operational excellence across various sectors. Other firms can adapt these principles by aligning their capacity decisions with clear strategic goals, investing in innovation, and expanding their resource base to sustain long-term competitiveness (Hambrick & Fredrickson, 2005). These lessons underscore the importance of strategic coherence and resource alignment in building and maintaining a competitive advantage in dynamic markets (Prahalad & Hamel, 1990).

References

• Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
• Grant, R. M. (2019). Contemporary strategy analysis (10th ed.). Wiley.
• Hambrick, D. C., & Fredrickson, J. W. (2005). Are you sure you have a strategy? Academy of Management Perspectives, 19(4), 51–62.
• Hill, C. W. L., & Jones, G. R. (2012). Strategic management: An integrated approach (10th ed.). Houghton Mifflin.
• Johnson, G., Scholes, K., & Whittington, R. (2017). Exploring corporate strategy (10th ed.). Pearson.
• Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
• Vance, A. (2015). Elon Musk: Tesla, SpaceX, and the quest for a fantastic future. HarperOne.
• GE. (2013). The history of General Electric. Retrieved from [reliable source URL not provided].