The Consumer Electronics Division of General Electric

Current research on the Consumer Electronics Division of General Electric demonstrates that the organization has seen a recent boost in sales as a result of its decision to launch its new Profile series of appliances. Malester (2005) notes that, "With Profile major appliance product launches helping lead the way...the consumer electronics and industrial segment at GE posted a 9 percent increase in revenue...coming in at $3.8 billion, up from a year-ago $3.5 billion" (p. 42). Further, Wolf and Malester (2006) note that at the International Business Show (IBS) held in Orange County, Florida General Electric provided a vision of a futuristic kitchen. The products included in this kitchen were:

-A "Sensing" Refrigerator: General Electric is working to design a refrigerator that will be able to detect what the user puts inside of it. Once groceries are stored in the refrigerator, an updated list of foods will be used by the refrigerator to adjust temperature and humidity such that the best possible food preservation occurs.

-A Multi-Technology Oven: Convection, thermal and microwave energies are all combined in this oven to prepare foods faster. In addition, excess heat generated by the oven is used to heat water for washing dishes-i.e. cogeneration.

-Dishwasher: The dishwasher conceptualized by General Electric allows the user to add detergent once a year and recycle water from the appliance for other uses in the home and garden.

Critically examining what has been written about the Consumer Electronics Division of General Electric, it seems reasonable to argue that at the present time, the organization is highly focused on using product differentiation as principle strategy. Through the development of its new line of Profile products, General Electric is combining new advances and innovations in technology as a central means for the organization to differentiate itself from its competitors. The organization is clearly hoping that by providing innovative twists on new products they will be able to spur both sales and consumer interest in the new products offered.

Given the tight competition that exists in the context of consumer electronics, product differentiation may be one of the best methods that General Electric can use to improve the financial success of the organization. However, like any strategy that depends upon innovation and change, it is possible that the organization may experience some problems using this overall strategy for development. With this in mind, it is helpful to consider the reasons why this strategy may work for the organization and why it may fail. By understanding the benefits and drawbacks of this strategy, a better understanding of the risks and challenges facing the organization will be elucidated.

Why GE's Strategy Will Succeed

Considering the specific reasons as to why the current strategy employed by General Electric will work, it seems reasonable to argue that this strategy has the following benefits:

-Facilitate Strong Brand Recognition: The use of technology as a means to develop products will enable General Electric to develop itself as a leader in innovation. By capitalizing on this organizational position, General Electric should be able to enhance the sale of all of its consumer products, even those that are not technologically superior to the competition.

-Spur the Development of New Technology: By approach consumer electronics through an innovative framework, General Electric may be able to discover new technologies that may revolutionize the appliance industry. If this occurs, the organization will be on the cutting-edge of new appliance design, ahead of all other competitors.

-Provide Consumers with Products They Want: The specific innovations that are being used by General Electric appear to be aimed at providing new twists on old ideas. This process has been spurred by what designers and engineers in the organization believe consumers want in their appliances. Through the research and development that is taking place in the organization, General Electric should be able to develop products that meet not only the consumer's needs, but also the consumer's desires as well.

-Become a Leader in Consumer Electronics: Through the development of new products, General Electric may be able to become a leader in this area. Although the Consumer Electronics Division of GE has been able to garner notable success, it has slipped in recent years under the direction of the organization's new CEO.

-Increase Profit Margins: Bys using technology and product differentiation as the means to spur interest in the organization, the uniqueness of the products offered by the organization may enable GE to charge more for products which cost less to build. As such, the organization may be able top boost profit margins by using this strategy.

Why GE May Fail

Even though it is quite evident that there are a host of reasons as to why General Electric may become quite successful using a product differentiation strategy as a means to facilitate growth and development, it is evident that this strategy carries with it a number of risks. As such it is pertinent to consider the problems that may arise as a consequence of utilizing this overall strategy.

-Products Developed Not Well Liked: Although GE believes that it is developing products that consumers want, it is possible that some of the products developed may not be well received by consumers. Even with good market research, some of the most innovative products fail.

-Costs for Development: Even though the GE organization clearly has a plan for product development, the costs associated with developing a new product are not always straightforward. As such, the organization may find that it takes more capital for product development than originally estimated.

-Time to Develop: General Electric may find that it takes more time to develop products. If the organization focuses on the wrong product at the wrong time, it may find that other competitors are able to outpace or out-develop the organization.

-Problems with Technology: Although General Electric is taking the necessary steps to ensure the integrity of the products it develops and sells, the "newness" of the technology being developed by the organization may have inherent, long-term problems that could cost the organization money. For instance, perhaps a new heating coil in the oven of the future frays in 18 months, causing fires. Without a clear understanding of the long-term performance of new technology, GE may face either lawsuits or recalls.

-Damaged Reputation: Even though General Electric may be able to develop new technologies that meet the needs of consumers, one "flop" will tarnish the reputation of the organization. If GE wants to develop its reputation and brand on the use of technology, it has to ensure that its products work every time.

Conclusion

Overall the data presented in this investigation demonstrates that while the product differentiation strategy developed by the Consumer Electronics Division of General Electric carries with it a number of potential benefits for the success of the organization, it also carries with it a number of inherent risks. Even with the best market research and product testing, the application of new technology to product development carries with it a considerable risk for the organization. Interestingly however, the willingness of the organization to assume this risk will have considerable benefits if the outcomes are favorable for the organization. Clearly, General Electric could have chosen a less tenuous strategy to facilitate the development of the organization. Be selecting a less aggressive strategy, the organization could have reduced risk and increased the chances for overall success. In addition, however, the organization would have had to give up its hopes of becoming a leader in consumer electronics. Thus, GE appears to have made the right choice to spur development and growth in this segment of its business operations.

References

Malester, J. (2005). GE major appliance sales rise 9%. This Week in Consumer Electronics, 20(4), 42.

Wolf, A., & Malester, J. (2006). GE profit up: Shows next-gen majaps at IBS. This Week in Consumer Electronics, 21(3), 74.