PESTEL and Porter 5-forces models

Sample Solution

Company: General Electric (GE)

CEO: Larry Culp (appointed in October 2018)

Turnaround attempt: GE was struggling financially in 2018. The company had lost billions of dollars in the previous few years, and its stock price had plummeted. In October 2018, the board of directors replaced CEO Jeff Immelt with Larry Culp. Culp was tasked with turning around the company and returning it to profitability.

Mission, vision, and values: GE's mission is to "invent the future of energy, healthcare, transportation, and infrastructure to build a better world." Its vision is to be "the world's most competitive and innovative industrial company." And its values are "imagination, ingenuity, and integrity."

Full Answer Section

Changes / initiatives: Culp made a number of changes as CEO of GE. He slashed costs, sold off non-core businesses, and restructured the company. He also focused on innovation and investing in new technologies.

PESTEL analysis: The PESTEL analysis is a tool used to assess the external environment of a company. It considers the following factors:

• Political factors: The political climate in the United States and other countries where GE operates.
• Economic factors: The state of the economy, interest rates, and inflation.
• Social factors: Demographic changes, consumer trends, and lifestyles.
• Technological factors: The pace of technological change and the impact of new technologies on the industry.
• Environmental factors: Climate change, pollution, and other environmental concerns.
• Legal factors: Changes in regulations and laws that affect the industry.

Based on the PESTEL analysis, the industry that GE operates in is not particularly attractive. The political climate in the United States is uncertain, and the economy is slowing down. There are also concerns about climate change and pollution, which could impact the industry.

Porter 5-forces analysis: The Porter 5-forces analysis is a tool used to assess the competitive forces in an industry. It considers the following factors:

• The threat of new entrants: The ease with which new companies can enter the industry.
• The bargaining power of buyers: The power of buyers to negotiate lower prices or better terms from suppliers.
• The bargaining power of suppliers: The power of suppliers to negotiate higher prices or better terms from buyers.
• The threat of substitute products: The availability of substitute products that can meet the same needs as the products offered by the industry.
• The intensity of rivalry among existing competitors: The level of competition among existing companies in the industry.

Based on the Porter 5-forces analysis, the industry that GE operates in is moderately attractive. The threat of new entrants is low, but the bargaining power of buyers is high. The threat of substitute products is also high, as there are many other companies that offer similar products and services. The intensity of rivalry among existing competitors is moderate.

VRIO analysis: The VRIO analysis is a tool used to assess a company's resources and capabilities. It considers the following factors:

• Value: Are the resources and capabilities valuable to the company?
• Rareness: Are the resources and capabilities rare?
• Imitability: Are the resources and capabilities difficult to imitate?
• Organization: Are the resources and capabilities organized and managed effectively?

Based on the VRIO analysis, GE has some resources and capabilities that could be the source of a competitive advantage. For example, the company has a strong brand name and a global reach. However, some of GE's resources and capabilities are not unique or difficult to imitate.

Turnaround success: Based on the analysis above, it is difficult to say whether the turnaround at GE will be successful. The company faces a number of challenges, including the uncertain political climate, the slowing economy, and the threat of substitute products. However, GE also has some strengths, such as its strong brand name and global reach. Only time will tell whether GE will be able to overcome its challenges and return to profitability.