An external analysis is one of the most important tasks to complete when completing a strategic analysis for a given corporation. By looking at our Internal Analysis of General Electric (GE) we identified Strengths and Weaknesses and we were able to recognize the Distinctive and Core Competencies that exist within the General Electric organization. Our external analysis consists of two major analyses: The Competitive Analysis and the Industry Analysis.
By taking a closer look into what our competition and overall industry has to offer, we will further get a better understanding of the overall market and will be able to make a clear and well-supported recommendation for General Electric. General Electric distinguished itself as the major player in the energy/technological field. However, not too far behind are Siemens and Alstom, the second and third largest corporations that compete directly with General Electric. Siemens is headquartered in Munich, Germany and offering its services in over 190 different countries. In 2006 they recorded sales at 87.
325 billion Euros. Over those 190 countries they employ about 475,000. Siemens is very similar to General Electric for the fact that they both offer a lot of the same products/services. Both companies also have strong brand name equity. Alstom specializes in energy, ship buildings, marine systems, and transport infrastructure. Their current headquarters is in Paris, France and the currently operate in 70 countries employees approximately 70,000. Their biggest acquisition came in 2000 when the acquired Asea Brown Boveri (ABB) who was a leading competitor to General Electric. In 2006, Alstom recorded sales of 14.
208 billion Euros, which has been on a constant increase of about 6% in the last 5 years. The makers of substitute products that consumers could fall back to consist of Philips and Citigroup. Adaptac and Adept Technology are two other makers for substitute products. For all of these companies it is all about gaining market share from the energy segment, transportation, healthcare, and consumer goods industries. With GE, Alstom, and Siemens making up the majority of the competition, the threat of new entrants is very minimal. It is very hard for inspiring organizations to pinch a sizable chunk of the market share from these corporations.
Consumer brand loyalty plays a big role in the success for these corporations. What can be said about the performance of the overall industry is that it is below GE’s standards. GE records annual revenue of approximately $141 billion, while the industry average is at approximately $7 billion. Overall GE has fairly good leverage ratios compared industry competitors. GE’s total debt ratio proves to its creditors that it that can maintain a high amount of leverage. GE also has a high long term debt ratio compared to the competitors which indicates that the firm can handle a significant amount of debt and still profit.
Between GE and Siemens, they employ 740,000 people. The industry average of the number of employees is 290. The one positive ratio in regards to the industry versus GE was the Revenue Growth percentage. GE is increasing its revenue by an average of about 1. 9% per year, while the industry is going strong, increasing at 7. 4% per year. This shows that there are many competitors out there in this industry that are gaining their respect from consumers. The next analysis that we looked at was on the Macro Environment.
To begin with the social trends, it is definitely known to all that the amount of energy and water consumption has been increasing exponentially in the last few decades. The World Wildlife Fund (WWF) estimated that people worldwide drink 89 billion liters of bottled water each year. Last year, Americans consumed an estimated 3. 4 billion gallons of bottled water, and that has been increasing year-to-year. In 1995 the U. S. citizenry consumed, on average, 327 million BTUs (British Thermal Units) per year, which is more than twice what many developed countries use per capita, including the United Kingdom, France, Italy, Germany and Japan.
Granted, this statistic is from 1995, but this goes to show the amount of energy we are consuming is incredibly high. All of this consumption of water and energy is letting GE, Alstom, and Siemens come in and letting their Research and Development teams come in and create new and innovative ways of conserving these necessities without drastically changing our social lifestyles. Demographically, the increase in age of the average United States citizen has been encouraging sales for a lot of companies. The U. S. median age continued to rise, from 35. 3 years on April 1, 2000, to 35. 9 years on July 1, 2003.
Now, in 2007, it is reported that the U. S median age is 36. 6 years old. This can be due to the fact that the “baby boomers” are slowly but surely getting older, causing the census to continue increasing. Politically, it is never quite certain how the U. S and overseas economies will perform. This has a direct correlation as to the foreign exchange rates, interest rates, and minimum wage requirements. It is a day-to-day, month-by-month basis when dealing with the state of the economy. Currently, our U. S economy has performed poorly for the last two years, mostly due to the housing crisis and high oil prices.
With the economy in a slump, this means there is fewer consumers spending going on and can pose a serious threat to organizations that specialize in the consumer good industry. On a global scale, the income per household seems to be on a delicate rise making it easier for them to spend the money on goods/services. However, there are still 49 countries in the world that are classified as “4th World Countries. ” To be labeled “4th World” you must meet three criteria: three-year average GNI per capita of less than US $750, human resource weakness, and economic vulnerability.
To have a list of 49 countries is an improved from past decades. In 2000, the list of Least Developed Countries was at 55. To say that there is a country that graduates from an LDC every year is an improvement to the global economy and may stir up future spending habits. Dealing with technological trends, is the easiest to see especially when analyzing for corporations such as GE. There are constant demands for goods such as televisions, electricity, healthcare equipment, and water. With the demand for these products at a constant high, it opens the door for many different organizations.