Back in 2004, GE’s top-management team was going through its annual strategic planning review when the management team came to a sudden realization: six of the company’s core businesses were deeply involved in environmental and energy￾related projects. The appliance business was exploring energy conservation. The plastics business was working on the replacement of PCBs, once widely used in industrial compounds, which had been found to have negative consequences for human health and the environment. The energy business was looking into alternatives to fossil fuels, including wind, solar, and nuclear power. Other businesses were looking at ways to reduce emissions and use energy more efficiently. What was particularly striking was that GE had initiated almost all of these projects in response to requests from its customers. When these common issues surfaced across different lines of business, the team members realized that something deeper was going on that they needed to understand. They initiated a data-gathering effort. They made an effort to educate themselves on the science behind energy and environmental issues, including greenhouse gas emissions. As CEO Jeff Immelt later explained, “We went through a process of really understanding and coming to our own points of view on the science.” Immelt himself became convinced that climate change was a technical fact. GE executives engaged in “dreaming sessions” with customers in energy and heavy-industry companies to try to understand their concerns and desires. What emerged was a wish list from customers that included cleaner ways to burn coal, more efficient wastewater treatment plants, better hydrogen fuel cells, and so on. At the same time, GE talked to government officials and regulators to get a sense for where public policy might be going. This external review led to the conclusion that energy prices would likely increase going forward, driven by rising energy consumption in developing nations and creating demand for energy-efficient products. The team also saw tighter environmental controls, including caps on greenhouse gas emissions, as all but inevitable. At the same time, team members looked inside GE. Although the company had already been working on numerous energy-efficiency and environmental projects, the team realized there were gaps in technological capabilities and there was a lack of overarching strategy. From these efforts emerged the realization that GE could build strong businesses by helping its customers to improve their energy efficiency and environmental performance. As Immelt soon became fond of saying, “green is green.” Thus was born GE’s ecomagination strategy. First rolled out in 2005, the ecomagination strategy cut across businesses. Immelt tapped one of the company’s promising young leaders to head the program. GE established targets for doubling investments in clean technology to $1.5 billion per year by 2010 and growing annual revenues from eco-products to $20 billion from $10 billion in 2004, twice the growth rate of its overall revenues. In its own operations, GE set out to cut greenhouse gas emissions per unit of output by 30% by 2008, and to cut absolute emissions by 1% by 2010 (as opposed to a forecasted increase of 40% due to the growth of the business). These corporate goals were broken into subgoals and handed down to the relevant businesses. Performance against goals was reviewed on a regular basis, and the compensation of executives was tied to their ability to meet these goals. The effort soon started to bear fruit: a new generation of energy-efficient appliances, more-efficient fluorescent and LED lights, a new jet engine that burned 10% less fuel, a hybrid locomotive that burned 3% less fuel and put out 40% lower emissions than its immediate predecessor, lightweight plastics to replace the steel in cars, and technologies for turning coal into gas in order to drive electric turbines, while stripping most of the carbon dioxide (CO2) from the turbine exhaust. 

By the end of its first 5-year plan, GE had met or exceeded most of its original goals, despite the global financial crisis that hit in 2008. Not only did GE sell more than $20 billion worth of eco-products in 2010, but, according to management, these products were among the most profitable in GE’s portfolio. In total, GE reported that its ecomagination portfolio included over 140 products and solutions that had generated $105 billion in revenues by 2011. One of the great growth stories in the company has been its wind turbine business, which it bought from Enron in 2002. In that year, it sold $200 million worth of wind turbines. By 2008, this was a $6-billion business that had installed 10,000 turbines. By 2012, GE had installed over 20,000 turbines worldwide and was predicting a surge in orders from developing nations. Sales from Brazil alone were forecasted to be in the range of $1 billion a year for the next decade. GE plans to double cleantech R&D to $10 billion 2015, grow ecomagination revenues at twice the rate of overall revenues, reduce its energy intensity by 50% and its greenhouse gas emissions by 25%, and reduce its water use by 25%. Sources: D. Fisher, “GE Turns Green,” Forbes, August 8, 2005, pp. 80–85; R. Kauffeld, A. Malhotra, and S. Higgins, “Green Is Strategy,” Strategy 1 Business, December 21, 2009; J. L. Bower, H. B. Leonard, and L. S. Paine, “Jeffrey Immelt and the Reinvention of GE,” Reuters (October 14, 2011); General

Question:-

(a). Describe with reason, the extent to which GE followed a classic SWOT model while formulating its ecomagination strategy. 

(b). Briefly describe two reasons for the successful implementation of GE's ecomagination strategy.

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