Strategic Issues
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General Electric (Jess Willson)
“A host of external factors influence a firms choice of direction and action and, ultimately, its organizational structure and internal processes” (Pearce and Robinson, 2004). These factors are the foundation for the forces and trends research. General Electric is a leader in the technological industry providing new innovation in lighting, medical equipment, power transmissions and industrial products. Their vision statement “imagination at work” tells of how GE is constantly striving to create new and innovative products for their company. There are three outside factors that have an impact on GE which are social, economic and technical.
Social
There are more and more utility companies that are providing both electricity and electric related services to try and help their customers decrease their electric bills. These services that are being provided are a benefit to society and include controlling the demand for energy, reducing the emissions of carbon dioxide and trying to slow global warming. The social factors that affect a company “involve the beliefs, values, attitudes, opinions, and lifestyles of persons in the firm’s external environment, as developed from cultural, ecological, demographic, religious, educational, and ethic conditioning”(Pearce and Robinson, 2004). The services that the utility companies are providing are called demand-side management programs or DSM. By using DSM programs, it will reduce the amount of electricity being used by improving the operational and technical efficiency for the consumers. There is a direct load control program that handles the timing of electricity by using control equipment at the consumer’s site or by having pricing options for the electricity that can fluctuate depending on time of use.
One way that GE helps their customers is by offering a rebate or a low interest loan to pay for the extra cost of energy efficient actions. GE has also been involved with the market transformation program. This is when the utility companies work with the manufacturers to create a product that is more efficient and then they are able to pass the savings on to the consumers. Another social factor GE is involved with is the energy star million drive which is to save energy and protect the environment. They have guaranteed to enable some energy power saving management features on close to 100,000 computer monitors throughout their businesses based in the United States. Once this is accomplished, it will save about 42 million kilowatt hours per year which is enough to provide light to 400,000 homes every month. Another program GE is involved in is to reduce the Greenhouse Gas emissions by more that 27,000 metric tons which is the same as removing 6,000 automobiles off the road. These programs are designed to both cut costs and help the environment.
Economic
There are major challenges to the industry that GE has to try and deal with. These challenges include electrical consumption, unstable fuel costs and the focus on the environment. The impact on policy on long term investment decisions embodies one of the most significant aspects in the utility industry’s existing strategy and its structure for the future. “Economic factor or forces that need to be considered for examination may include the availability of credit, the level of disposable income, the ability of people to spend their money, prime interest rates, inflation rate, trends in the Gross Domestic Product (GDP), and the direction of the economy which the company operates”(Pearce and Robinson 2004). Between now and 2030, it is predicted that the world’s consumption of electricity will double.
GE has a few innovations that will be more cost effective in generating electricity. One is a solid oxide fuel program that provides a continual flow of power at very high temperatures which greatly improves energy efficiency. Also, GE has over 35 years of experience in the design and supply of geothermal plants. Use of these plants will also cause a reduction in energy costs while providing consumers with