A strategy is a plan to accomplish overall or long term goals under uncertainty conditions, and organizations develop several strategies to ensure that they remain recognizable in the market. The major types of strategies that influence organization profitability include business strategy, operational strategy, and transformation strategy. As a result of the frequent entry of new firms in the market, companies struggle to gain a competitive advantage to ensure they maximize profits. In this respect, organizations develop strategic approaches to promote competitive advantage in a particular industry and market. For instance, General Electric Company (GE) is a multinational conglomerate in New York, America, with its headquarters in Boston. The company works in various sectors such as aviation, renewable energy, additive manufacturing, lighting, digital industry, healthcare, power, and venture finance and capital. According to Forbes 500, by gross revenue, the company was ranked twenty-first in the United States of America, justifying its success. There are three strategic approaches to competitive advantage to competitive advantage, which include cost leadership, differentiation, and focus, and General Electric Company adopts a differentiation approach to gain competitive advantage.
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The three conventional strategic approaches to competitive advantage include cost leadership, focus, and differentiation. Cost leadership approach focuses on economies of scale where a firm offers products at a relatively low cost while in distinction, firms concentrate on the product to ensure difficulty in replication and focus companies contemplate on the market (Forest & Fred, 2016). These explanations illustrate that firms adopt a different mechanism to ensure that they gain a competitive advantage, considering the tremendous advancement in the industrial and technological revolution. Moreover, globalization has facilitated international trade, influencing the entrance of many firms in the market, increasing competition level. The three competitive advantage strategic approaches majorly concentrate on prices, market, and quality to ensure customer satisfaction, and General Electric Company (GE) utilizes one of these approaches.
General Electric Company (GE) is a multinational company that has operated for approximately 128 years focusing on various industries for diversity. GE operates worldwide with around two hundred and five thousand employees, and in 2019 it made a revenue equivalent to 95.214 billion dollars (“Generic Electric Company,” 2020). This data justifies that the company has been successful in its operations, hence, utilizing competitive advantage strategic approaches. The company focuses on various products such as Wind turbines, Software, lightning, health care, finance, energy, electric motors, electrical distributions, and aircraft engines. Therefore, the General Electric Company has a competitive advantage over its competitors justified through high profits.
The General Electric Company utilizes a differentiation strategic competitive advantage approach to ensure that it maximizes profits. In a differentiation approach, a firm’s products can be easily be distinguished from its competitors by delivering quality products and services (Forest & Fred, 2016). This clarification implies that in the differentiation approach, a company concentrates on product value to ensure customer satisfaction. In this respect, GE’s purpose is, “We rise to the challenge of building a world that works” (“Generic Electric Company,” 2020). This purpose statement justifies that the company concentrates on innovation to ensure they guarantee customer satisfaction. Through research and development, the firm has managed to create unique and exclusive products to attract more customers. Innovation is a vital aspect of a differentiation approach since, through it, a company’s products can be easily be distinguished from those of the competitors. General Electric has concentrated on innovation in aviation and healthcare industries, matching products with technological advancement to ensure customer satisfaction. Therefore, the company utilizes a strategic differentiation approach to competitive advantage to attract more customers.
Competitive advantage places businesses in a favorable position to its competitors, and three strategic approaches include differentiation, cost leadership, and focus. In cost leadership, a company lowers its prices while in differentiation. A firm focuses on the quality of products or services and focuses on a narrow target market part in focus businesses. The General Electric Company is among high performing companies in the United States of America and utilizes a strategic differentiation approach to attract more customers.
References
David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Pearson–Prentice Hall.
Generic Electric Company, 2020, https://www.ge.com/about-us
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