Term Paper: Business Transformation Strategy GE Capital

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SAMPLE EXCERPT:

[. . .] They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players.

Competitive Rivalry between Existing Players

This force describes the intensity of competition between existing players

Companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. The two factors exerting the largest pressure on GECW and enlivening their competitors are:

Players are building business on similar strategies

There is not much differentiation between players and their products; hence, there is much price competition.

Low market growth rates (growth of a particular company is possible only at the expense of a competitor).

Because of the limits Irish auto market, these players are going the bang their elbows as they play together in the same sand box. Being the biggest or the most reputable will not hold onto GECW's market position when they and their competitors are offering essentially the same products to the same people at the similar terms.

In summary, when GECS came to market in Ireland, they did so with a "different and better" market strategy. They were willing and able to finance the dealers stock in return for a close to exclusive offering of the loan paperwork. Now that others have learned how to play the same game, "different and better" no longer applies to GECW, and they must differentiate themselves from the crowd again if they are to recapture a strong hold as market leader, and rebuild already eroding margins.

SWOT Analysis

Because Porters 5 forces are an expansion of the threats to a business, and of the traditional SWOT Analysis, this section will limit itself to GECW's Strengths and Weaknesses and Opportunities. By evaluating these assets and liabilities, and combining it with the information learned from Porters forces, a new direction will be determined for GECW, along with specific steps and implementation strategies for the future.

Strengths.

A traditional look at the strengths of a company looks at what the company is currently doing well in the marketplace today. However, GECW has slowly slid into a position of looking at what the company did well in the marketplace. As the case with many larger successful companies, GECW built its reputation and success on a specific strategy which is no longer suiting it, and the list of strengths below no longer carries the influence in the marketplace which it used to.

GECW Brand now synonymous with Point of Sale Auto finance. They have scale and capacity within the central office, but the smaller branches are now able to duplicate these forces through smaller, faster response times and agility in the market.

Some of the professional accounts managers which have helped build GECW's competitive advantage have left the giant, and are working for competing firms. The innovation and differentiation which GECS brought to the marketplace is now able to be duplicated by others, partially because of the human resources the company has lost to their competitors, and because the other companies are choosing to replicate the GECW model on a smaller scale.

Over all, the strengths which used to support the company no longer are affecting positive market placement. As with many larger companies, the slowness of the corporate structure to respond to these eroding strengths is putting the company into as much risk as it the presence of their competitors.

Weaknesses

This list of weaknesses, when added to the absence of influential strengths, identifies a much more dangerous trend for GECW in the market place than eroding margins and new competition. GECW is positioned to be significantly affected by these weaknesses, and threats listed earlier. The company has taken on the perception of becoming slow, institutionalized, inflexible and bureaucratic. These perceptions are comparative perceptions; they exist only because the consumer has more attractive viable options in the market place. The organization would not be perceived as slow and inflexible if the consumer did not have an identifiable option that was swift to meet their needs. Because the Irish market is relatively small, GECW cannot rely on a constant influx of new buyers to mask this growing perception. The saying goes that a satisfied customer will tell 1 or 2 friends while an unhappy one will tell of their experiences and opinions to 10-12 people. In a small market, the negative effect of this kind of word of mouth advertising will quickly erode GECW's position in the market.

Whether accurate in GECW's case or not, consumers have the perception that larger companies have a more significant cost base, and therefore cannot offer the same economy on their products and services. This is a perception which the company will not be able to alter, because this is the global perception of small - v s - big business.

Opportunities

In light of the advancing threats to the organization, a host of weaknesses and strengths on which the company can no longer build, the opportunities for GECW are the most important area to accurately identify. In a relatively fixes market, wherein competitors do not have significant entrance barriers, and can minimize the economy of scale through digital means, which was once GECW's largest asset, the company faces a situation much more severe than eroding margins. The company must differentiate itself again and use its size to create opportunity which the smaller companies cannot attain.

The initial review of opportunities includes identifying the growth of the Irish car market. On the small island, without significant industry or population influx the growth of the market will tend to continue on current rates. New product development is a strong possibility, but often smaller companies create and bring to market new products and opportunities much more effectively than large global leaders. GECW's market position is already being challenged by its competitors, so its existing position is not an opportunity. The key question is ask in this area is what can GECW do to change its market position. The company can not rely on the opportunities of the past to strengthen its current standing. This will be a key are of casting a new vision, and will be further discussed in the conclusion.

One more evaluative tool will be applied to this situation before looking for a new direction. The McKinsey 7-S model proposed by Peters and Waterman is a means of looking beyond the exterior SWOT and market dynamics measures by Porters 5 forces and gazing into the heart of the company itself. This company is clearly positioned poorly. The eroding margins are not so much a function of doing business poorly as it is a matter of relying on yesterday's success to carry the present day. The business world has changed, and since yesterday's success have shaped the company culture and expectations, the company culture and expectations will need to be adjusted along with the company's market position if the company is to be able to find a new direction, and reach the profitability goals set by new the new parent company.

McKinsey 7-S's

Tom Peters and Robert Waterman, published their 7-S-Model in their article "Structure Is Not Organization" (1980) and in their books "The Art of Japanese Management" (1981) and "In Search of Excellence" (1982). The model starts on the premise that an organization is not just Structure, but consists of seven elements:

Those seven elements are distinguished in so called hard S's and soft S's. The hard elements (green circles) are feasible and easy to identify. They can typically be found in strategy statements, corporate plans, and organizational charts. The four soft S's however, are less quantifiable. Capabilities, values and elements of corporate culture are slowly developed, often without the direct attention of those contributing to them. They are highly determined by the people at work in the organization. Therefore it is much more difficult to plan or to influence the characteristics of the soft elements. Although the soft factors are below the surface, they have a great impact of the hard structures, strategies and systems of the organization. The crucial element to understand about the 7-S model is that if one element changes then it affects all the others. For example, a change in HR-systems like internal career plans and management training will have an impact on organizational culture (management style) and thus will affect structures, processes, and finally characteristic competences of the organization.

Of these 7 structural elements, four are relatively static for GECW. The structure of the organization, its shared values, skills and staff are not going to be significantly effected by the changing market environment. Changing the structure of a global company is not a feasible option. The operation of Woodchester Credit Lyonnais Bank was already changed when it was acquired by GE capitol, and this current marketing strategy is a function of that change in the smaller company's structure. The Shared values, and skill have… [END OF PREVIEW]

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