Corporate

Strategy
Case Study 5
The GE Energy
Management
Initiative (A)

Team Rush
Fu Yazhang

1501214059

Mega Ranty S.

1501214141

Sunny Shao

1501214074

Yang Yang

1501214090

Youssef Adrehmi

1502010675

1. How does the GE Management system work? How does GE Canada fit into this
picture?
GEs organizational structure called multidivisional structure (M form or MDF) (Appendix 1).
This structure refers to the organizational structure where the firm is separated into several
semi-autonomous business units but still guided and controlled by financial (target) from
parent company.1 Within this context, for international business, GE sets up various national
functions including finance, human resource, public relations, legal, and business
development for each country. The vice-president for these functions in a specific
country reports to the CEO of that country. This is consistent with the fact that those
functions vary from country to country. However, in terms of its products and service
(division), GE runs its operation based on customers rather than national boundary. The
company has 10 businesses including wind power, water and process technologies, security,
life science, GE Commercial Finance, GE Consumer Finance, GE Healthcare, GE Industrial,
GE Infrastructure and NBC Universal, each of which has several units with various divisions.
For instance, GE lighting, as one unit of GE Industrial Business, has different functional
divisions such as R&D, marketing, sales, etc. Each of these divisions has a vice-president in
headquarter who is in charge of that function globally. Without country management
roles, GE requires its divisional managers of specific businesses to report
directly to their US headquarters. For example, the manager who is responsible for R&D
of a unit under GE Infrastructure in a foreign country reports directly to the vice-president of
R&D at that unit headquarter in US. This kind of structure leads to decentralization. A
decentralized organization can act more quickly and responsive to solve the problems.
Moreover, this system helps company to screening the business opportunities better than
centralization and reduce the possibility to lose the opportunities due to slow reaction. 2
Furthermore, as mentioned before, this structure lets the business units to have its own
autonomy to decide and implement its strategy based on the market, letting the divisional CEO
to make his own business strategy based on the understanding of the operating market.

Multi-divisional Form. (2016). Wikipedia. Retrieved from https://en.wikipedia.org/wiki/Multi-divisional_form

Robbins, Stephen P. and Judge, Timothy A. (2015). Organizational Behavior. Pearson.

Although, it seems like this structure brings adequate advantages, but, it also has weaknesses
such as difficulty in maintaining communication, sharing information, and coordination
among divisions.
The structure of GE Canada is similar with the previous explanation in the beginning of this
question. As an example, GE sets up finance, environmental affairs, legal, human resources
and public relations and business development in Canada, each with a vice-president. The
vice-president for each function reports to the CEO of GE Canada. The business leaders of
different divisions for different business units in Canada are required to report directly to the
vice-president in headquarter who is in charge of that division globally. For example, the
marketing manager of GE Lightings Canadian operations is required to report directly to the
vice-president of marketing in GE Lighting group headquarter in US.

2. As of the end of the meeting with GE supply executives, what are your options
for proceeding, and what do you intend to do?
By taking the position of Raj Bhatt, one of the business development managers for GE Canada.
Our group strongly believe that energy efficiency represents a real business opportunity and
an attractive industry in Canada that GE Energy should not miss. So, after the meeting with
GE supply executives, Bhatt may need to take a step back and think more about what decision
could be the best for GE Energy in order to successfully implement the Canadian market by
winning the first promising deal of the Canadian Federal Government buildings program since
the prequalification was already gained.

Bath has now to think and analyzes whether this

project should be managed by the local Canadian venture or by GE Supply. After his
meeting with GE supply executives, it appeared clearly that none of these two decisions are
completely perfect and both choices seemed to have some weaknesses. In order to pick the
optimal option, our group will provide an analysis to assess those opportunities, their
resources, and their environment by clarifying the advantages and disadvantages of both
possibilities.
If GE Canada managed the project as first option, many advantages could be beneficial
for Bhatt to flourish this opportunity. First, we can mention the good understanding of the
Canadian market due to its location which helps identify many different factors that can have

a positive impact determining where the current market is and where it is going especially that
the energy efficiency is not one of the six core business of General Electric. Second, the power
of collective ambition that was obvious among the Canadian team for that particular
opportunity which may increase the degree of collaboration to accomplish finest outcomes by
sharing the same purpose and vision. Third, assuming that the project owned by Canadian
governments, they must prefer having local operated companies to handle the project in order
to enhance the national business growth than multinational company such as GE supply which
based in US.
This option is not completely perfect. Many disadvantages could be mentioned such as
the lack of experience in this new business since GE Canada has not run the energy
efficiency business before which will absolutely increase the risk of failure facing
uncertainty and the competitors already existing in Canadian market. The energy efficient
management project will be paid based on the evaluation of expected savings in energy used.
Thus, GE Canadas lack of understanding can lead to high downside financial risk if the
outcomes doesnt meet the expected energy savings. Moreover, considering other risk that can
happen when changing the lighting system such as pulling down lots amount of asbestos due
to lack of experience. Asbestos was commonly used in construction material, however since
2005, the amount of usage for this material had decreased due to health concern such as
cancer. 3 This mistake may cause legal lawsuit to GE. Furthermore, the lacks of backup
money that may hold GE Canada back from being more competitive in the market and
increase its financial risk. Then, GE Canada should break the normal model of GE energy
to get this opportunity which may create organizational dilemmas inside the corporation
through geographical silos across business units of other countries and headquarter.
By GE supply managing the project in Canada, various advantages may follow due to
their experience in the energy efficiency industry over the past 12 months that can be used
as an asset. Having staffs that are experienced and knowledgeable can be invaluable in setting
the corporation apart from its competitors. Also, the good relationship with the energy

National

Cancer

Institute.

(2009).

Asbestos

Exposure

and

Cancer

Risk.

Retrieved

http://www.cancer.gov/about-cancer/causes-prevention/risk/substances/asbestos/asbestos-fact-sheet

from

service companies which helps in developing efficiently the project by assuming the
technical and performance risks. Moreover, the strong financial backup which enable GE
supply to plan for the future invest in systems, processes and people, add equipment and other
capabilities to meet the needs of energy efficiency industry project. Then, the new business
will fit the normal model which will guarantee a continuous organizational stability inside
the corporation in order to maintain and grow the organization in the long term.
The disadvantages of the second option are still less risky than the first one, such as the less
understanding of the Canadian market due to the focus on the US business which can
lead to time, effort and money worsening and let the chance to competitors that are ready to
take the opportunity. Also the detriment of revenues that go directly to headquarter
will omit the opportunity for GE Canada to gain more profit. Moreover, as US based division,
GE Supply will have less preference from Canadian governments who likely want its
national company to grow than multinational company based outside Canada.
Considering the time constraint to win the project, according to our analysis results, the risks
exist in the first option have bigger constraint than advantages offered, in contrast the
disadvantages for second option are less risk while the advantages are obviously stronger than
first option. Moreover, our group believe that the weaknesses in the second option can be
omitted by the next solution suggested by our group. We propose that Bhatt should make a
win-win decision by letting GE supply takes control of the federal buildings program
while helping and assisting them to win the project, but also by asking GE energy
headquarter for a transferring skills from GE Canada to GE supply. Consequently,
transferring key personnel who profoundly understand the Canadian market to GE supply
team will help them to adjust their weaknesses and build a solid management team that can
successfully implement the energy efficiency industry in Canada by combining both
experience in the industry and well understanding of the market to added to the reputation
and availability of resources within the company. Sharing and transferring capabilities will
also help to create more value for GE Canadas key personnel to get a maximum of experience
and knowledge that could be helpful for future project of GE Canada.

Appendix

GE Company Organization Chart

Appendix 1