Competitive Rivalry - MEDIUM
General Electric (GE) stands as the most reputable and most branched out company with several sectors. Siemens is the largest GE competitor. Besides, Philips electronics also gives GE a tough competition (Safieddine et al., 2015). Philips Electronics is a smaller competitor, but it gives GE a tough time since it continuously expands with time. However, GE enjoys a competitive advantage of being diversified. Few companies are giving it competition in the market, but they give it a tough competition.
The threat of new entrants - LOW
There is little threat of a new entrance for GE. That is because GE has a high reputation and also a bigger size. These make it difficult for any new company to enter the market and compete. Besides, entering this particular market requires high investment and capital ("Porter’s Five Forces Analysis of General Electric|Porter Analysis", 2020) . Lastly, legal issues may also be a barrier to the industry. Therefore these factors combine to bar other companies from entering the industry and offer competition
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The threat of substitute products – MODERATE TO HIGH
Customers targeted by GE Company have other options available from which they can buy. For instance, Siemens and Philips electrical are the main GE competitors (Safieddine et al., 2015). That calls for GE to always look at its pricing and its product features since the threat of substitute products is always high. Commenting on GE’s threat of substitute products, it is moderate to high. It is moderate because GE’s customers are loyal to the company since they trust the company brand. Therefore at that view, the threat becomes moderate.
Bargaining power of buyers - MEDIUM
GE buyer’s bargaining power is medium. GE is known for selling high-quality products in addition to charging fair prices. That keeps customers' satisfaction a priority. GE, therefore, remains high in the competitive market.
Bargaining power of Suppliers - LOW
GE supplier’s bargaining power is low. The company is buysing a massive amount of products from its suppliers, leaving the suppliers with no power to bargain since they cannot afford to lose that GE connection. On the other hand, GE remains with power since it can flexibly choose its suppliers.
Porter’s Diamond Model
Firm strategy, structure, and rivalry - HIGH
GE’s strategy, structure, and rivalry is high. That is because the domestic environment influenced its founders’ activities to expand and become more significant in size. The cultural standards, legal regime, and GE’s norms, together with the home country’s opportunities to gain competitive advantage, determined GE’s success to compete favorably in the MENAT region.
Demand conditions - MEDIUM
GE’s demand conditions can be categorized as medium. That is because GE’s domestic customers were enlightened, giving the company better feedback to improve its product. Additionally, there was compatibility between GE products’ domestic demand and consumers' demand within the MENAT region (Safieddine et al., 2015). That, therefore, helped the company to compete favorably against Siemens and Philips.
Factor conditions - HIGH
GE successfully grew its business in the MENAT region due to factor conditions such as joint ventures that the GE was interested in the local firms to carry out particular projects. These local ventures made it easier for the factor creation process for GE.
Related and supporting industry – HIGH.
GE had a vehicle called the Global Growth Organization (GGO) to support its initiative. The key strategies for GGO were building leadership in the world markets by focusing on the main priorities, focusing on GE competitive advantages, and ensuring success by using the company to country approach.
Government – MEDIUM
GE developed the company-to-country agreement whose concept was to make the government a customer response to the economic slowdown in the global economy. GE used the agreement to make money in the region by making the human capital investment and becoming a cooperate citizen.
A VRIO Analysis
VRIO is a framework to examine a firm’s internal environment. It represents four questions that one must ask about a capability or resource to determine if it can compete potentially in the market (Lopes et al., 2018). These are the question of value, rarity, imitability, and organization. GE resources were limited (rare) and valuable. That is evident when the company approached its presence in the MENAT region cautiously and prevented significant regional investments. That means that the company experienced a competitive advantage but for a concise while.
Further, the industry had a high imitation cost that made it enjoy competitive advantages over the other firms. For instance, GE’s cost of imitation increased due to a combination of unique historical conditions such as being the first company to have potentially increase in the MENAT region despite the obstacles such as political instability and corruption in the area (Safieddine et al., 2015) . All in all, GE expected and enjoyed a sustainable advantage over other competitors in the industry because its resources were valuable, rare, and costly to imitate. That was possible due to the proper organization of the company whose structure and control were well organized. For instance, the natured relationship between GE and FTMC boosted GE’s imitative of sharing knowledge by making GE’s latest design for lower voltage switchgear, among other equipment, accessible for the local customers.
Summery table of GE’s VRIO, Competitive Implications, and Economic Implications
Resource | Valuable? | Rare? | Costly to Imitate? | Organized Properly? | Competitive Implications | Economic Implications |
|---|---|---|---|---|---|---|
| Effective strategic planning process | Yes | YES | NO | No | Temporary competitive advantage | Normal |
| Managerial skills | Yes | YES | YES | YES | Sustained competitive advantage | Above normal |
| Reputation with customers for quality and reliability | NO | NO | No | YES | Temporary Advantage | Above Normal |
| High technology and core | Yes | Yes | Yes | Yes | Sustained Advantage | Above Normal |
| Innovative production processes | YES | YES | NO | YES | Temporary competitive advantage | Above Normal (at least for some amount of time) |
| Firm’s capacity to raise equity | NO | YES | YES | NO | Temporary competitive advantage | Normal |
References
Lopes, J., Farinha, L., Ferreira, J., & Silveira, P. (2018). Does regional VRIO model help policy-makers to assess the resources of a region? A stakeholder perception approach. Land Use Policy , 79 , 659-670. https://doi.org/10.1016/j.landusepol.2018.07.040
Porter’s Five Forces Analysis of General Electric|Porter Analysis . Porter Analysis. (2020). Retrieved 9 October 2020, from https://www.porteranalysis.com/porters-five-forces-analysis-of-general-electric/ .
Safieddine, A., Mark, K., & Rhayem, S. (2015). General Electric's Expansion In The Middle East (pp. 1-16). Ivey Publisher.
