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CASE ANALYSIS OF GE COMPANY
NAY LIN
4MBA-41

History , development and growth of GE Company
GE is a multinational conglomeration organization that originated in the United States. It is incorporated in New York and the headquarters are based in Fairfield, Connecticut. The company operates in several areas including Energy, Technology Infrastructure, Capital Finance and products in the Consumer and Industrial category.
The company was created by Thomas Edison, the inventor of the light bulb. The company is often considered the most successful conglomerate in the world. The basis for this is that it reached its conglomerate status before this became a common practice for companies. Since its inception, the company has continued to grow, expand and innovate in a variety of industries and fields including things that range from electric fans to airplanes.
The company was ranked the 26th largest company and the 14th most profitable one in America in 2011. This was based on gross revenue but another list ranked the company 4th among the Forbes Global 2000 by considering more detailed metrics. It has also been listed as the 7th best company for leaders and 15th most admired company by Fortune in 2011/2012, number 5 for best global brand by Interbrand, and by Fast Company as the 19th most innovative company.
Vision: 'We bring good things to life'.
Mission: General Electric Mission Statement from their Core Values: "Passionate, Curious, Resourceful, Accountable, Teamwork, Committed, Open, Energizing, Always With Unyielding Integrity"
Strengths

• Overall revenues from emerging markets which include regions such as Middle East, Africa, Canada, Australia, Russia, Latin America, China and India expanded by 18% since 2001 • GE's expertise in energy, transportation, and health care will prove critical for developing economies in the decades ahead. • Since 2005, GE Energy has double in size to $43 billion in annual revenue, and the aim is to double it once more by the end of this decade. • GE Global Research is focused on developing breakthrough innovations in areas such as molecular imaging and diagnostics, energy conversion, nanotechnology, advanced propulsion and security technologies • GE Advantage, it’s ongoing process-improvement program which is improving on 40 big processes throughout the company, has realized $800 million of margin improvement in 2012

Weaknesses

• Pension costs could weigh on cash flow down the road because of an increase in retirees and benefit payments • Low stock prices due to financial downturn. high debt-to-equity ratio, dividends being cut, riskiness of financial industry, etc. • Ongoing legal proceedings likely to hamper corporate image

• GE Capital's Commercial Lending and Leasing (CLL) operation has yet to realize a turnaround from its shedding of bad loans

INTERNAL FACTOR EVALUATION

|Internal Factors |Weight |Rating |Weighted Score |
|Strengths | | | |
|Overall revenues from emerging markets which include regions such as Middle East, Africa, |.10 |4 |.4 |
|Canada, Australia, Russia, Latin America, China and India expanded by 18% since 2001 | | | |
|GE's expertise in energy, transportation, and health care will prove critical for developing|.10 |3 |.3 |
|economies in the decades ahead. | | | |
|Since 2005, GE Energy has double in size to $43 billion in annual revenue, and the aim is to|.10 |3 |.3 |
|double it once more by the end of this decade. | | | |
|GE Advantage, it’s ongoing process-improvement program which is improving on 40 big |.10 |4 |.4 |
|processes throughout the company, has realized $800 million of margin improvement in 2012 | | | |
|GE Global Research is focused on developing breakthrough innovations in areas such as |.10 |3 |.3 |
|molecular imaging and diagnostics, energy conversion, nanotechnology, advanced propulsion | | | |
|and security technologies | | | |
|Weaknesses | | | |
|Pension costs could weigh on cash flow down the road because of an increase in retirees and |.10 |1 |.1 |
|benefit payments | | | |
|Low stock prices due to financial downturn |.20 |2 |.4 |
|Ongoing legal proceedings likely to hamper corporate image |.10 |2 |.2 |
|GE Capital's Commercial Lending and Leasing (CLL) operation has yet to realize a turnaround |.10 |1 |.1 |
|from its shedding of bad loans | | | |
| |1.00 | |2.50 |
| | | | |
|Total Scores | | | |

THREAT OF NEW ENTRANTS

GE may face formidable and innovative new entrants in the energy fields when it comes to renewable energy.

BARGAINING POWER OF BUYERS

Buyers do not have a high bargaining power in the industries in which GE conducts business.

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

GE is constantly looking for opportunities to offer a wide range of innovative products and services in each business division.

BARGAINING POWER OF SUPPLIERS

GE is the unequivocal leader in most of its supply chains.

RIVALRY AMONG COMPETING FIRMS

GE faces strong competitors in all of the industries in which it competes. However, GE has such a competent management staff and a vast amount of resources, no competitor seriously threatens the standing of the company. Commercial lending and leasing business is facing fierce competition.

RELATIVE POWER OF UNIONS, GOVERNMENTS, SPECIAL INTEREST GROUPS, ETC.

Unions make it more difficult for GE to conduct everyday business activities.

Opportunities

• Number of people connecting to power grids will grow exponentially by 2050 • $60 trillion of infrastructure spending is needed in emerging economies by 2030 • 33,000 more airplanes will need to be built by 2030 • Health-related spending will balloon in the U.S. in coming years • Global demand for solar energy increased 30% annually in last 20 years

Threats

• The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact capital investment • Because of oversupply, solar panel prices have plummeted 82% since August 2009 • Because of approximately 108 different union local bargaining units, GE will face significant pension obligations in the coming years
| |

• Uncertainty in wind energy industry due to political uncertainty and new legislation that weakens environmental laws • GE’s commercial lending and leasing business operates in a highly competitive environment.

EXTERNAL FACTOR EVALUATION

|External Factors |Weight |Rating |Weighted Score |
|Opportunities | | | |
|Number of people connecting to power grids will grow exponentially by 2050 |.15 |4 |.60 |
|$60 trillion of infrastructure spending is needed in emerging economies by 2030 |.15 |4 |.60 |
|33,000 more airplanes will need to be built by 2030 |.10 |4 |.40 |
|Health-related spending will balloon in the U.S. in coming years |.05 |4 |.20 |
|Global demand for solar energy increased 30% annually in last 20 years |.05 |4 |.20 |
|Threats | | | |
|The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact |.15 |4 |.6 |
|capital investment | | | |
|Because of oversupply, solar panel prices have plummeted 82% since August 2009 |.10 |4 |.40 |
|Because of approximately 108 different union local bargaining units, GE will face significant |.10 |4 |.40 |
|pension obligations in the coming years | | | |
|Uncertainty in wind energy industry due to political uncertainty and new legislation that weakens|.10 |4 |.40 |
|environmental laws | | | |
|GE’s commercial lending and leasing business operates in a highly competitive environment. |.05 |4 |.20 |
|Total Scores |1.00 | |4.00 |

|SO Strategies |WO Strategies |
|S1S2O1O2. Place heavy focus on customers in emerging markets in regards to |W1O1O2. Continue to seek a wider profit margin from |
|energy, transportation, and health needs |businesses in emerging markets. |
|S4O1O2O3. Continue to develop increasingly durable and energy efficient | |
|technologies to gain more of an edge over competitors in emerging markets | |
|S5O1O2O3. Invest heavily in its process-improvement program regarding its | |
|core businesses in emerging markets to save more cash than competitors in | |
|those regions | |
|ST Strategies |WT Strategies |
|S4T2T4. Continue to research and develop new technologies in regards to |W1T2T3. Having more advanced solar panels and wind turbines|
|solar panels, aircraft engines, wind turbines, software, analytics, |than competitors when the demand for these products pick up|
|communications technologies and more. |may positively affect the stock price |
| |W1T3. Pay down the pension obligations to possibly boost |
| |the company’s value and increase the stock price |

As Coporated level strategy,

Place heavy focus on customers in emerging markets in regards to energy, transportation, and health needs. (Market development)

As Business level strategy, .

Invest heavily in its process-improvement program regarding its core businesses in emerging markets to save more cash than competitors in those regions.( Differentiation)

. Having more advanced solar panels and wind turbines than competitors when the demand for these products pick up may positively affect the stock price.( Differentiation)

As Functional level strategy,

Continue to research and develop new technologies in regards to solar panels, aircraft engines, wind turbines, software, analytics, communications technologies and more.( R & D)

Pay down the pension obligations to possibly boost the company’s value and increase the stock price.(HR)

Structure and Control

[pic]

It is organizational structure of GE company in 2011, GE use Matrix structure. Blue color structure is functional structure and Orange color is multidivisional structure.

According to strategy, now I will assess its structure is fixed with their strategies or not.

For coporated level strategy - Place heavy focus on customers in emerging markets in regards to energy, transportation, and health needs(Market development). I think that Strategies are fixed with structure because to find out markets development , it has business development department and also already have good growth Energy, healthcare and transportation divisions.

For business strategy, already mentioned above , company have to use differentiation method . So, when I see structure , company emphasize in R&D(Global Research).And have strong finicial support and good history. So, I think , company ‘s structure fix with their strategies.(Also included functional level strategies No.1)

For functional level strategy, already mentioned above, they have to support pension obligation expect to increase value of company’s stock share. When I see structure, It has big and well running HR department . So, that strategy fix with company’ structure.

Recommendation

These are the strategic alternatives I am recommending for GE:

• Continue following the differentiation strategy and develop products that are perceived as unique in the industries where it does business.

• Continue to form partnerships with companies to temporarily combine the different strengths of partners to achieve an outcome of value to all.

• Continue to sell businesses when they underperform or deviate too far from GE’s core strengths and use the capital acquired from those deals to invest in core industrial businesses, buy back shares (return money to shareholders), and increase the dividend yield.

• Continue acquiring companies in its supply chains to protect its ability to deliver products and sales revenue and decrease business risk.

It is the end of case analysis of GE company.

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