General Electric&Ww Case Hbs

In: Business and Management

Submitted By ozdeaksaray
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Bogazıcı unıversıty executıve mba program | ADEX 509 STRATEGIC MANAGEMENT SEMINAR | GENERAL ELECTRIC VS WESTINGHOUSE CASEPOSITION PAPER | | OZDE KARAKAS | 03/03/2012 |

ADEX 509: STRATEGIC MANAGEMENT SEMINAR
Ozde KARAKAS / Position Paper
This position paper aims to illustrate the competitive environment in large electric tribunes market in 60’s between General Electric and Westinghouse and will be evaluating the competitive positioning of both companies.
BRIEF SUMMARY
Market
Turbine generators produced over 80% of the US power supply. Tribunes were the major cost item of the electrical utilities. Therefore any reduction in the prices of turbines increased market share. The buyer of turbines was electric utilities which are owned by the government – federal, state or local – and private investors. The top 25 utilities accounted for 55% of the US demand for turbine generating capacity. The demand for turbines was depended on the peak electricity demand forecasts, which tended to be highly cyclical, of utilities. Furthermore utilities bought large units infrequently rather than purchasing smaller units more regularly since there are rapid advances in turbine technology and turbines require high capital cost. There was two months lag between the order and the shipment due to engineering and manufacturing of the product. The procurement process of government electric utilities was composed of a sealed bids submitted to their specifications. On the other hand procurement process of private investor owned negotiated with manufacturers under manufacturers did not know which type of turbine the competitor proposed or its price. The negotiation process between a private investor owned utility and turbine producer started between procurement agent and sales agent and finalized between top level executives. Pricing of competitor was known by each player…...

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