Thomas Alva Edison established Edison Electric Light Company in 1878. General Electric Company, known as and commonly abbreviated simply to GE, was formed in 1892, as a result of a merger of the competing companies Edison General Electric Company and the Thomson-Houston Electric Company. Having its headquarters in United States, GE is a major technology conglomerate and is the only company listed in the Dow Jones Industrial Index today that was also included in the original index of 1896. GE is a big multinational corporation and has a diversified infrastructure. Its business activities span a wide range of areas from aircraft engines, industrial products, water processing products, power generation to financial services, medical diagnostic imaging, security technology, consumer financing, and television programming. GE operates in more than 100 countries and employs about 300,000 people worldwide. In smaller and less developed countries, it operates through distributorship or dealership channel by giving Continue reading
Business Strategies
Case Study of McDonalds: Strategy Formulation in a Declining Business
McDonald’s Corporation or rather the CEO, Mr. Greenberg realized there was a major problem arising within their corporation when their earnings declined in the late 1990s till the early 2000s. Their net income not only shrunk to 17%, but also suffered from slow sales growth below the industry average during that period of time. Although their market share was well above their competitors such as Burger King and Wendy’s nevertheless there was a slow share growth. Therefore the question of what caused the Big Mac Attack is raised. It is observed that there was a growing trend of customers moving to non hamburger meals which is being offered by indirect competitors such as KFC, Subway (dominating the market with more than 13,200 US outlets) and Pizza Hut as an alternative choice. Sandwiches and a variety of microwaveable meals are being offered at supermarkets, convenience stores and even at petrol stations. Continue reading
The Stability Strategy in Management
Stability strategy implies continuing the current activities of the firm without any significant change in direction. If the environment is unstable and the firm is doing well, then it may believe that it is better to make no changes. A firm is said to be following a stability strategy if it is satisfied with the same consumer groups and maintaining the same market share, satisfied with incremental improvements of functional performance and the management does not want to take any risks that might be associated with expansion or growth. Stability strategy is most likely to be pursued by small businesses or firms in a mature stage of development. Stability strategies are implemented by ‘steady as it goes’ approaches to decisions. No major functional changes are made in the product line, markets or functions. However, stability strategy is not a ‘do nothing’ approach nor does it mean that goals such Continue reading
Case Study: Nissan’s Successful Turnaround Under Carlos Ghosn
Nissan is a famous automobile manufacturing company which was founded in 1933. After the Second World War, Nissan expanded its operations globally. Nissan was very well known for its advanced engineering and technology, plant productivity and quality management. However, during the previous decade, Nissan management has emphasized on short-term market share growth, instead of profitability or long-term strategic success. Nissan’s designs had not reflected customer opinion. In addition, Nissan managers tended to put retained earnings into keiretsu investing (equity of suppliers), rather than reinvesting in new product designs as other competitors did. These inappropriate strategies combining with the Asian crisis influence on a devaluation of the yen led Nissan to the edge of bankruptcy. Nissan was in need of a strategic partner that could lend both financing and new management ideas to foster a turnaround. Furthermore, Nissan sought to expand into other regions where it had less presence. In order Continue reading
Strategic Marketing Tools – Ansoff Matrix and BCG Matrix
Ansoff Product-Market Expansion Grid A useful planning tool in respect of markets and products is the matrix developed by Igor Ansoff, who is regarded by some as the ‘Father of Strategic Management’. Fully titled the Ansoff Product-Market Growth Matrix, the tool was first published in Harvard Business Review, 1957, in Ansoff’s paper Strategies for Diversification. The Ansoff Product-Market Expansion Grid or Ansoff Matrix helps to understand and assess marketing or business development strategy. Any business or part of a business can choose which strategy to employ, or which mix of strategic options to use. This is a fundamentally simple and effective way of looking at strategic development options. Each of these strategic options holds different opportunities and downsides for different organizations, so what is right for one business won’t necessarily be right for another. Think about what option offers the best potential for your own business and market. Think about Continue reading
Defenses Against Takeover Bids – Anti Takeover Strategies
A firm having all or any of the following features may provide a temptation to an acquiring firm to take-over the former: The target firm has under performed other shares and the overall market in terms of return the shareholders in the preceding years. The target firm has been less profitable than other firms, and The promoter/owner group has lower shareholding in the target firm and the public has a higher portion. If an acquiring firm makes an offer for negotiated merger to the management of the target firm, it is up to the latter to accept or not to accept the offer. The target firm may not find the offer to be attractive and hence it may reject the offer. However, the acquiring firm may still persists with the idea either by making a tender offer or attempting a hostile take-over bid. In such a case, it is the Continue reading