Question 1
Two Criteria that are used for the Selection of Companies to be bought or retained in GE’s Portfolio of Companies based on the Case
The GE Company is regarded broadly as among the sphere’s most successful companies of the 21st century. When Welch started his job as the General Electric CEO in 1981, he commenced on a comprehensive change of GE’s approach; introducing a current era of internal efficiency and performance management. Jack Welch’s profit direction, which was aimed at developing wages of 1.5 intervals to dual of the GDP development rate and the management ideology found its diction in General Electric slogan. The slogan included self-confidence, simplicity, and speed. These values could not only reflect the companies processes and systems but GE's services and products through its highly and simple functional designs as well. His corporate policy was about efficiency and performance (Slater & Welch, 2004). He persistently drove his juniors to the utmost of their capabilities, through his 20 eons as chief executive officer. He encouraged staffs to embrace aspiring targets and improve their accomplishment continuously at all measures. Jack was celebrated for his usage of constructive dispute as a method of eliciting obligations from line supervisors and making hard decisions.
Jack led a maintained strike on bureaucratic exercise and replaced it with the culture of leadership, confidence, openness, and imaginative thinking at each measure of the company. Welch stopped ruthlessly few layers of supervision and shed a huge number of positions, which gave him the byname Neutron Jack, throughout his organizational rebuild (Slater & Welch, 2004. He also came up with several criteria to be used to choose organizations to be retained or bought in the General Electric portfolio of firms. These criteria are workout and globalization. The workout is a context, which involves a section of personnel from enterprises being requested to talk freely about the administration exercises in their workplaces without terror of retribution. This criterion of work out should continue to be used because it engages everyone in the company. On the other hand, globalization is directed at exploiting worldwide economies of range across the General Electric enterprise portfolios and exploiting the advantage of international chances as they emerge. Globalization is another criterion that a company should continue to use today, as it opens many channels to international markets. GE is more diversified because it has generated unique products in the market today, which is a rich source of some competitive advantage in the global market.
Question 2
Identify a new growth opportunity for Starbucks, based on an idea you get from looking at either of their suppliers, substitutes, competitors, or complements.
Starbucks has diversified its products. It offers a wide range of products, which include; iced and hot espresso, fresh made coffee, beverages, non-coffee and coffee blended beverages, baked pastries, salads, Tazo tea, and sandwiches (Johnson, 2008). The new substitutes and complements offer a new growth opportunity for the brand. Starbucks’ paraphernalia comprises of espresso machines, coffee grinders, coffee brewers, movies, music CD’s, gift cards, and books (Johnson, 2008). The global consumer commodities include iced coffee, tea, bottled Frappuccino, espresso drinks, coffee liqueurs, premium ice cream, and whole bean coffee. Starbucks understands ideas of product differentiation and brand identity. The brand has monitored the products and services that customers appreciate. It has thus, differentiated its services and products amid other firms’ services or products in the domestic and global markets. Starbucks discerns this success importantly on the worth of the brand while depending on its exceptional status for its commodity quality, consistent, and superior customer service.
Question 3
List an industry that you think is currently exhibiting low profitability and growth potential
I think that the coffee industry is exhibiting low profitability and growth potential. The nature of strategy creation is that it involves management with competition. However, it is easy to observe competition pessimistically and narrowly. While some executives protest to the contradictory, intense rivalry in a company is neither bad luck nor a coincidence. The powerful competitive forces ascertain the benefit of a field and hence, are of magnificent importance in policy formulation (Besanko, 2010). For instance, even a firm with a powerful status in a field that is unthreatened by future, it will earn little profits; if it encounters a low or superior cost substitute commodity as the top manufacturers of coffee percolators and vacuum tubes have experienced to their sadness. In a situation like this, surviving with the replacement commodity becomes the first strategic priority.
Question 4
List one resource, capability, or core competence of McDonald’s and describe why it is difficult to imitate or substitute.
When an organization’s capabilities or resources meet certain standards, they are known as core competencies. When a capability or resource meets these criteria, it plays a part in a firm’s competitive benefit over the industry competitors and permits the company to attain high profitability. A capability or resource is a key competency if it becomes rare, expensive to imitate, non-substitutable, and valuable (Conrady, 2011). One of the core competencies of McDonalds is its unique and secret recipe. Its competitors can neither imitate nor substitute it easily. Only a few of the personnel in the brand know about the recipe. In addition, if the secret information is to be handed out to any outsiders that are concerned about it, they have to sign confidential contracts with the brand.
References
Slater, R., & Welch, J. (2004). Jack Welch on Leadership: Abridged from Jack Welch and the GE way. New York: McGraw-Hill.
Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy. Harlow: Financial Times Prentice Hall.
Besanko, D. (2010). Economics of strategy. Hoboken, NJ: John Wiley & Sons.
Conrady, R., Buck, M., Viehl, P., & Tittel, K. (2011). Trends and issues in global tourism 2011. Heidelberg: Springer.
