Ge Company Analysis

Executive Summary General Electric is a multinational corporation that is divided into six distinct divisions. These include GE Technology Infrastructure, GE Healthcare, GE Energy Infrastructure, NBC Universal, GE Capital Finance, and GE Consumer and Industrial. They are the twelfth-largest company in the world by revenue and the second-largest company by market capitalization. The diversity and size of General Electric gives them a lot of protection against the poor performance of one industry.

It also allows them to sell and obtain new corporations at opportune moments. General Electric is diligent when it comes to the safety of their employees and the environment. They are one of the most conscientious companies when it comes to pollution, energy use, and the conservation of all resources. They have made it their mission to create new, innovative ways to conserve and produce energy while minimizing the effects on the environment. Such a large corporation often finds itself faced with opportunities and threats that they need to be prepared for.

It is up to General Electric to use their strengths to minimize these threats and to use these opportunities to minimize their weaknesses. I have put together a Strategic Management Plan that will help them do this during 2010. This report includes a competitive environment analysis and an internal and external audit. I have also evaluated the strategies that have been used by General Electric that have been successful. The report concludes with my recommendations and predictions for their future. Proposed Mission Statement

At General Electric we have made it our mission to live and work by the following principles: * To respect our employees and to provide them with a healthy, positive environment to work in * To ensure the satisfaction of all of our customers * Become one of the top performing corporations in every market we serve * To lead the way in innovative, technological solutions * To protect our environment Environmental Mission Statement At General Electric we are committed to becoming the leader in environmentally friendly technologies.

We have made it our mission to use and produce products that will help protect our environment and we will strive to continue to create innovative ways to conserve our natural resources. External Audit A large, diverse corporation like General Electric finds itself faced with numerous opportunities that they are able to take advantage of. They are able to use these opportunities to help them enter new fields, make progress in existing fields, and to help the corporation prosper. By being prepared General Electric can easily take advantages of the external opportunities that are available to them.

Opportunities * Increased consumer demand for high efficiency appliances * Increased demand for innovative tools and technologies in the rapidly growing healthcare industry * Rebates that are being offered to consumers for purchasing energy efficient appliances, solar panels, etc * Increased awareness and demand for alternative and renewable energy products * Ability to offer financing options to consumers, businesses, real estate ventures, and healthcare institutions * Growth in overseas markets Although General Electric has many opportunities available to them, there are also threats posed against them.

These external threats are something that often can’t be controlled. However if they are anticipated, General Electric can be prepared for them and take the steps that are necessary to minimize the impact that they will have on the corporation. Threats * Economic recession * U. S. housing market in slump * Credit becoming difficult to obtain * Rising defaults on loans * Competition from rival firms * Bargaining power of consumers * Bargaining power of suppliers * Profits and value of stocks down Competitive Environment Analysis Rivalry Among Competing Firms.

The diversity of General Electric means that they have many direct competitors for each division that they operate. This competition means that GE needs to keep being innovative to stay on top. Their competitors include Honeywell, Citigroup, Whirlpool, 3M, The Walt Disney Corporation, Viacom, Bank of America, and many more. The only corporation that operates in as many industries as GE is Siemens; who competes in all divisions except NBC Universal. Although they are still a direct threat to GE, they still earn considerably less than GE. In 2009 GE’s revenue was approximately $154.

95 billion, while Siemens’ was approximately 88. 21 billion. (See Appendix C) Potential Entry of New Competitors Because they are involved in so many different industries, General Electric must be cautious about new competitors that are entering the industry. If they find that a new competitor is going to outperform them in a specific industry, or with a specific product, they need to be ready to take the steps necessary to put them back on top. This may include introducing a new product, redesigning an existing product, or simply selling that portion of the company and exiting the market.

One of the benefits of being so large and diverse is that GE can exit a market and invest in others when they feel that the time has come. Many other companies don’t have that option available to them. Bargaining Power of Suppliers General Electric operates on a philosophy that their “eye is always open”. (www. ge. com, 2010) This means that have a company policy stating that they will consistently audit the suppliers that they use to ensure that their customers are receiving quality products at a fair price. This includes on-site inspections of their suppliers throughout the world.

The size of GE has allowed them some degree of flexibility when it comes to their suppliers. They are able to offer an abundant amount of business to suppliers and are willing to maintain a long-term relationship as long as the supplier produces superior quality products at the best price for consumers. The size of GE has allowed them to be affected less by the bargaining power of suppliers than many other corporations are. Bargaining Power of Consumers The bargaining power of consumers has a big impact on General Electric.

They are committed to their customers and want to do everything in their power to preserve the relationship and keep their customers happy. General Electric does this by ensuring that they offer fair prices, promotions, new product selections, and warranties on items. Because some of the products they offer common; GE monitors the market closely to see what their competitors are doing so that they can respond quickly. This allows them to keep their customers happy. Competitive Profile Matrix | General Electric| | Siemens| |

Critical Success Factors| Weight| Rating| Score| Rating| Score| Advertising| 0. 10| 3| 0. 30| 3| 0. 30| Management| 0. 10| 4| 0. 40| 3| 0. 30| Customer Loyalty| 0. 10| 4| 0. 40| 2| 0. 20| Increase in New Customers| 0. 10| 3| 0. 30| 2| 0. 20| Availability of products| 0. 10| 3| 0. 30| 3| 0. 30| Diversification| 0. 15| 4| 0. 60| 3| 0. 45| Global Expansion| 0. 15| 3| 0. 45| 3| 0. 45| Product Quality| 0. 10| 4| 0. 40| 4| 0. 40| Market Share| 0. 10| 3| 0. 30| 2| 0. 20| Total| 1. 00| | 3. 15| | 2. 70| Table 1: Competitive Profile Matrix, GE and Siemens in 2010 Internal Audit

Due to the size of the corporation, General Electric needs to constantly manage the internal strengths and weaknesses of their corporation in order to ensure that they remain successful. This will allow them to make any changes that are necessary before the implications are too great. General Electric needs to take advantage of the opportunity that they have to expand their corporation globally. In order to successfully do this they must understand the differences in cultures and the different needs that each country has. They can use their internal strengths to help achieve this objective.

They need to be able to use the skills of their management team successfully. This includes working on planning for the future, organizing, motivating, staffing, and controlling. These steps will allow GE to formulate, implement, and evaluate strategies effectively. Being involved in the research and development process is crucial to the success of General Electric. Most of the products that they offer need to updated and upgraded frequently. If they do not continue to research and develop the products they offer, they will quickly be outmatched by their competition.

GE not only needs to research and develop their own products, they need to research new products and ideas and what their competition is offering. Without this internal process, GE would quickly lose their place as one of the most innovative, technological corporations. GE currently has over 36,000 innovators employed by them to keep up with their research and development needs. (www. ge. com, 2010) General Electric must employ a non-stop marketing campaign. This will allow them to quickly define, anticipate, create, and fulfill their customers’ needs and wants. By doing this they will increase their sales and their share of the industry.

In order to successfully market their products they must be able to perform the seven basic functions of marketing: customer analysis, selling products/services, planning, pricing, distribution, marketing research, and opportunity analysis. These functions will help identify the weaknesses and strengths in GE’s marketing plan. (David, 2009) Strengths * Well known brand with a good reputation * Diverse corporation with investments in several different areas * Dedicated employees and strong leadership * Leader in high efficiency appliances * Ability to make attempts at new ventures * Unsurpassed technological advancements.

* Significant cash flow Weaknesses * GE Financial hit very hard by recession * Stock prices declining * Profits falling in media-entertainment segment SWOT Matrix for General Electric in 2010 | Strengths1. Well known brand with a good reputation2. Diverse corporation3. Strong leadership and dedicated employees4. Leader in high efficiency appliances5. Ability to make attempts at new ventures6. Unsurpassed technological advancements7. Significant cash flow | Weaknesses1. GE Financial hit hard by recession2. Stock prices declining3. Profits falling in media-entertainment segment| Opportunities1.

Consumer demand for high efficiency appliances2. Increased demand for technology in healthcare industry3. Rebates for energy efficient appliances4. Demand for alternative and renewable energy products5. Ability to offer financing 6. Growth in overseas markets| SO Strategies1. Create affordable line of energy efficient appliances (S4, O1)2. Increase production of technology used in the medical field (S6, O2)3. Work on creation of new solar energy and alternative fuel products (S5, O4)4. Take advantage of new opportunities in fields that are promising (S7, O5)5. Expand product offering on a global scale (S1, O6) | WO Strategies1.

Expand GE Financial globally (W1, O6)2. Use rebates and incentives to increase sales of energy efficient appliances and renewable energy products (W2,O1, O3, O4)3. Offer incentives to companies willing to invest in the media-entertainment segment of the corporation (W2, O5)| Threats1. Economic recession2. U. S. housing market slump3. Credit becoming difficult to obtain4. Rising defaults on loans5. Competition from rival firms6. Bargaining power of consumers7. Bargaining power of suppliers| ST Strategies1. Offer deep discounts on products and services to stimulate sales (S1, T1)2.

Work on ways to increase consumer and business sales and create new programs that will help off-set the economic problems (S3, T2, T3)3. Create new, innovative technologies that surpass anything the competition can offer (S6, T5) | WT Strategies1. Create new strategies to boost business and a new marketing plan (W1, T1)2. Create new line up of new shows on corporation’s network NBC that will stimulate the number of viewers. (W3, T5)| Table 2: SWOT Matrix for General Electric in 2010 Strategies Used by General Electric Market Development General Electric has committed itself to expanding their corporation globally.

They are currently focusing on emerging markets. The growth potential in international markets can often provide corporations with higher revenue growth. They have focused on expanding internationally is their cable television division. They hope to double their cable revenue to $500 million by expanding internationally. Divesture The size of General Electric allows the corporation to sell portions of the corporation that are no longer successful. GE recently reached an agreement with Comcast to purchase 51% of NBC Universal. Their plan is to eventually sell the remaining 49% to Comcast.

They also sold GE Life and GE Insurance in 2006 and officially exited the insurance business. By continuing to sell portions of the corporation that are struggling or have become too expensive to keep, GE will be able to remain successful. Related Diversification General Electric is constantly acquiring new corporations. The size of the corporation allows them to buy and sell corporations at opportune times. The recently acquired the Weather Channel and two healthcare related corporations: Amersham and IDX. By using their profits to continue purchasing corporations that they feel will be successful; their revenue will continue to increase.

Recommendations My recommendation for General Electric is that they continue with their strategy of expanding their healthcare, engine, and energy businesses. They are incredibly lucrative markets right now and they are always in need of new technology and innovative ideas. I would also recommend that instead of selling the remaining 49% of NBC Universal to Comcast that they keep it and continue to grow the division. There is a huge market for entertainment and cable television. If they keep it and make critical changes I feel that it would be very profitable for them.

My final recommendation is that GE continues to continue to grow globally. There are many untapped markets that they can prosper from. They just have to use the resources they have to continue with their expansion into those markets. Epilogue General Electric is a multinational corporation that was founded in Fairfield, Connecticut in 1892. It rapidly grew to be the twelfth-largest corporations in the world based on revenue and the second-largest corporation by market capitalization. (www. wikinvest. com, 2010) General Electric’s operations now include financial services, energy, industrial manufacturing, healthcare, and media industries.

General Electric is one of the most diverse corporations in the United States. They are made up of six different divisions that have many companies within them. These divisions include GE Technology Infrastructure, GE Healthcare, GE Energy Infrastructure, NBC Universal, GE Capital Financial, and GE Consumer and Industrial. Each division has numerous companies that operate within it. GE Technology Infrastructure generates 27% of the corporation’s revenue and is dedicated to developing technology for the transportation industry.

This includes jet engines and parts, military and commercial aircraft, locomotives, engines for trains and the marine industry, water pumps, water filters, and other equipment used in water treatment and desalination systems. GE Healthcare is a sub-unit of GE Technology Infrastructure. It creates healthcare and medical-related services and goods. This includes many different types of medical technology that is used by hospitals, medical facilities, pharmaceutical and biotechnology companies, and the life science research market. These products are used worldwide.

GE Energy Infrastructure generates 24% of the corporation’s revenue and is in charge of manufacturing equipment for energy companies. They sell energy technologies including gas turbines, generators, and steam turbines that are used to power companies and industrial plants. This division supplies drilling systems, floating production platforms, compressors, and turbines that are used in the oil and natural gas industries. NBC Universal is a major US broadcasting network and a motion picture studio that generates 9. 8% of the corporation’s revenue.

They own a large number of news and entertainment networks, a motion picture production company, and a group of theme parks. They also have the rights to the 2010 and 2012 Olympic Games, NFL Football, and Super Bowl 2012. GE Capital Finance generates 3. 2% of the corporation’s revenue and it consists of all of the financial services that are offered by General Electric. They offer loans to consumers needing capital to construct new facilities, purchase new equipment, or acquire real estate. They provide the construction, manufacturing, transportation, telecommunications, and healthcare industries with all of their financial needs.

For consumers they provide banking and credit services. The final group generates 6. 1% of the corporation’s revenue: GE Consumer and Industrial. They produce and sell consumer appliances, lighting, industrial equipment, and related services. Although this is often the most well-known group it produces the least amount of revenue for General Electric. This is one area that there is room for advancement in. Although the competition can be intense, GE currently has control of over 50% of the appliance and lighting market. To give you an idea of how much revenue General Electric receives from each segment; see Appendix A and Appendix B.

They contain charts from 2008 that breaks down the earnings of GE by segment and geographic location. Overall, GE generated $183 billion in revenue in 2008 and $156 billion in 2009. The 14. 1% decline was due to the hard hit that they have taken from the economic recession and the slowdown of global demand. As stated previously, their diversification allows them some protection from poor performance in any particular segment and allows them to take advantage of favorable market conditions and buy and sell companies at good times.

GE anticipated that they will have over $25 billion in cash from working capital management, the sale of their security business, and the sale of their stake in NBC Universal. They are looking for corporations that are valued at over $1 billion to add to their portfolio during 2010 and 2011. Although they reported a net income of $1. 95 billion (down 31%) during the first quarter of 2010, they remain optimistic for 2010 and 2011. They feel that they are back on track and expect the company to continue growing. With their strong management and dedicated employees I feel that they will bounce back from the recession that has hit many so hard.

General Electric still continues to lead the way in protecting our environment and developing new green technologies. They are committed to finding new ways to solve all of the world’s most challenging problems. They are dedicated to reducing water use, reducing emissions, improving air quality, and to changing energy policies. The future looks bright for General Electric. They have plans to continue to help build the healthcare, transportation, technology, energy, and consumer technology industries worldwide. These are some of the fastest growing industries with the most potential right now.

General Electric also has the resources that many other corporations don’t have available to them. This gives them an advantage over many of their competitors. I feel that with determination, a strong business plan, dedicated employees and innovation that they will be successful in the years to come. Bibliography Agency, A. N. (2010, 1 22). GE profit tops forecasts despite financial weakness. Retrieved June 1, 2010, from Bangkok Post: http://www. bangkokpost. com/business/economics/166192/ge-profit-tops-forecasts-despite-finance-weakness David, F. R. (2008). Strategic Management Concepts and Cases. New Jersey: Prentice Hall. Electric, G.

(2010). Retrieved May 10, 2010, from General Electric: http://www. ge. com/ General Electric Company. (n. d. ). Retrieved May 15, 2010, from Wikinvest: http://www. wikinvest. com/stock/General_Electric_Company_(GE) Industrial: GE Competitors. (n. d. ). Retrieved May 30, 2010, from Better Trades: http://www. better-trades. com/stock-reviews/industrial/ge/1-about. asp Lieberman, D. (2007, 12 14). GE sees growth opportunites. Retrieved May 5, 2010, from USA Today: http://www. usatoday. com/money/companies/management/2007-12-13-immelt-ge_N. htm Profile-General Electric Co. (n. d. ). Retrieved May 16, 2010, from Yahoo Finance: http://finance.

yahoo. com/q/pr? s=GE Appendix A Graph 1: General Electric’s Revenue by Segment (2008) from: http://www. wikinvest. com/stock/General_Electric_Company_(GE) Diverse Appendix B Graph 2: Geographic Revenue Breakdown (2008) from: http://www. wikinvest. com/stock/General_Electric_Company_(GE) Appendix C Competitors DIRECT COMPETITOR COMPARISON| | | | GE| C| PHG| SI| Industry| Market Cap:| 166. 77B| 108. 38B| 26. 71B| 75. 32B| 1. 86B| Employ ees:| 304,000| 263,000| 116,186| 402,000| 28. 26K| Qtrly Rev Growth (yoy):| -4. 80%| 16. 80%| 11. 90%| -3. 80%| 14. 50%| Revenue (ttm):| 154. 95B| 43. 97B| 28. 50B| 88. 21B| 10. 18B| Gross Margin (ttm):| 31.

59%| N/A| 37. 15%| 28. 07%| 33. 86%| EBITDA (ttm):| 16. 93B| N/A| 3. 46B| 10. 85B| 768. 60M| Oper Margins (ttm):| 7. 54%| -11. 70%| 6. 98%| 8. 59%| 10. 05%| Net Income (ttm):| 10. 40B| -3. 76B| 801. 36M| 3. 65B| N/A| EPS (ttm):| 0. 922| -0. 224| 0. 86| 4. 218| 0. 54| P/E (ttm):| 16. 94| N/A| 33. 44| 20. 55| 16. 93| PEG (5 yr expected):| 1. 23| N/A| 0. 86| 0. 36| 1. 28| P/S (ttm):| 1. 08| 2. 50| 0. 93| 0. 85| 1. 15| | | C = Citigroup, Inc. | PHG = Koninklijke Philips Electronics NV| SI = Siemens AG| Industry = Conglomerates| Table 3: Direct Competitors of GE during 2010, from: http://finance. yahoo. com/q/co? s=GE+Competitors