Intro: Why did I select General Electric? The reason I picked the company General Electric for my research was I knew that the company was well diversified. General Electric makes products that I use everyday and I thought it would be interesting to research and find out how they got where they are in the global market. I will research how much of the sales come from foreign markets and how these markets influence the company. My research will include a basic overview of General Electric as well as more in depth research to help explain where General Electric is today.
Thomas Edison had brought together several of his business interests under one corporation to form Edison General Electric. At about the same time, Thomson-Houston Company, under the leadership of Charles A. Coffin, gained access to a number of key patents through the acquisition of a number of competitors. Subsequently, General Electric was formed by the 1892 merger of Edison General Electric and Thomson-Houston Company. Today, General Electric is a multinational conglomerate headquartered out of New Haven, Connecticut.
General Electric operates as a technology, media, and financial services company worldwide (yahoofinance. com). Many of General Electric’s subsidiaries would fair well as a standalone company in the Fortune 500. General Electric is constantly changing its business face through acquisitions, divestitures and reorganizations. Also, General Electric has reinvented itself in the global market through research and development. What has been General Electric’s history in the global market? General Electric has had a long life in the global market. The earliest foreign business endeavor took place over 100 years ago.
Although, it’s unclear when the first sales may have taken place in some foreign lands, research and development has been international for many years. General Electric breaks down their markets into 7 segements. The seven segements are: Northern Asia, Southeast Asia, Australia/NewZealand, Europe, Middle East/Africa, North America, and Latin America. (GE. com). General Electric also has 4 research and development sites located around the world to help the company better understand consumer needs. General Electric prides itself on its ability to meet consumer’s needs around the world.
Products must be altered to fit specific rules and regulations and these things have become second nature to General Electric. That is why the company is continually a Fortune 500 company and seems to not be leaving the list anytime soon. What percentage of their business is now derived from outside the United States and what are the percentage breakdowns of other countries in which they conduct business? Why did General Electric decide to go global? General Electric conducts business not only in the United States, but also throughtout the world. General Electric breaks down sales into 7 distinct regions.
These areas are crucial to the growth and development of General Electric. The countries that inhabit the Northern Asia section are: China, Japan, Pakistan, India, Korea, and Taiwan (GE. com). The expansion into Northern Asia is relativly new, but the company sees a great potential because of the population. The plan for General Electric is to localize the business to the region, while building on local capabilities and developing local resources. General Electric focuses on enabling the countries in which they operate the tools to advance their lifestyles.
General Electric supports the growth of these countries with the products they provide (GE. com). The countries that are part of the Southeast Asia segements are: Cambodia, Philippines, Indonesia, and Thailand. Again, there is a huge potential for sales and revenue. General Electric supplies hostipals with cutting edge technology in Malaysia; build infastructure in Indonesia; provide clean energy and water solutions to the Philippines; and building aircraft engines in Veitnam (GE. com). General Electric began its work in Australia in 1902 when they installed a motor for Sydney’s Pyrmont Bridge.
The sales continue to grow and General Electric focuses on consumer needs to reinvent themselves and create new products. General Electric moved into New Zealand in 1982, General Electric is involved in commercial property. In the two countries, General Electric employs more than 6,000 employees. Europe has proved to be General Electric’s largest market, growing at an astonishing 3 times the global rate (yahoofinance. com). There are over 24 countries in the region. General Electric provides products to help build the region. This is shown by the $52 million dollar research facility in Germany.
Russia has been one of General Electric’s biggest supporters. General Electric operates multiple businesses within the country, all from their unique product segments. The Middle East and Africa have been part of General Electric since 1898. General Electric has been working vigorously to provide Africa with the tools necessary to increase industry and commerce. Meanwhile, General Electric is expanding the growth of this region by providing investments, infrastructure, and aviation tools (msnmoney. com). North America is the headquarters’ for General Electric.
General Electric plans continue to provide services to this region, but they are aware of the outside world. General Electric plans to expand to become a leader of innovation and leadership to the world (yahoofinance. com). They realize that there are outside opportunities that are far more profitable than in North America. General Electric sees the United States as a constant consumer, but they realize they need to tap into segments that are not modernized. Latin America is a place that is held in high regards to General Electric.
This is because the region is decimated with poverty. Due to the recent developments in the trading of Latin America, General Electric plans to help grow transportation, healthcare, and infrastructure. The plan is to create cleaner water and education to underprivileged people (GE. com). General Electric believes they can impact the lives of every consumer with their products. General Electric also places a high value on research. General Electric built 4 research centers throughout the world in order to better understand the consumer and also to meet their consumer’s needs.
The four global research centers employ 3,000 people in four state of the art facilities. The facilities are located in New York, Bangalore, Shanghai, and Munich. These are designed to promote the research and investment in foreign markets (msnmoney. com). The reason General Electric decided to move into the international markets was to increase revenue and sales. These new markets are often viewed as having higher growth potential than the current markets they are involved in (yahoofinance. com). One example, cable and television programming industry can grow quickly.
General Electric operates 15 cable and satellite brands operating in over 100 countries. Management believes it can double its cable revenue in this next year (msnmoney. com). Also, with General Electrics diversified product line they are able to meet the needs of every individual country. The diversified segements provide protection against poor performance because one segement can support another. This enables General Electric to take the chance to move into a foreign market. The size of General Electric allows them to buy or sell segements that most companies would not be able to afford.
The diversification of not only the products offered, but the services offered allow General Electric to operate at their own pace. This is a strength of General Electric because they can offer multiple products in mulitple countries. General Electric has a year ending of December 31. This means that the financial information for 2009 will not be posted until Febuary 2010. Therefore, in the interest of accuaracy I will be providing General Electric’s 2008 numbers. General Electric breaks their worldwide sales into 6 areas when showing sales numbers. These geographical areas are known as: U.
S. , Europe, Pacific Basin, Americas, Middle East and Africa, and other. The United States currently holds top market share in sales among all General Elecric regions with 47% of the revenue. The United States is a crucial part of General Electric’s sales, but the focus has been shifting to foreign markets because the size of the markets is astronomical. Europe finishes second with 24% of General Electrics revenue. Again, these countries are all domesticated and have proven to be a reliable market, but the main focus of the company will be the Pacific Basin.
The Pacific Basin which includes Asia has the most potential of all the regions. This is due to the large number of people and the lack of industry within these countries. The Pacific Basin accounts for only 13% of the revenue, but General Electric expects that number to increase greatly within the next couple years. The America’s, Middle East and Africa, and other account for only 16% of the sales. While, the revene in these areas may be low, General Electric expects to expand sells in these regions. General Electric is marketable to these regions because of their differentiated products.
Not all products may work in a certain region, but with the differentiation General Electric can offer everyone something that is useful. About half or 47% of General Electrics sales are coming from the United States and the other half or 53% from the rest of the world (wikinvest. com). I would expect to see the numbers start to change. General Electric is focusing on the foreign markets that haven’t been accessed. This will increase their sales in the rest of the world. I would expect United States sells to stay steady, but the rest of the world will take a larger part of the sales in the upcoming years (msnmoney.com). [pic] (wikinvest. com).
What types of products differentiation from their American base did General Electric have to develop to enter foreign markets? General Electric has had to develop different products to meet the needs of consumers around the world. Laws and Regulations are different from country to country. General Electric must change or tweek products in order to meet the regulations of the country which it is doing business. If General Electric doesn’t meet these laws and regulations it could face steep legal penalties from the foreign business partners.
“The GE legal organization includes more than 1,000 experienced lawyers located at GE businesses around the world, whose job it is to help the company achieve growth with unyielding integrity and compliance by the law. Many jobs are dedicated strictly to compliance (GE. com). ” General Electric pays careful attention to the laws imposed from country to country. This ties into part of General Electrics integrity policy, which places high empashis on honesty and openness. “General Electric businesses face different compliance challenges, they all focus on an approach comprising of 3 parts: prevention, detection, and response (GE.com). ”
This means that before General Electric enters a market they ensure complaince with all rules and regulations because they have taken corrective action. Lawyers enter the country before the product is available to discuss and ensure compliance. This is the prevention aspect of the compliance program. Next, is detection. “Measurement and monitoring allow GE to detect compliance problems at an early stage and determine root causes and take corrective action (GE. com). ” General Electrics employees monitor rules to ensure product are within all laws, however laws change and General Electric must be able to detect these changes.
When regulations change employees inform management and take corrective actions before it results in a lawsuit. The final aspect of the plan is response. “When a concern arises, leaders act promptly to have it evaluated and investigated by counsel and other persons with the appropriate expertise. If the concern does turn out to be warranted, appropriate remedial action is taken (GE. com). ” General Electric does not run when it violates the law. General Electric acts promptly to solve any issues and this corrective actions helps to eliminate any future problems.
General Electric also needs to be aware of trade laws, as well as labor or industrial laws. Competition laws also affect the rate at which General Electric can market it products against it competition. Also, patents and trademarkets need to be recognized in order for the company to maintian trade without law suits. The question remains then, how does General Electric go about differentiating its products from country to country? Vijay Govindarajan says, “In GE’s first phase of globalization, the company achieved global scope by identifying existing products with global potential and taking them into markets throughout the world.
In the second phase, GE globalized its resource base — for example, by establishing centers of excellence in R&D outside the United States. In the third, GE began to adapt global products to local needs — a phenomenon labeled “Glocalization (GE. com). ” It is easy to see that General Electric has been in the business for quite a few years now, but they are able to adapt to the ever changing legal enviroment throughout the world. General Electric sends lawyers ahead to research and inform management of current laws in order to effectively comply with worldwide laws.
Next, General Electric adapts the products to meet the local needs of consumers everywhere. General Electric uses two systems to adapt products to their inteded markets. There is glocalization and reverse innovation. Glocalization is when a company produces a product in its home country and then distributes it to the rest of the world. Reverse innovation is when a product is produced elsewhere and then sold to the United States. Two examples of reverse innovation are an ECG machine (electrocardiogram) and and portable ultrasound machine. “These products were formed for emerging markets and then distributed in the United States.
The ECG machine was intended for rural India and the ultrasound machine for rural China, both places with emence needs for these products (Immelt, Govindarajan, Trimble). ” These products were created for the emerging markets and then they’ve been adapted for the United States using their lawyers and studying American laws. These products are essentially the same, but minor changes needed to be made in order to ensure no regulations were broke. Reverse innovation helps GE make products for countries that do not have certain products, but glocalization is their main form of research and development.
Household appliances need to have a different plug in order to compensate for the different electrical plugs around the world. First, the current is different in the United States than in Europe. “Alternating current is the standard for North America, while direct current is the electricity of choice in other places around the world, including most parts of Europe (WiseGeek. com). ” This means products outside the United States need to be adapted in order to work in other countries. There tends to be a difference in the voltage used and the types of plugs are different.
These differences cause General Electric to adapt their products to ensure they deliver a safe, reliable, and law friendly product. This would affect lighting, microwaves, refrigerators, dishwashers, air conditioners, freezers, dehumidifiers, washers, ovens and countless other products. The electrical products get the most consideration because these products must be changed in order to function properly. Also, General Electric makes household appliances smaller in order to compensate for the size difference among American’s and Europeans.
European’s tend to have smaller homes and space. General Electric must also alter the price in order to be able to reach the intended consumer base. General Electric could not offer products in India for the same prices as the United States, because our economics of scale are much different. This means that the people of the United States could afford to buy light bulbs for $5 dollars because this isn’t that much money in the United States. However, in India the average worker makes much less and can not afford a product for $5 dollars.
General Electric’s product differentiation is quite simple. It makes products for its intended consumer market, and then it adjusts the product according to laws and regulations. This helps ensure safety and regulation, while enabling the company to provide services otherwise unavailable to the countries. Has General Electric been a global success? The global strategy for General Electric has been a huge success. This is due to the large number of countries in which it operates and also because the product lines offered by General Electric are extensive.
General Electric is a conglomarate composed of six different divisions and listed are their percentage of revenue: GE Technology Infrastructure (25% of revenue), GE Healthcare, GE Energy (21%), NBC Universal (9%), GE Capital Finance (37%), GE Consumer and Industrial (11. 7%). These diversified areas allow General Electric to enter markets that may have been off limits before. The products allow General Electric to reach consumers across all levels and impact countries in a positive way. General Electric operates in over 100 countries and expects sales in countries such as India to double from 3 billion to 6 billion (msnmoney.com).
Also, with the declining economy of the United States investments in other countries has proved to be profitable. With a weak dollar, the European countries have helped keep General Electric profitable. This shows that their business endeavors have been profitable, or they would not have been able to expand to other countries. Since 2004, General Electric has increase revenue from $124 billion to $183 billion in 2008. This shows that all the business endeavors by General Electric are profitable (wikinvest. com).
Also, 53% percent of the sales came from outside the United States in 2008 (GE. com) After reviewing the numbers its easy to see that not only has General Electric had a huge financial success in the foreign markets, but they are proving they can dominate the competition. What has been General Electric biggest financial failure? When asked the question what is General Electric’s greatest financial failure, it can become a daunting task to find an answer. General Electric has been in operation for so many years there has been multiple financle failures.
The biggest failure however has been in General Electrics financial sector. Millions of dollars have been lost because General Electric has put its self in a unique position because they help fund other businesses. The current recession has lead to a weak American dollar and has lead to General Electric losing millions of dollars. Revenue from General Electrics Captial Finance division dropped over 200,000 million dollars from 2008 to 2009. Also, profit dropped a considerable amount. The recession has lead to weak financial standing around the world.
The Capital Finance aspect of General Electric has left the company frail and weak in this division of their business. |Capital Finance | |2009 | | |2008 | | |Revenues |$ |12,522 | |$ |14,766 | | | | | | | | | | |Segment profit |$ |336 | |$ |1,030 | | One instance that I found to be particularly troublesome was the early exit from the Chinese banking market. General Electric had a deal in place to buy a 7. 3% stake in the Chinese bank Shenzhen (Chen, 2007). The reason I see this as a financial failure is because they could have had a stake in a country with over a billion people.
“People can’t expect GE to buy shares for 5 yuan when the current market price is 40 yuan” (Chen, 2007). This is troublesome because the people of China could view this as an unethical business practice. If General Electric is viewed as a company that tries to take advantage of its consumers, then they may have no chance of surviving in foreign markets. Plus, the Chinese government has a large part in deciding who gains control in the Chinese banks and they are reluctant to let a foreign company gain control. “The shareholders would never let this deal go through”( Chen, 2007).
Although, this deal was never passed, General Electric needs to be aware that a market like China can make or break a company. The last thing needed is being a company labeled as unethical. This $100 million dollar deal could have helped General Electric move into the Chinese credit system and ultimately helped them increase revenue in such an enourmous market. I believe this deal was the biggest failure for General Electric because it stopped them from entering a market so few foreign companies have been and in all likely will not enter anytime soon.
However, General Electric still feels that it can be profitable in 2010. CEO Jeffrey R. Immelt says, “We remain a great source of liquidity to companies, consumers, and projects. We provided $48 billion of new loans in fourth quarter 2008 and plan for about $180 billion in 2009. We are a leader in mid market commercial lending around the world. We continue to support many customers in infrastructure industries like aviation, healthcare, transportation, and energy. We intend to stay anchored in what we know, own, and manage.
We underwrite all loans and leases to our standards and typically, as senior lenders, we are secured in collateral. In addition, we are prepared to hold these assets through the cycle. At the same time, we are repositioning our financial services business to operate as a more focused and smaller finance segment (GE. com). ” I believe that the financial segment of General Electric has been there most recent and biggest failure; however I believe with their continued profitability they will be able to make their financial segment a success. What advice would I offer General Electric to increase expansion in the global market?
After researching and reviewing General Electric it is easy to see why they are such a profitable company. In 2008, General Electric was the twelth largest company in the world by revenue (yahoofinance. com). General Electric operates with 6 divisions all of which could stand alone on the Fortune 500 list. If I were to offer advice, I would say to stay the same, but make a few minor adjustments.. I believe if they continue to set up research centers outside of the United States they are more likely to make a connection to their foreign market base.
I agree with the research center in Shanghia because I believe China needs to be a major focus of General Electric. I think it obvious that General Electric makes a direct connection with their consumers because they probe and investigate their needs. I think if they continue this trend General Electric could reach markets that could produce strong profits. Also, I think General Electric needs to focus on making countries better and devolping them. If General Electric continues their innitative to improve their host countries, they will be more likely to produce brand loyalty and brand awareness.
This could prove to be a building block into a strong relationship with the rest of the world. Lastly, I would tell General Electric to focus on the future and not the present. I believe that the world is always evolving and their abiltiy to meet these needs could help them be profitable in the years to come. I think I could go on and on with proposed suggestions, but the fact is General Electric is a step ahead of the competition. I believe they need to keep the identity they have now, while maintianing a positive and eager attitude towards learning and research.
General Electric has been in operation for over 100 years now. I believe they have come along way from making lightbulbs. Their divisions and segements are as diverse as you and me. I believe that General Electric will continue to grow globally because of their focus on the customer. General Electric can expand as much as they want, as long as, they continue to find ways to please the consumer. For General Electric it does not seem that hard, but they will need to continue to find ways to be both innovative and economical.
The main strategy imployed by General Electric has been to take the products offered from the United States and make the necessary adjustments in order to make the product legal for sale within that given countries boarders. This has been a successful campaign and I believe General Electric will continue to grow in the years to come. References Chen, George. “GE’s China Bank Deal Failed due to Price: Bankers. ” Reuters. 24 Oct. 2007: Web. 27 Jan 2010. http://www. reuters. com/assets/print? aid=USSHA7802620071024. General Electric Co. Yahoo Finance. 31 Dec. 2008.
Yahoo, Web. 27 Jan 2010. http://finance. yahoo. com/q/pr? s=GE. “General Electric Company. ” Wikinvest. Wikinvest, Web. 27 Jan 2010. http://wikinvest. com/stock/general_electric_company_(GE). GE Global Research. Fact Sheet. General Electric, Web. 27 Jan 2010. http://www. ge. com/company/factsheets/grc. html. “GE. ” MSN Money. MSN, Web. 27 Jan 2010. http://moneycentral. msn. com/detail/stock_quote? symbol=GE. Govindarajan, Vijay. “Expert Perspective. ” GE Citizenship. General Electric, Web. 27 Jan 2010. http://www. ge/com/citizenship/news_features/perspectives_govindarajan.
jsp Immelt, Jeffery, Vijay Govindarajan, and Chris Trimble. “How GE is Disrupting Itself. ” Harvard Business Review Oct. 2009: Web. 27 Jan 2010. http://hbr. org/2009/10/how-ge-is-disrupting-itself/ar/1. Legal Processes and Systems. GE Citizenship. General Electric, Web. 27 Jan 2010. http://www. ge. com/citizenship/performance_areas/compliance_governance_process. jsp. “What is the difference Between American and European Outlets?. ” Wise Geek. Web. 27 Jan 2010. http://wisegeek. com/what-is-the-difference-between-American-and-European-outlets. html.