General Electric & GlaxoSmithKline

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Changes in Technology That GE Has Undertaken in Product and Process

General Electric (GE) built Local Growth Teams (LGT), which was a process change of the manufacturing technology that the company has always used. The new process shifts the focus of production to where the company has a high potential of selling its commodities.

In addition, LGT allows GE to build latest offerings, which are separate from the items that are already in its inventory. Previously, all subsidiaries of GE worked as part of the whole company; however, fresh subsidiaries under the LGT structure operate as new companies.

Therefore, their interaction within the organization occurs as a form of partnership enabling them to obtain necessary resources when needed, and still maintain their autonomy for operation (White and Bruton 2-3).

The company also introduced the concept of ‘ecomagination’. This was another method innovation in the use of technology. It merged the generation of energy and the process of manufacturing vehicles that use the spawned energy.

The innovative process of production gave general electric the ability to create new opportunities, which increased its products value and their market demand (White and Bruton 4).

GE also undertook product innovation changes. In the first case, the company used a system-integration approach for existing products to improve them and increase their market share.

While developing LGT structures, GE used applied research methods to utilize existing knowledge, about the products in its inventory to develop first-hand products.

The up to date products by LGT improve the firm’s market position in emerging countries that lack a sustainable market for its traditional products. Therefore, the above example illustrates the use of systems integration as a type of innovation.

For example, the company applies the same basic research that developed ultrasound machines technology to develop portable ultrasound-machines in India and China. The firm also re-engineered its work progression.

Instead of controlling the processes of LGT from once central location, GE allowed all LGT to operate independently and consolidate their functions as individual companies.

This ensured that the organization was deleting all unnecessary hindrances in management levels and work. The above innovation was an example of using applied technology to create altered merchandises.

The company introduced new-fangled products, which lead to new opportunities in emerging markets. At the same time, the company introduced the modern process of researching and manufacturing that concentrate of its high-growth market.

Combination of Technology and Management

General Electric has made changes to its organization, which gives it a market advantage when using technology. The firm altered its structure where necessary like in the case of LGT. It also reviewed its personnel policies and leadership.

The firm created local teams that understand the needs and challenges of specific markets. This allowed the company to come up with products that are relevant and cost-effective in their respective markets.

The organization holds patents to various technologies and allows its local growth teams to exploit the patents and come up with new products.

To achieve this objective, the firm reorganized its management roles and objectives to realign them with technology. The new orientation implied that policy and leadership bend towards a technology that fit the business the company wants to grow in (White and Bruton 4).

Strategic Concerns for GE in Future

As General Electric extends its global presence, it should also seek to develop new customer relationships in its existing markets. The company should not take for granted markets where its strategies are already doing well.

Technological innovations often lead to the loss of a company’s competitive advantage. For example, fresh technology might render a product obsolete or cut its production costs and force companies to reduce their prices or face the wrath of recent entrants to the market. So while GE is shifting its power to where the growth is, it should also look at existing markets that are not growing but are under threat of disruption by technology.

As GE expands its manufacturing capabilities in new markets, it should also look at its capabilities more closely. Its competitors will soon copy its innovative processes of fabrication and come up with competitive outputs.

The company must ensure that the introduction of toned-down alternative products, in unknown markets, does not make it appear to be neglecting the demands, of the market.

Otherwise, it might suffer a backlash on its products as consumers seek to fulfil their needs with better products from competitors. As the firm realizes high returns in new markets, it should not become a victim by defending its market share when other firms introduced superior products.

Technology and Product Changes to Monitor

The firm should monitor the technologies that alter the demand of its products or render them obsolete. It should also monitor processes that tear down geographical boundaries or market barriers.

These processes will either remove its competitive advantage of exclusivity or allow it to tap fresh value-creating ideas. It should look at processes that allow existing technologies to serve additional purposes, and lead to new commodities (Tidd, Pavitt and Bessant 17-21).

Marketing and Technology Balance

General Electric maintained a balance of its marketing efforts and technology by managing its technology and innovation as the core of its production. The company used technology to produce products of distinctive capabilities and costs.

Having varied versions of the same product allowed the company to serve a wider market, including fewer traditional areas. The company also followed other technology developments within the industry but leveraged its expertise and network to create new products that eventually earn it a significant market share.

GE bought technology when it realized that the development of its own technology would take time or was expensive. The firm bought other firms that already had the technology it was eyeing, or the marketing capabilities that increased its market share (White and Bruton 2-4).

Special Planning Needs for GSK

GSK needs to plan how to diversify its global business while it continues to simplify the operating model of the firm. The firms need to plan how to retain its competitiveness of producing new products. Therefore, it needs to reorganize its research and development area to make them more efficient.

The firm needs to build an internal innovation foundation, which will support innovation. It needs processes that allow knowledge to transfer among its eight broad areas of focus. As it generates ideas and products, the firm also needs to manage them at any given time. Thus, the firm requires an efficient evaluation process.

During the planning phase, GSK needs to consider its technology and innovation strategy in relation to its dominant competitive position. It needs to look at how processes, operations and systems are influencing its capabilities.

Thereafter, it should examine ways to alter its organization structure to take advantage of the knowledge for internal innovation. The company has to coordinate its operations globally to ensure the outputs for customers, stakeholders and competitors become valuable data for processing in its R&D areas, which will strengthen its competitive position.

Industry Trends for Consideration

GSK should look at entrant companies in the eight market areas that make up its focus. The mint companies increase the competition for the existing market share and may come with new technologies, which disrupt the dominant position of GSK.

In addition to checking for newcomers, the company should also observe how existent products are influencing the economic inefficiency that exists within the industry. When all inefficiencies cease to exist, it will no longer be profitable, for the firm to continue innovating in the particular focus area (Zahra and Ali 105-106).

The firm should look at epidemic trends of neglected diseases that form the core of its research focus. The trends assist the firm to plan on the scale of resources that it should commit.

The trends also provide information that might be replicable in the development of drugs for similar diseases. Above all, the company should monitor breakthroughs in treatment technologies and medical combinations. Up to date processes and products will allow the firm to introduce modern ways of using their existing technology or come up with fresh products.

GSK can be innovative enough to beat its competitors in the race of introducing new products. However, the firm also needs strong retail presence to sell and grow its market share.

Therefore, the company should monitor mergers and acquisitions within the production channel. It should also keenly follow the changing preferences of retailers as state requirements influenced them in their respective countries.

Lastly, GSK should monitor regulatory conditions that govern the administration of health care. Often, official directives lead to the abandonment of a product in favour of another. In other cases, users develop the resistance to a specific combination of medication and require new types. The firm should look at medication resistant trends.

Critical Implementation Issues

The allocation of over 10 per cent of revenues on research and development was critical to the company’s development of high mid-size products. The firm needed to support its innovation and marketing efforts an appropriate financial budget to make it sustainable (Betz 51).

If it had not allocated funds to develop mid-size products, then it would be exposing its strategic advantage when its successful products become obsolete. Therefore, the allocation of ten per cent of revenues, on the product, research was important in the firm’s diversification strategy (White and Bruton 71).

Without the research and development of mid-size products, the firm would fail on its strategy of delivering more products of value. Having a constant stream of new products ensures that the firm is competitive and profitable.

If it instead concentrated on a few big-size products, then it would succumb to cyclic periods of good and bad performance (Betz 51). The quest for the market leadership position in the pharmaceutical industry obliges firms to remain innovative even when they are enjoying the market dominance.

Besides, new diseases and their resistance are always emerging; therefore, it is paramount that the firm allocates substantial revenue to research and development. Another critical implementation issue is the return on innovation policy.

Without a criterion for justifying the development of a specific product, the firm would waste resources on areas that do not meet its expectations. For a company generating so many products in a particular period, proper control of its inventory is important to ensure that the production resources do not go to waste (White and Bruton 72-73).

Influence of Changes Made in 2008

The changes made in 2008 that created Discovery Performance Units will accelerate the implementation of the firm’s critical issue of competitive advantage.

For example, in line with the research and development of mid-size products, DPU will reduce the organizational inefficiency associated with decision-making in large organizations.

In addition, concentration on particular focus areas by the DPU will enable GSK to develop better quality products and reduce research mistakes that come with diverse interests.

Funding guarantees for DPU also give them a security of tenure, which allows them to plan and implement research and development calendars without financial interruptions.

The elimination of short-term discontinuances will ensure that GSK achieve its goal of providing the best science and products to consumers. The 2008 restructuring allows the firm to continue benefiting from innovations and continue developing capacities for more novelties in the future (White and Bruton 73).

After the new introductions of 2008, project management at GSK has become more decentralized. The dispersion makes the firm more adaptable to emerging trends within the industry. It allows the research to focus on different technologies without compromising the firm’s already dominant position in specific products.

Special Evaluation Needs

GSK needs to determine whether the innovations coming from its research labs, and the subsequent product developments, will be successful, in the market. The firm has to know how many products it intends to produce over a given period and offer them in the marketplace. It also needs to define the quantity of each product line.

The company needs to look further than sales and profits when it evaluates its long-term strategy concerns. The evaluation should focus on how its products are relating to their substitutes, in the market. GSK already has strategies for its business and needs to evaluate their effectiveness and relevance in the industry.

The corporation has to know if the growth of a diversified global business contributed to its dominant position. Secondly, its strategy of delivering products of more value should be evaluated against the need for making profits. Lastly, it should evaluate its efficiency strategy to see if there are additional avenues for reducing costs or increasing value.

The use of an internal innovation strategy has the most influence on how well GSK evaluates its progress. The cross-fertilization of ideas encouraged by the company is also crucial for knowledge transfer with aids decision-making within the firm.

The sharing of information among departments assisted the company to reorganize its operations in 2008. It will continue to influence the evaluation of progress within the firm.

Control Systems for GSK

GSK obtains much of its competitive advantage from its human capital. Therefore, it needs human-resource system to control the exploitation of human capital (Verburg, Ortt and Dicke 54). The system would assist the firm to control the compliance of its employees and increase their commitment to its goals.

The company also needs a balanced scorecard system to increase the efficiency of inter and intradepartmental transactions and services (Sisaye 37). The company has many product lines and needs a just-in-time technology (JIT) system.

The system will reduce transaction costs and other costs that arise from the production, distribution and sales processes. As it continues to develop products from preventing disease, the company also needs to prevent its operations from causing harm to its environment.

An environment system, which reports the organization’s impact on its ecology, will assist it to create more value without violating environmental laws of specific countries.

Works Cited

Betz, Frederick. Managing Technological Innovation: Competitive Advantage from Change. 2nd ed. Hoboken: John Wiley & Sons, 2003. Print.

Sisaye, Seleshi. The Ecology of Management Accounting and Control Systems. Westport: Greenwood Publishing Group, 2006. Print.

Tidd, Joseph, Keith Pavitt and John Bessant. Managing Innovation: Integrating Technological, Market and Organizational Change. West Sussex: John Wiley & Sons, 2005. Print.

Verburg, Robert, Roland Ortt and Wilhelmina Margaretha Dicke, Managing Technology and Innovation: An Introduction. New York: Routledge, 2006. Print.

White, Margaret A and Garry D Bruton. The Management of Technology and Innovation: A Strategic Approach. Boston: Cengage Learning, 2011. Print.

Zahra, Shaker A and Abbas Ali, The Impact of Innovation and Technology in The Global Marketplace. New York: International Business Press, 1994. Print.

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