General Electric - Strategic Audit Assignment
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This is my Strategic Audit assignment which was required for my Business Management Strategy course in my MBA program. I had to submit this assignment as four separate papers throughout the semester. ...

This is my Strategic Audit assignment which was required for my Business Management Strategy course in my MBA program. I had to submit this assignment as four separate papers throughout the semester. I added a plethora of images, tables, and graphs to clarify the ideas in the paper. I originally used the Modern style set to make the paper more aesthetic but I had to change the font to Times New Roman so that it could convert appropriately on the Slideshare website.

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General Electric - Strategic Audit Assignment Document Transcript

  • 1. 1 General Electric – Strategic Assignment #1 Tim Enalls Tim Enalls General Electric WMBA 6110: Business Strategy Strategic Audit Summer 2013
  • 2. 2 General Electric – Strategic Assignment #1 Tim Enalls INTRODUCTION In this paper, I will conduct a strategic audit on General Electric and its eight business units. The following factors will be discussed:  Current Situation  Corporate Governance  External Environment: Opportunities and Threats  Internal Environment: Strengths and Weaknesses  Analysis of Strategic Factors (SWOT)  Strategic Alternatives and Recommended Strategy  Implementation  Evaluation and Control CURRENT SITUATION CURRENT PERFORMANCE
  • 3. 3 General Electric – Strategic Assignment #1 Tim Enalls In 2012, General Electric grew its segment profits by 11% to $22.9 billion. It generated $17.8 billion of cash from operating activities, up 48%, and returned $12.4 billion of cash to investors through dividends and stock buybacks. Its total shareholder return grew by 21%, well ahead of the 16% growth in the S&P 500. GE’s market cap grew by about $30 billion, and it is the eighth most valuable company in the world. At $100 billion of revenue with 15% margins, General Electric is also the largest and most profitable infrastructure company in the world. GE’s biggest source of revenues came from GE capital topping out at $46 billion. Revenues in 2012 were $147,359 million as compared to $147,288 million in 2011. Two noticeable differences between 2012 and 2011 is that total assets and earnings (loss) from discontinued operations are considerably lower. This is because of the sale of the GE Money Japan business (its Japanese personal loan business and Japanese mortgage and card businesses), WMC (its U.S. mortgage business), BAC Credomatic GECF Inc. (its Central American bank and card business), Consumer RV Marine (its U.S. recreational vehicle and marine equipment financing business), Australian Home Lending (its consumer home lending operations in Australia and New Zealand), and others. The selling of underperforming businesses is part of an ongoing business strategy. Long-term borrowings decreases year-by-year consistently.
  • 4. 4 General Electric – Strategic Assignment #1 Tim Enalls Profit Increase Percentage per Business Unit: 1. GE Power & Water – 8% as higher volume, increased other income, and the impacts of deflation were partially offset by lower prices, lower productivity, and the effects of the stronger U.S. dollar. 2. GE Oil & Gas – 16% as higher volume and increased productivity, reflecting increased equipment margins, were partially offset by the effects of the stronger U.S. dollar. 3. GE Energy Management – 68% as a result of higher prices and increased other income. 4. GE Aviation – 7% due primarily to higher prices and higher volume, partially offset by higher inflation and lower productivity.
  • 5. 5 General Electric – Strategic Assignment #1 Tim Enalls 5. GE Healthcare – 4% reflecting increased productivity, higher volume and other income, partially offset by lower prices and higher inflation, primarily non-material related. 6. GE Transporation – 36% as a result of higher volume, higher prices, and increased productivity. 7. GE Home & Business Solutions – 31% as higher prices were partially offset by the effects of inflation and lower productivity. 8. GE Capital – 12% primarily due to lower impairments and core increases, including higher tax benefits, partially offset by the absence of the 2011 gain as a result of selling its $3.78 billion stake in Garanti Bank in 2010.
  • 6. 6 General Electric – Strategic Assignment #1 Tim Enalls According to GE’s scorecard, industrial segment earnings growth is at +10% and industrial operating earnings % of total is at 55%. Interesting, $6.4 billion worth of cash was generated by GE capital, solidifying it as GE’s biggest cash cow. Additionally, returns on total capital topped out at an impressive 11.7%. While revenues in 2012 ($147 billion) weren’t as high as in 2008 ($180 billion), there has been a consistent increase in operating earnings over the last four years. Cash flow from operating activities (CFOA) is also close to 2008 levels, topping out at $17.8 billion. In 2012, General Electric outperformed the S&P 500 and Dow Jones indexes steadfastly. As of May 10, 2013, the stock price was $22.90 per share. There are $10.4 billion shares issued, the market cap is $238.12 billion, and the earnings per share (EPS) is $1.43. The market price per share divided by earnings per share ratio (P/E) for GE’s stock is 16.01. STRATEGIC POSTURE Mission General Electric doesn’t seem to have an official mission statement but the following statement displayed at the bottom of its website appears to be more persuasively worded than most official mission statements:
  • 7. 7 General Electric – Strategic Assignment #1 Tim Enalls Furthermore, these are the following statements that are on the websites for each of GE’s business units: 1. GE Power & Water – “with a full array of advanced power generation and energy delivery technologies, we work collaboratively with customers to drive growth & progress, anticipate energy needs of the future, and power a cleaner, more productive world. “ 2. GE Oil & Gas – “a world leader in advanced technology equipment and services for all segments of the oil and gas industry, from exploration & production to downstream.” 3. GE Energy Management – “This is GE’s electrification business. Global teams design technology solutions for the transmission, distribution, management, conversion and optimization of electrical power across multiple energy-intensive industries.” 4. GE Aviation – “the world's leading producer of large and small jet engines for commercial and military aircraft. It also supplies aircraft-derived engines for marine applications and provide aviation services.” 5. GE Healthcare – “provides transformational medical technologies and services that are shaping a new age of patient care. Its broad expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing technologies, performance improvement and performance solutions services help its customers to deliver better care to more people around the world at a lower cost. In addition, it partners with healthcare leaders, striving to leverage the global policy change necessary to implement a successful shift to sustainable healthcare systems.” 6. GE Transporation – “solves the world’s toughest transportation challenges. GE Transportation builds equipment that moves the rail, mining and marine industries. Its fuel- efficient and lower-emissions freight and passenger locomotives, diesel engines for rail, marine and stationary power applications, signaling and software solutions, drive systems for mining trucks, and value-added services help customers grow.” 7. GE Home & Business Solutions – “Innovative technologies to deliver comfort, convenience, and electrical protection and control in more than 150 countries. The subunits include Appliances, Lighting, and Electrical Distribution.” 8. GE Capital – “provide smart financing and the know-how of GE to help its customers' capital go further and do more.”
  • 8. 8 General Electric – Strategic Assignment #1 Tim Enalls Objectives Last year, GE set the following execution goals to complete in 2012: double-digit industrial earnings growth, margin expansion, restarting the GE Capital dividend to the parent, reducing the size of GE Capital, and balanced capital allocation. It achieved all of those goals for the year. Strategies According to Jeffrey R. Immelt, GE’S CEO, these are five strategies that GE is implementing in order to create value over time and gain competitive advantage: 1. It has remade GE as an “Infrastructure Leader” with a smaller financial services division. GE will continue growing in fast-growing businesses like Oil & Gas, Life Sciences, and Distributed Power—businesses GE was not in a decade ago. This growth results from organic investment and focused acquisitions. This growth is essential because around $60 trillion of infrastructure investment is needed by 2030 to support billions of new customers joining the middle class in emerging markets. GE Capital will continue to be reduced from the $600 billion in assets it was in 2008 to $300 - $400 billion in the future. 2. It is committed to allocating capital in a balanced and disciplined way. GE’s top priority is growing the dividend and it is one of the top companies in regards to dividend
  • 9. 9 General Electric – Strategic Assignment #1 Tim Enalls payments. GE will buy back shares to get below 10 billion, where it was before the 2008 crash. It will also continue to execute on focused acquisitions, a capital-efficient way to grow a company. 3. It has significantly increased investment in organic growth, focusing on R&D and global expansion. Annually, GE invests $10 billion to launch new products and build global capability. Over the past decade, it doubled its annual R&D investment, increasing from $2- $3 billion to 5 –6% of revenue. It will launch 10 new gas turbines this decade, significantly more than other companies are capable of launching. 4. It has built deep customer relationships based on an outcomes oriented model. It has grown its service revenue from $21 billion to $43 billion over the past decade. There is $157 billion service backlog, which means there is room to grow in the future. 5. It has positioned GE to lead in the big productivity drivers of this era. a. It will lead in the shale gas revolution. GE plans to use its Oil & Gas business for the extraction, development, and environmental protection of shale gas. b. It is extending GE’s lead in advanced manufacturing. GE is investing in processing technologies such as additive manufacturing. GE also aspires to use new light-weight materials for turbines and to reduce cycle times of complex systems. c. It is making a major investment in software and analytics. GE has built a Software and Analytical Center of Excellence in California in which some of the best talent in the world will be employed in order to achieve this goal. GE aspires to build smarter machines with the ability to extract and analyze data.
  • 10. 10 General Electric – Strategic Assignment #1 Tim Enalls Each of the strategies proclaimed by Mr. Immelt is intended to sustain or increase GE’s competitive position in the various industries it is in. Policies It goes without saying that General Electric is one of the most recognized companies in the world:  Ranked among Fortune's listing of the world’s most admired companies and the top companies for leaders in 2012  Named in Barron's list of the most respected companies in 2012  Named in Ethisphere's list of the world's most ethical companies in 2012.  Named in Bloomberg Businessweek's list of the world's most innovative companies in 2012  Ranks sixth on Interbrand's list of Best Global Brands  Ranks 24th on the list of Best Global Green Brands Social Responsibility GE’s proclaimed commitment to social responsibility is vast and far surpasses what most companies are able and willing to achieve. GE Citizenship is a fulltime commitment to providing assistance in focus areas such as people, planet, and economy. The amount of resources and research that GE has invested in each of these three areas is substantial and serves as an impressive benchmark for other similar-sized companies to match.
  • 11. 11 General Electric – Strategic Assignment #1 Tim Enalls Ecomagination is GE’s commitment to imagine and build innovative solutions to today’s environmental challenges while driving economic growth. The resources and amount of effort they have expended to publicize this initiative is beyond compare. Not only is there an entire webpage dedicated to it, there is even a YouTube channel with 82 high-quality videos. Hiring practices As many companies state, GE promotes a diverse workforce and it provides all of its employees with opportunities to reach their growth potential. On GE’s website, it says its achievements reflect a culture of meritocracy—a philosophy that holds that power should be vested in individuals according to their merit. GE continues to receive recognition from top publications and organizations such as Diversity Careers, Black Enterprise, Working Mother, and Diversity MBA magazine. Sarbanes-Oxley Act of 2002 GE fully complies with the Sarbanes-Oxley Act and meticulously makes this fact known to investors. In 2005, it was revealed that GE spent more than $30 million in the previous year to comply with the Sarbanes-Oxley law. This money was used to map out the flow of money, check information
  • 12. 12 General Electric – Strategic Assignment #1 Tim Enalls technology systems and much more. Reassuring investors that they are following all applicable laws and regulations is a top priority for GE executives. Ombudsperson Process According to the GE ombudsperson process webpage, all GE employees are encouraged to report concerns about legal or ethical violations. According to the website, their concerns will be objectively investigated by subject matter experts in Finance, Legal and Human Resources (and outside specialists, if necessary), with appropriate individual and remedial action and without fear or favor. As was already suggested, GE expends a tremendous amount of resources to make it known that they fulfill all four of the responsibilities shown in the graphic above. CORPORATE GOVERNANCE BOARD OF DIRECTORS
  • 13. 13 General Electric – Strategic Assignment #1 Tim Enalls The GE board held 13 meetings in 2012. Each outside Board member is expected to visit at least two GE businesses without the involvement of corporate management in order to establish their own personal analysis of the company’s operations. According to the GE website, the board members focus on the areas such as strategy, risk management, leadership development and regulatory matters. In 2012, they received briefings on a variety of issues, including capital allocation and business development, risk management, technology excellence and IT strategy, margin dynamics, regulatory trends, healthcare and social cost, capital market trends, the global economic environment, and GE’s branding, marketing and operating initiatives. At the end of the year, the Board and each of its committees conducted a thorough self-evaluation. Out of the 17 members of the GE board, 16 are independent. The board members each own GE stocks. GE currently offers stock for sale to the public and will likely continue to do so in the long term. GE has different classes of stock with different voting rights—common stock and preferred stock.
  • 14. 14 General Electric – Strategic Assignment #1 Tim Enalls Name Contribution and Background Independent Director? Board Member Since International Experience W. Geoffrey Beattie Deputy Chairman, Thomson Reuters, global media and financial data, Toronto, Canada. Yes 2009 Limited John J. Brennan Chairman Emeritus and Senior Advisor, The Vanguard Group, Inc., global investment management. Malvern, Pennsylvania. Yes 2012 Limited Dr. James I. Cash, Jr. Emeritus James E. Robison Professor of Business Administration, Harvard Graduate School of Business, Boston, Massachusetts. Yes 1997 Limited Francisco D’Souza Chief Executive Officer, Cognizant Technology Solutions Corporation. Teaneck, New Jersey. Yes 2013 Limited Marijn E. Dekkers Chairman of the Management Board, Bayer AG. Leverkusen, Germany. Yes 2012 Limited
  • 15. 15 General Electric – Strategic Assignment #1 Tim Enalls Ann M. Fudge Former Chairman of the Board and Chief Executive Officer, Young & Rubicam Brands, global marketing communications network. New York, New York. Yes 1999 Limited Dr. Susan M. Hockfield President Emerita and Professor of Neuroscience, Massachusetts Institute of Technology. Cambridge, Massachusetts. Yes 2006 Limited Jeffrey R. Immelt Chairman of the Board and Chief Executive Officer, General Electric Company. Fairfield, Connecticut. No 2000 Limited Andrea Jung Former Chairman of the Board and Chief Executive Officer, Avon Products, Inc., beauty products. New York, New York. Yes 1998 Limited Robert W. Lane Former Chairman of the Board and Chief Executive Officer, Deere & Company, agricultural, construction and forestry equipment. Moline, Illinois. Yes 2005 Limited Former Chairman of the Board and Chief Executive Officer, Johnson & Johnson, pharmaceutical, medical and consumer products. New Brunswick, New Jersey. Yes 2002 Limited
  • 16. 16 General Electric – Strategic Assignment #1 Tim Enalls Ralph S. Larsen Rochelle B. Lazarus Chairman Emerita and former Chief Executive Officer, Ogilvy & Mather Worldwide, global marketing communications company. New York, New York. Yes 2000 Limited James J. Mulva Former Chairman of the Board and Chief Executive Officer, ConocoPhillips, international, integrated energy company. Houston, Texas. Yes 2008 Limited Mary L. Schapiro Managing Director, Promontory Financial Group, a global consulting firm. Yes 2013 Limited Robert J. Swieringa Professor of Accounting and former Anne and Elmer Lindseth Dean, Johnson Graduate School of Management, Cornell University. Ithaca, New York. Yes 2002 Limited James S. Tisch President and Chief Executive Officer, Loews Corporation, diversified holding company. New York, New York. Yes 2010 Limited
  • 17. 17 General Electric – Strategic Assignment #1 Tim Enalls Douglas A. Warner III Former Chairman of the Board, J.P. Morgan Chase & Co., The Chase Manhattan Bank, and Morgan Guaranty Trust Company, investment banking. New York, New York. Yes 1992 Limited As was conferred before, GE’s board of directors actively participates in GE’s affairs. TOP MANAGEMENT
  • 18. 18 General Electric – Strategic Assignment #1 Tim Enalls GE has many of the most gifted and knowledgeable executives in the world. As with the GE board of directors, the GE corporate executives have unprecedented professional and educational backgrounds. Top management has established a well-documented, systematic approach to management.
  • 19. 19 General Electric – Strategic Assignment #1 Tim Enalls According to the Forbes website, Jeffrey Immelt owned 1,577,969 shares in 2011. Other members of the GE corporate executive team also own a considerable number of shares. If the agency theory is correct, their stock ownerships ensure that their decisions will result in the well-being of GE’S competitiveness. Name Contribution and Background Year Placed in Position International Experience Ferdinando “Nani” Beccalli- Falco Senior Vice President President and CEO of GE Europe; CEO GE Germany  Manages the European activities creating and implementing the strategy and coordinating all GE businesses.  Responsible for the leadership of GE in Germany where he is heading the operations of a "One GE" country business  Enjoyed a long career at GE, starting in 1975 in the United States  Served as President & CEO GE International where he successfully built GE's global team over nine years.  Held leadership positions in GE Capital and GE Plastics in the U.S., the Netherlands and Japan. Kathryn A. Cassidy SVP and Treasurer GE & GE Capital  Almost all of GE's debt is issued through GE Capital to support its financial services businesses.  GE Capital is America's largest corporate issuer of long-term debt and the world's largest issuer of 2001
  • 20. 20 General Electric – Strategic Assignment #1 Tim Enalls commercial paper. Beth Comstock Chief Marketing Officer SVP of GE  Leads GE’s growth and market innovation initiatives, including three company-wide platforms: GE Ventures, which partners start-ups with GE capabilities, and ecomagination and healthymagination, which harness innovation for better environmental and health outcomes.  Leads the sales, marketing and communications functions.  Served as President of Integrated Media at NBC Universal where she oversaw ad sales, marketing and research, and led the company’s digital media efforts, including the formation of hulu.com, Peacock Equity, and ivillage.com. 2003 Matthew G. Cribbins Vice President GE Global Audit  Leads a team of 700  Spent six years on GE's Corporate Audit Staff (CAS), becoming an executive audit manager for Commercial Finance.  In 2003, he was named chief financial officer (CFO) for GE Energy Financial Services  Promoted to CFO, GE Commercial Finance Asia in 2006, based in Tokyo, Japan.  In 2008, he became the CFO of GE Capital Asia and served in that role until August 2009  Was the vice president of Financial Planning and Analysis for GE 2011
  • 21. 21 General Electric – Strategic Assignment #1 Tim Enalls Capital. Brackett B. Denniston III Senior Vice President General Counsel, GE  Previously served as GE's Vice President and Senior Counsel for Litigation and Legal Policy from 1996-2004  From 1993 to 1996, he was Chief Legal Counsel to Governor William F. Weld of Massachusetts. 2005, 2004 Shane Fitzsimons Chief Financial Officer Global Growth & Operations, GE  Served as Vice President, Corporate Financial Planning and Analysis since February, 2004  Was finance manager for GE Engine Services  Was manager of Group Financial Planning & Analysis for Aircraft Engines. 2011 John L. Flannery Senior Vice President GE Corporate Business Development  Was President and CEO for GE India where he was directly responsible for all of GE’s operations in the country  Has been with GE for over 25 years and has held several senior leadership positions in the company  Was also President & CEO, GE Capital, Asia Pacific  Was President and CEO of GE Commercial Finance, Asia 2013
  • 22. 22 General Electric – Strategic Assignment #1 Tim Enalls Jeffrey R. Immelt Chairman and CEO  Has held several global leadership positions since coming to GE in 1982, including roles in GE's Plastics, Appliances, and Healthcare businesses  In 1989 he became an officer of GE and joined the GE Capital Board in 1997 2001 Mark M. Little SVP, Director of GE Global Research, Chief Technology Officer  At Global Research, approximately 2,600 people from virtually every major scientific and engineering discipline focus on the company's long-range technology needs.  Was vice president of GE Energy's power-generation segment headquartered in Schenectady, New York. 2005 John F. Lynch Senior Vice President GE Corporate Human Resources  Starting in 2004, led human resources at the new global headquarters for GE Healthcare in London  In 2001, Mr. Lynch was elected a GE company officer, becoming vice president in Human Resources for GE Medical Systems 2007 Puneet Mahajan Vice President Chief Risk Officer, GE  In 2010, he moved to India as the Chief Financial Officer (CFO) for GE India where he helped create the country P&L structure putting all GE businesses under one management 2011
  • 23. 23 General Electric – Strategic Assignment #1 Tim Enalls team  In 2009, Puneet moved back to Japan as the Chief Financial Officer (CFO) for GE Capital Asia Pacific overseeing Finance for $42B in assets across 10 countries. Jamie S. Miller Senior Vice President & Chief Information Officer GE  Previously served in the role of Vice President, Controller and Chief Accounting Officer, leading a globally distributed GE controllership team comprised of approximately 3,500 accountants  Served as the senior vice president, chief accounting officer and controller of WellPoint, Inc 2013 Michael A. Neal Chairman and CEO GE Capital  In 2005, was named a Vice Chairman of General Electric Company and Chairman of GE Capital Corporation  In 2002, Neal became President and CEO of GE Commercial Finance and President of GE Capital Services 2002 Susan P. Peters Chief Learning Officer, GE VP of Executive Development  Responsible for talent identification, leadership development and succession planning for GE executives worldwide  Assumes responsibility for all training and development, including leadership  In 2000, she became executive vice president of Human Resources for 2007, 2001
  • 24. 24 General Electric – Strategic Assignment #1 Tim Enalls NBC. John G. Rice Vice Chairman and President & CEO GE Global Growth & Operations  Former vice chairman of GE and president & CEO of GE Technology Infrastructure  From 2005-2007, vice chairman of GE’s industrial and infrastructure businesses 2010 Trevor A. Schauenberg Vice President Corporate Investor Communications  Was vice president and chief financial officer for GE Capital Solutions  Was chief financial officer for GE Infrastructure, Transportation Keith S. Sherin Vice Chairman Chief Financial Officer, GE  Former vice president of Finance and Financial Services Operation 2007, 1998 Brian Worrell Vice President GE Corporate Financial Planning & Analysis  Was vice president of the GE Corporate Audit Staff from January, 2006, to December, 2010.  Led a team of 750 people responsible for ensuring financial statement integrity, controllership, compliance and best practices throughout the company. 2011 EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS
  • 25. 25 General Electric – Strategic Assignment #1 Tim Enalls NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES As is clearly visible in the satellite images above, ice in the Arctic North Pole is melting at a considerable rate. Many scientists believe that by the year 2050, the ice will melt so completely that new shipping routes will be available on at least a seasonal basis. By that year, the quickest route to ship goods from Asia to the U.S. East Coast will be straight across the arctic. It is also expected that
  • 26. 26 General Electric – Strategic Assignment #1 Tim Enalls the Northwest Passage north of Canada will also become an economically viable shipping route. This is in many ways an unfortunate change in the natural physical environment, especially if it is caused by increased atmospheric CO2 emitted fromhuman activities. But this change may obviously result in new customers for GE Transportation to market its marine engines, parts, and services to due to the new shipping routes made available. In 1959, a powerful solar storm shorted out telegraph wires in parts of the U.S. and Europe. This caused extensive fires in the areas affected. Also, in 1989 and 2003, parts of the US and Canada suffered blackouts due to powerful solar storms. Modern power systems are more vulnerable to effects of a severe geomagnetic storm than ever before. This is due to the total length of high-voltage power lines increasing nearly 10 fold and the unprecedented demand for power which is stressing the modern power grids. A major solar flare has the potentiality to knock out power grids, leaving 150 million people in the United States alone without electricity. Most of the damage would be inflicted on transformers which can take as long as 12 months to individually locate and repair. That is why a node-by-node forecast of geomagnetic currents is potentially so valuable and may be a very promising venture for GE Energy globally. SOCIETAL ENVIRONMENT
  • 27. 27 General Electric – Strategic Assignment #1 Tim Enalls Using the subsequent tables as guide, each of the four major societal environmental trends (as they pertain to GE) will be discussed: economic, technological, political-legal, and sociocultural.
  • 28. 28 General Electric – Strategic Assignment #1 Tim Enalls Economic In 2012, 431 global companies were surveyed by Global Intelligence Alliance (GIA) and were asked what the top 5 emerging markets for their industries were over the next 5 years. India, Brazil, China, Russia, Indonesia, South Africa, Vietnam, Mexico, Turkey, and Argentina were the top choices in that order.
  • 29. 29 General Electric – Strategic Assignment #1 Tim Enalls According to Global Insight, countries in Asia will have the highest annual GDP growth in the next 17 years. Africa and Latin America are also geographic areas that are expected to experience high GDP growth. According to Boeing, 30,900 new airplanes will be needed by year 2029. A majority of these new planes will be single-aisle (narrow-body) planes used commercially. The market value for all of these new airplanes will be $3.6 trillion. This is huge potential market for GE Aviation which manufactures airplane engines and systems and provides related services.
  • 30. 30 General Electric – Strategic Assignment #1 Tim Enalls Many of the new 30,900 airplanes will be needed in the Asia Pacific due to the high amount of traffic that will be added by 2029. The annual growth of traffic in that geographic areas will be 7.1% annually.
  • 31. 31 General Electric – Strategic Assignment #1 Tim Enalls From now until 2035, it is projected that there will be an uptake in the production of Shale gas. Shale gas is natural gas trapped within shale rock formations deeper underground. Shales are fine-grained sedimentary rocks that can be rich sources of petroleum and natural gas. Oil and gas companies have to drill through shale rock horizontally to bore a well that stretches through the natural gas producing shale. GE Oil & Gas and Chesapeake Energy created a refueling station solution to make compressed natural gas (CNG) more accessible as a transportation fuel for cars. GE Power & Water and Memsys will also develop a solution for treating wastewater generated during the gas extraction process It is projected that a majority of nonhydropower renewable electricity in the U.S. from now until 2035 will be generated by biomass-derived energy and wind power. GE Energy manufactures Biomass steam turbines and wind turbines that can meet much of this demand. The top reserve holders of shale gas are China, U.S., Argentina, and others.
  • 32. 32 General Electric – Strategic Assignment #1 Tim Enalls As the figure above states, growth in energy demand over the next twenty years is expected to come almost exclusively from developing economies. This is a major reason why GE must continue to adapt sufficiently to local conditions and pricing in these geographic areas and conduct good market intelligence. Technological Trends
  • 33. 33 General Electric – Strategic Assignment #1 Tim Enalls This chart isn’t clearly visible in this document due to size restrictions but it is available at http://envisioningtech.com/health/. The technologies presented in this chart would have seemed unreal 30 years ago, but most people today would agree that many of these technologies are entirely feasible within the next two decades.
  • 34. 34 General Electric – Strategic Assignment #1 Tim Enalls These are some of the most interesting technologies in this chart:  Regeneration o Artificial general-purpose cells, muscles, retinas, and vascular systems o 3D printed organs o Tissue regeneration o Synthetic blood  Treatments o 3D printed drugs o Bioelectronic drugs  Biogerontology o Genetic engineering  Telemedicine o Full brain simulation o Robotic surgery o App-driven diagnostics  Diagnostics o Blood stream, tissue-embedded, ingestible, and epidermal sensors o Open health records o Data-driven diagnostics o Question answering computing systems  Augmentation o Telescopic & microscopic vision o Auditory vision substation o Neuroprosthetics GE Healthcare currently provides technologies that can support or innovate in these areas.
  • 35. 35 General Electric – Strategic Assignment #1 Tim Enalls Commercial aircraft passengers want airplanes in the future to use less fuel, release fewer carbon emissions, be powered by non-fossil fuels (eg. Biofuels), and emit less noise. GE Aviation is currently meeting most of those demands now with their newest and most advanced airplane engines.
  • 36. 36 General Electric – Strategic Assignment #1 Tim Enalls When it comes to jet engine design, the turbine is connected by a shaft to the compressor at the front, thus turning it and keeping the whole process running. In some newer jet engines, air and hot gases in the combustor rotate with the compressor and turbine. To achieve this, an orbiting combustion nozzle (OCN) turns with the compressor to inject the air into the combustion chamber as a vortex. The vortex is maintained by blades that rotate on the inner casing of the combustor. This swirling action helps mix the air and fuel for a more complete and much quicker combustion. The hot gases then exit, also in a vortex, to drive the turbine. GE Aviation’s ADVENT (Adaptive Versatile Engine Technology) allows multiple streams of air to flow from the compressor to the turbine. This approach enables the engine to operate more efficiently across its operating range. This is just one benefit out of many in GE’s newest and greatest engines. They enable some of the lowest emissions in the market, require minimal core maintenance, and contain the lightest-weight composite material available.
  • 37. 37 General Electric – Strategic Assignment #1 Tim Enalls A solar-powered airplane is scheduled to fly from San Fransisco to New York using no other fuel except solar energy. Solar cells are placed on the top of the wingspan and horizontal stabilizer of the plane. The solar cells convert sun rays directly into electricity which powers the electrical system in the plane. This application of solar energy conversion technology is likely to become more mainstream in the future in an effort to reduce fuel costs to an extent.
  • 38. 38 General Electric – Strategic Assignment #1 Tim Enalls Solar energy is the most abundant renewable source of energy available. Solar energy could also turn out to be the cheapest form of energy as solar panels become more efficient in the coming years and solar factories are built to power entire cities. According to GE, The U.S. 2035 energy goals include 80% of electricity being converted from green energy sources, an 85% increase in renewable energy investment, and an initiative to make each watt (derived unit of power) cost only $1.
  • 39. 39 General Electric – Strategic Assignment #1 Tim Enalls By 2030, it is estimated that only 496,805 square kilometers of surface area would be required to power the entire world with zero carbon emissions and with solar power alone.
  • 40. 40 General Electric – Strategic Assignment #1 Tim Enalls In Japan, incredibly innovative wind turbine system revealed itself that is promised to generate two to three times the power of traditional models. Traditional wind turbines have been cited for their general inefficiency and loud noise. Researchers found that attaching an inward curving ring around the perimeter of a turbine's blades increases the focus of airflow faster through the blade zones at two to three times the speed as before. An improvement in safety from covering the outer edges of the blades and a reduction of the dreaded noise pollution of older models is just a bonus. Power grids of the future will be largely decentralized, rely on multiple sources of energy simultaneously, and allow for up-to-date monitoring of energy consumption and networks. Many expect these revolutionary, decentralized power grids to be common-place in emerging economies
  • 41. 41 General Electric – Strategic Assignment #1 Tim Enalls globally. GE Energy offers multiple products and services for gas, nuclear, wind, and solar energy conversion needs and anticipates substantial profits as new power grids are constructed in emerging markets. Political-Legal Trends
  • 42. 42 General Electric – Strategic Assignment #1 Tim Enalls This map indicates the level of freedom and rights that citizens have in these countries. Countries that are free tend to have laws more favorable to economic progress than countries that are not free. This map indicates the level of corruptness in each country. When dealing with countries with corrupt governments, more due diligence may be necessary. Practices that may be allowable in corrupt countries may not be worth pursuing as they would place GE in a negative light globally.
  • 43. 43 General Electric – Strategic Assignment #1 Tim Enalls As indicates by this chart, the countries that are most democratic are primarily in Europe. Many of the emerging economies and resource-rich countries that GE should focus efforts on rank towards the middle of the list and some are even at the bottom. Interestingly, the United States isn’t even in the top 15 on this list. Sociocultural Trends
  • 44. 44 General Electric – Strategic Assignment #1 Tim Enalls This map shows a breakdown of healthcare spending per person in each state of the United States in 2009. Massachusetts, Alaska, Maine, Delaware, Connecticut, New York, and Rhode Island have the highest healthcare spending per person. Though GE Healthcare operates in many foreign countries, this information is relevant because of the division’s expansive U.S. market.
  • 45. 45 General Electric – Strategic Assignment #1 Tim Enalls This chart shows the average life expectancy of citizens in different countries and the per capita spending per person. Surprisingly, the average life expectancy in Japan is 81.5 yet the per capita spending is around $2,000. Conversely, the average life expectancy in the United States is almost 76 but the per capita spending is $4,500. This longstanding trend provides opportunity for higher profit margins in the United States for healthcare companies. The Patient Protection and Affordable Care Act signed into law in 2010 may have a discernible effect on U.S. per capita spending in the coming decade. ANALYSIS OF SOCIETY ENVIRONMENTAL FACTORS This chart lists the major opportunities and threats facing GE in its external environment. ISSUES PRIORITY MATRIX
  • 46. 46 General Electric – Strategic Assignment #1 Tim Enalls Probable Impact on Corporation ProbabilityofOccurrence High Medium Low High High Priority  Huge demand for more power grids by 2050  $60 trillion of infrastructure needed in emerging economies by 2030  International oil exploration and production is higher than ever High Priority  Unions causing increasing pension obligations  Increased demand for lighter and more energy- efficient aircraft turbines Medium Priority  Solar panel prices are plummeting Medium High Priority  Global demand for solar energy increases 30% per year Medium Priority  Continuing economic recession and political uncertainty  More government regulations  Wind energy market will take off during next 20 years Low Priority  Health-related spending will increase in U.S. Low Medium Priority  N/A Low Priority  N/A Low Priority  N/A This is the issues priority matrix. It helps classify external events by likelihood of occurrence and probably impact on a corporation to assist in determining the most logical and pressing actions to take in the future.
  • 47. 47 General Electric – Strategic Assignment #1 Tim Enalls Industry Matrix Key Success Factors Weight GE Energy Rating GE Energy Weighted Score ABB Rating ABB Weighted Score International Expansion .20 5 1.00 5 1.00 Innovation .20 5 1.00 4 .80 Distribution Systems .20 5 1.00 4 .80 Product and Service Variety .15 5 .75 5 .75 Sustainability Efforts .10 5 .50 5 .50 Promotional Efforts .10 5 .50 3 .30 Customer Service .05 5 .50 5 .50 Total 1.0 5.25 4.65 The industry matrix summarizes key success factors within an industry. As shown in this table, the matrix gives a weight for each factor based on how important that factor is for success within the industry. In this table, GE Energy is key success factors ratings are compared to those of its biggest competitor—ABB. GE Energy is such a well-managed division with such exhaustive resources and capabilities, that I saw no justification to give it lower than a perfect score. ABB will have a difficult time keeping up with GE Energy now and in the future within the energy industry. External Factor Analysis Summary (EFAS Table) External Factors Weight Rating Weighted Score Comments Opportunities
  • 48. 48 General Electric – Strategic Assignment #1 Tim Enalls Number of people connecting to power grids will grow exponentially by 2050 .15 5 .75 Increased demand for reliable gas and wind turbines, solar solutions, and related equipment and services $60 trillion of infrastructure spending is needed in emerging economies by 2030 .15 5 .75 Increased demand for energy, transportation, industrial equipment, services, etc. 33,000 more airplanes will need to be built by 2030 .10 5 .50 Continued demand for aircraft engines, civil systems, and related services Health-related spending will balloon in the U.S. in coming years .05 5 .25 Increased demand for healthcare equipment, software solutions, and services Global demand for solar energy increased 30% annually in last 20 years .05 4 .20 Persisting as top innovator in this area is key as market expands further Threats The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact capital investment .15 5 .75 50% of GE revenue comes from the financial industry Because of oversupply, solar panel prices have plummeted 82% since August 2009 .10 4 .40 Heavily-subsidized Chinese manufacturers flood world with cheap solar panels Because of approximately 108 different union local bargaining units, GE will face significant pension obligations in the coming years .10 4 .40 In 2011, 15,800 GE workers were represented by Unions Uncertainty in wind energy industry due to political uncertainty and new legislation that weakens .10 4 .40 Political uncertainty in Europe and push-back against
  • 49. 49 General Electric – Strategic Assignment #1 Tim Enalls environmental laws environmentalism in U.S. GE’s commercial lending and leasing business operates in a highly competitive environment. .05 4 .20 Banks are loaded with liquidity, they’re starving for growth, and interest rates are lower than ever Total Scores 1.00 4.60 An EFAS (External Factors Analysis Summary) table is one way to organize external factors into the generally accepted categories of opportunities and threats as well as to analyze how well a particular company’s management (rating) is responding to these specific factors in light of the perceived importance (weight) of these factors to the company. Because GE is one of the most competently- managed companies in the world with strategies that indicate that its executives are deliberately responding to these opportunities and threats to the best of their ability, I gave the company high scores. TASK ENVIRONMENT Even though GE currently attains about half of its revenues from its GE Capital business, the other 7 business divisions such as GE Aviation, GE Energy, and GE Transportation are global. GE Capital is currently shrinking in size and the other divisions are having more priority placed on them. The pressure for coordination is strong and the pressure for local responsiveness is moderately weak.
  • 50. 50 General Electric – Strategic Assignment #1 Tim Enalls In this map of strategic groups, GE is located among companies with very extensive products and services and moderately high prices.
  • 51. 51 General Electric – Strategic Assignment #1 Tim Enalls THREAT OF NEW ENTRANTS Medium Force – GE may face formidable and innovative new entrants in the energy fields when it comes to renewable energy. BARGAINING POWER OF BUYERS Medium Force – Buyers do not have a high bargaining power in the industries in which GE conducts business. THREAT OF SUBSTITUTE PRODUCTS OR SERVICES Medium Force – GE is constantly looking for opportunities to offer a wide range of innovative products and services in each business division. BARGAINING POWER OF SUPPLIERS
  • 52. 52 General Electric – Strategic Assignment #1 Tim Enalls Low Force – GE is the unequivocal leader in most of its supply chains. RIVALRY AMONG COMPETING FIRMS Medium Force - 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. Medium Force – Unions make it more difficult for GE to conduct everyday business activities. SUMMARY OF EXTERNAL FACTORS Opportunities 1. Number of people connecting to power grids will grow exponentially by 2050 2. $60 trillion of infrastructure spending is needed in emerging economies by 2030 3. 30,000 more airplanes will need to be built by 2030 4. Health-related spending will balloon in the U.S. 5. Global demand for solar energy increases 30% annually 6. International oil exploration and production spending higher than ever Threats 1. The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact capital investment 2. Because of oversupply, solar panel prices have plummeted 82% since August 2009 3. Because of approximately 108 different union local bargaining units, GE will face significant pension obligations in the coming years
  • 53. 53 General Electric – Strategic Assignment #1 Tim Enalls 4. Uncertainty in wind energy industry due to political uncertainty and new legislation that weakens environmental laws 5. GE’s commercial lending and leasing business operates in a highly competitive environment. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES CORPORATE STRUCTURE The above organizational chart was updated on February 2011 and displays GE’s top leadership. Each GE business unit has its own president who reports directly to Jeffrey Immelt, GE’s CEO. Also worthy of note, GE has increased senior leadership outside of the U.S. by 50% over the past seven years in order to support operations in emerging markets. CORPORATE CULTURE
  • 54. 54 General Electric – Strategic Assignment #1 Tim Enalls While former CEO Jack Welch tended to groom generalists, Immelt focused on training executives to become subject matter experts instead. Immelt’s reasoning was, with greater specialization, new products and services could be delivered to the market in a timelier fashion, and customer needs could be met more effectively. Welch has also identified four initiatives that provided the overarching vision for his 20 years as CEO: globalization, services, six sigma and e-business. Immelt continued those initiatives and they are among the factors that make each of GE’s business units most similar to each other. Additionally, GE has a very aggressive environmental initiative and promotes diversity by upholding various forums, groups, and networks. CORPORATE RESOURCES MARKETING For decades, GE did not have a substantial marketing organization. For decades, GE went by the assumption that its products and services were so exceptional, that they could practically market themselves. At best, marketing was considered a superflous support function in most of GE’s divisions. However, many of GE’s businesses start maturing and its executives realized that they could not win simply by launching increasingly sophisticated technologies or by taking existing technologies to new markets. GE transformed its marketing operations and effectively doubled the size of the marketing organization from 2,500 people in 2003 to 5,000 in 2010. Marketers throughout the organization were also given a common framework as a means of measuring success: principles, people, and process. 1. Principles - After a thorough assessment of its expertise and functions, GE came up with eight disciplines organized into two groups: go-to-market activities and commercial essentials. They became the core principles driving their marketing organization. They are the following: a. Strategy and innovation b. Branding and communications c. Sales force effectiveness d. “New World” skills e. Market knowledge f. Segmentation and targeting g. Value creation and pricing h. Commercial activation 2. People – GE found that marketers play four roles: a. Instigators challenge the status quo and look for new and better ways of doing things. b. Innovators turn marketplace insights into untested products, services, or solutions.
  • 55. 55 General Electric – Strategic Assignment #1 Tim Enalls c. Integrators build bridges across silos and functions and between the company and the market. d. Implementers execute on ideas. 3. Process – After GE identified what it wanted from its Marketing department, it started putting together metrics for evaluation of the marketing teams and started a process called Maturity Evaluation—surveys which had a list of 35 skills and 140 definitions that defined what success looked like. Marketing teams throughout GE are rated annually to ensure they are meeting GE’s new marketing goals. Product Place Promotion Price GE Lightspeed VCT (CT Scanner) - Warranty is an option GE Healthcare’s website and various suppliers such as Block Imaging that can be contacted by phone or email There is print copy on various websites owned by GE Healthcare and Block Imaging. $1.6-1.7 million when fully configured According to GE Healthcare’s website, the LightSpeed VCT is able to non-invasively capture a 3D image of any organ in one second and capture images of the heart and coronaries in fewer than five heartbeats—something no other CT system can offer. In a single rotation, the system creates 64 credit card-thin images, totaling 40 millimeters of anatomical coverage. These images are combined to form a three-dimensional view of the patient’s anatomy for the physician to analyze. GE Healthcare encourages hospitals, medical clinics, etc. to contact it directly through its website.
  • 56. 56 General Electric – Strategic Assignment #1 Tim Enalls The GE Lightspeed and other similar CT scanners may continue to sell more as baby boomers age and the need for more healthcare rises in the next decade or so. Before too long, it could be replaced by a more compact and advanced technological device.
  • 57. 57 General Electric – Strategic Assignment #1 Tim Enalls GE could very well have the broadest and deepest online presence of any company. At the time of this writing, GE has 16 business websites for its businesses and initiatives, 65 websites tailored to various countries in the world, a widely popular Facebook page, several YouTube channels, a Twitter account, and more. If that isn’t enough, GE recently launched an enormously popular, widely- acclaimed advertising campaign called “Agent of Good,” which stars former Matrix trilogy movie star, Hugo Weaving, portraying his iconic Agent Smith character. GE routinely posts print advertisements on social media websites and its own websites such as the ones below:
  • 58. 58 General Electric – Strategic Assignment #1 Tim Enalls Another example of GE’s marketing might is demonstrated by GE’s FlexEfficiency* 60 Truck Tour. This tour has covered over 30,000 miles throughout the U.S. in the last few months. More than 4,000 people have visited the trailer to learn about GE’s latest innovation in power generation: it’s FlexEfficiency* 60 Power Plant portfolio. The 18-wheeler features twin slide-out pods packed with 3D models, interactive videos and more.
  • 59. 59 General Electric – Strategic Assignment #1 Tim Enalls FINANCE
  • 60. 60 General Electric – Strategic Assignment #1 Tim Enalls GE has an investor-friendly capital allocation policy. It issued $7.2 billion in dividens in 2012 and it expected to issue $8 billion in dividends in 2013. It is consistently buying back more shares every year and could buy back as much as $10 billion in shares in 2013. GE is positioned to spend approximately $8 billion on strategic acquisitions in 2013.
  • 61. 61 General Electric – Strategic Assignment #1 Tim Enalls According to Forbes, GE is #21 in sales, #24 in profit, #44 in assets, and #6 in market value. GE’s market cap is currently $243.74 billion. GE is doing exceptionally well despite the headwinds caused by the 2008 recession.
  • 62. 62 General Electric – Strategic Assignment #1 Tim Enalls The chart above from Morningstar.com, shows the trends of GE’s financials from the last ten years. GE was negatively affected by the recession as indicated by the 2009, but its performance has reached stable levels again. This chart shows GE’s key ratios from the last ten years. GE’s net margin %, return on assets, and return on equity dipped noticeably in 2009, but those ratios are starting to reach normal percentages again. RESEARCH AND DEVELOPMENT (R&D) GE Global Research is GE’s renowned industrial research organization and provides innovative technologies for all of GE’s businesses. It has been in existence for over 100 years and has provided GE an edge over its competitors when it comes to innovation. GE Global Research is headquartered in Niskayuna, NY, and has facilities in Bangalore, India, Shanghai, China, and Munich, Germany. It has more than 2,800 employees (more than 1,000 are PhDs).GE’s total R&D budget in 2008 was $4.3 billion, while the budget for GE Global Research was $555 million. In 2008, GE had 2,537 U.S. patents while GE Global Research had 560. As listed on its website, GE Global Research is focused on developing innovations in the following areas: 1. Advanced Technologies a. Sustainable Energy b. Advanced Propulsion c. Nanotechnology
  • 63. 63 General Electric – Strategic Assignment #1 Tim Enalls d. Electronic Materials Systems e. Molecular Imaging & Diagnostics f. Energy Conversion 2. Aero-Thermal & Mechanical Systems a. Diesel Engines: Breaking the Paradigm b. More Efficient Power on Land or in the Air c. Waste Not, Want Not 3. Chemistry & Chemical Engineering a. Batteries for the Hybrid Age b. How Green is Green? c. Exploring the Energy Frontier 4. Diagnostics & Biomedical Technologies a. Magnets That “See” Instead of “Stick” b. An Extra Set of Eyes for Doctors c. Making the “Not So Obvious” Obvious d. Proper Growth Requires Proper Care e. Discovering the Depths of Cancer Cells 5. Electrical Technologies & Systems a. Get Plugged into the EV Revolution b. Integrated Circuits that can take the Heat c. Reining in the Sun and the Wind to our Grid 6. Manufacturing & Materials Technologies a. Composites b. Nondestructive from Cradle to Grave c. Turning X-Rays into Light d. Corrosion Experts e. Taking the Heat 7. Software Sciences & Analytics a. A New Way to Monitor and Manage the Power Grid b. Reducing Waste though the “Power of 1%” c. Using Data Analysis to Help Save Lives d. An Algorithm for Trains
  • 64. 64 General Electric – Strategic Assignment #1 Tim Enalls GE gradually increases how much it spends on R&D, year after year. From 2011 to 2013, GE spent $16-17 billion on R&D.
  • 65. 65 General Electric – Strategic Assignment #1 Tim Enalls GE's vision for an "industrial Internet" includes an interconnected web linking all types of machines and devices. This interconnectivity can be used to better monitor energy usage and allocate power more efficiently.
  • 66. 66 General Electric – Strategic Assignment #1 Tim Enalls GE’s version of the smart grid is among the most efficient, reliable, and secure. It includes:  Flexible generation  Wide area protection  A distribution Management System (DMS)  An outage Management System (OMS)  An energy Management System (EMS)  Solar power  Smart metering  Wireless monitoring & control  Fiber optic communications  A battery energy storage system  Wind turbines.
  • 67. 67 General Electric – Strategic Assignment #1 Tim Enalls This is General Electric’s FlexEfficiency* 60 Combined Cycle Power Plant portfolio which was unveiled last year in 2012. It defines a new standard for high efficiency and operational flexibility when it comes to converting natural gas and heat into electricity. It is at the top of its class in regards to delivering reliable, responsive power to the energy grid in countries that use 60Hz as the frequency of their alternate current electricity—United States, Canada, and Mexico. This power plan can generate enough energy to power more than 600,000 homes. A newer version has already been designed for countries like the U.S. that use the 60Hz frequency. Some of its benefits include:  More than 61 percent baseload efficiency  Two-year construction schedules  One button push start in under 30 minutes  Smaller carbon footprint — 12,700 metric tons of CO2 per year In 2011, GE received more U.S. patents for clean energy than any other company in the world. The vast majority of GE's 184 "green" patents were related to wind energy, and the company topped the runner-up, Samsung, by 56 patents.
  • 68. 68 General Electric – Strategic Assignment #1 Tim Enalls OPERATIONS AND LOGISTICS GE seems to use the job shop methodology in most of its manufacturing centers where turbines, locomotives, and other large equipment are built. It uses more automation at centers where smaller equipment such as solar panels is produced. GE is in its third year of GE Advantage, its process-improvement program. The task of its teams is to improve 40 big processes in the company. The program saved an astonishing $800 million of margin in 2012. On example is its “Transportation: Requisition to Platform” process, which facilitates its new product launches. Results so far include: 80% system reuse; a six month reduction in cycle; and a 35% reduction in sole-source suppliers and overtime. The infographic above presents a selection of some of GE’s biggest locations in the U.S. where build the latest generation of steam and turbines, generators, and other high-tech products.
  • 69. 69 General Electric – Strategic Assignment #1 Tim Enalls This photo was taken at GE’s Greenville, SC plant. GE’s Greenville plant is the largest gas turbine manufacturing plant in the world, with over 3,000 employees producing products for domestic and global export. Since GE is an industrial company, it relies on third parties for raw materials, parts, and components used in its products. This reliance exposes GE to fluctuations in the prices and availability of these materials, parts, and components. Quality issues experienced by third-party providers can also adversely influence the quality and effectiveness of GE’s products and services. In 2012, GE said it will expand its aviation business, investing $580 million in new plants, and adding more than 400 new aviation-related jobs in manufacturing, research and development over the next three years. In 2013 it will open new plants in Ellisville, Mississippi; Auburn, Alabama; and Dayton, Ohio. The company expects its deliveries of commercial and military jet engines to grow from 3,000 in 2011 to 3,400 in 2012 and 3,800 in 2013. GE is expanding internationally at a fast pace. In 2010, it announced that it was investing more than $2 billion into its efforts in China and $500 to its Brazil operations. Deals have also been negotiated in India and the Middle East. GE is focusing its efforts on areas including oil, gas, renewable energy, mining and transportation in emerging economies and resource-rich countries such as these.
  • 70. 70 General Electric – Strategic Assignment #1 Tim Enalls Something of upmost interest, in November 2012, GE Aviation acquired Morris Technologies, a 3D printing company, to make parts for jet engines. Morris Technologies uses a number of 3D printing machines, all of which work by using a digital description of an object to build it in physical form, layer by layer. Among the 3D printing technologies used by Morris Technologies is laser sintering. This involves spreading a thin layer of metallic powder onto a build platform and then fusing the material with a laser beam. The process is repeated until an object emerges. HUMAN RESOURCES MANAGEMENT (HRM) Career Development GE has strong career development programs to develop the core competencies that it values in employees. They range from entry level leadership programs offered to college graduates to continual leadership development for all levels of the company. In addition, the employs the following practices:  On-campus recruiting  Internships and Co-ops  Offers new grads the ability to defer working for GE for two years in order to join the Teach for America program. John F. Welch Leadership Development Center
  • 71. 71 General Electric – Strategic Assignment #1 Tim Enalls Every year, thousands of GE’s employees ranging from entry-level employees to its highest- performing executives make a trip to Crotonville, NY which, as GE describes it, is a transformative learning experience that, for many, becomes a defining career event. For more than 50 years, this center has been considered a forefront of real-world application for cutting-edge thinking in organizational development, leadership, innovation and change. It provides learning opportunities and comradeship for its employees in such a way that other companies may want to duplicate it to attain similar results. U.S Veterans GE announced last year that it will hire 5,000 U.S. military veterans. The company already employs more than 10,000 veterans and will add 5,000 more in the next 5 years. Diversity GE claims on its website that relies on a culture of leadership and diversity to drive innovation and productivity. GE has what it calls “Affinity Networks” that comprise of the following organizations:
  • 72. 72 General Electric – Strategic Assignment #1 Tim Enalls  African American Forum  Asian Pacific American Forum  Gay, Lesbian, Bisexual, and Transgender Alliance  Hispanic Forum  Veterans Network  Women’s Network Additionally, GE has won the following award & accolades:  Top 10 of Diversity MBA Magazines 50 Out Front Companies for Diversity Leadership  Woman Engineer Magazine's Top 50 Employers  Equal Opportunity Magazine's Top 50 Employers  Minority Engineer Magazine's #1 Employer  CAREERS & the DisABLED Magazine's Top 50 Employers INFORMATION TECHNOLOGY (IT) In 2008, according to GE’s former Chief Information Officer, Gary Reiner, the biggest role of GE’s IT is to assist in speeding up the innovation process or the product-development process. According to
  • 73. 73 General Electric – Strategic Assignment #1 Tim Enalls him, GE spent a lot of time looking at tools that will help us develop the next great engine more quickly and more effectively. In 2008, GE’s IT organization had a budget that was growing and had a worth of $4 billion, the size of a Fortune 500 company. Not only that, Reiner reported directly to GE's CEO, Jeff Immelt instead of the CFO which is typical in other companies. And he ran GE's massive Six Sigma initiative since 1996 and also oversaw the company's $55 billion of annual sourcing. On March 18, 2013, Jamie S. Miller was named GE’s next CIO. She replaced Charlene Begley, who GE said had taken a leave of absence for personal health reasons. On GE’s website, Jamie S. Miller’s job description says that she leads the information technology teams across GE to enable speed, growth, and profitability. It is unclear whether Miller plays as c lose a role as Reiner did in GE’s Six Sigma initiative or its sourcing operations. As mentioned earlier, GE has 16 business websites for its businesses and initiatives, 65 websites tailored to various countries in the world. The company has an exceptional global presence and it would take a knowledgeable and effective IT team in order to manage, build, and maintain that amount of data. It also takes a robust IT staff to develop products such as advanced visualization software used for healthcare, navigation and guidance systems for aviation, distribution management systems, outage management systems, energy management systems, wireless monitoring functionality and more for customers in multiple industries.
  • 74. 74 General Electric – Strategic Assignment #1 Tim Enalls SUMMARY OF INTERNAL FACTORS Internal Factors Weight Rating Weighted Score Comments 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 .10 5 .5 Focusing on serving customers in emerging markets is critical for long-term success GE's expertise in energy, transportation, and health care will prove critical for developing economies in the decades ahead. .07 5 .35 N/A 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. .07 5 .35 N/A GE controls more than 44% of the gas turbine market, topping its closest competitor, Siemens, over the past .03 5 .15 N/A
  • 75. 75 General Electric – Strategic Assignment #1 Tim Enalls decade. Aviation backlog increased 24% to $99 billion at the end of 2011, reflecting a strong pipeline fueled by emerging market demand. This could be largely due to years of R&D investment. .03 5 .15 N/A GE's transportation revenue grew 45% in 2011, while profits climbed over 100%. Orders surged 67% in transportation for the first quarter of 2012. .03 5 .15 N/A 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 .06 5 .3 N/A 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 .07 5 .35 N/A GE Capital's revenue declined from 2010 to 2011, but profitability doubled to $6.5 billion, representing 31% of total segment profits largely because focusing on middle-market lending boosts margins and increase stability .04 5 .20 N/A Weaknesses Pension costs could weigh on cash flow down the road because of an increase in retirees and benefit payments .10 4 .40 Currently, this weakness is far outweighed by GE strengths and opportunities
  • 76. 76 General Electric – Strategic Assignment #1 Tim Enalls Low stock prices due to financial downturn .20 4 .80 Currently, this weakness is far outweighed by GE strengths and opportunities Ongoing legal proceedings likely to hamper corporate image .10 4 .40 Currently, this weakness is far outweighed by GE strengths and opportunities GE Capital's Commercial Lending and Leasing (CLL) operation has yet to realize a turnaround from its shedding of bad loans .10 4 .40 Currently, this weakness is far outweighed by GE strengths and opportunities Total Scores 1.00 4.00 As the above chart indicates, I was able to find far more strengths than weaknesses in GE. I believe that GE’s greatest strengths are:  its ongoing success and focus in emerging markets  its expertise in energy, transportation, and health care  The success of its energy business unit and other business units relating to supporting infrastructure growth  The size, scope, and focus of its R&D I believe that GE’s core competencies include:  Its R&D prowess, its prevalent use of quality management tools  Its IT system which enables a fast innovation and product-development process  The fact that its large business units can share knowledge about best practices and directly benefit each other at will  Many others to be considered
  • 77. 77 General Electric – Strategic Assignment #1 Tim Enalls High-growth emerging markets accounted for 18% of the core industrial business in 2001, which more than doubled to 37% in 2011. GE’s spectacular success in emerging markets is expected to continue.
  • 78. 78 General Electric – Strategic Assignment #1 Tim Enalls As indicated by the above graphic, GE has pinpointed the resource rich and high-growth countries it will focus on within the next few decades and continually researches these target markets. ANALYSIS OF STRATEGIC FACTORS (SWOT) SITUATION ANALYSIS Strategic Factor Analysis Summary (SFAS) Matrix Strategic Factors Weight Rating Weighted Score Comments Strengths
  • 79. 79 General Electric – Strategic Assignment #1 Tim Enalls 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 .25 5 1.25 Focusing on serving customers in emerging markets is critical for long-term success Weaknesses Low stock prices due to financial downturn. high debt-to-equity ratio, dividends being cut, riskiness of financial industry, etc. .15 4 .60 This weakness is far outweighed by GE strengths and opportunities Opportunities Number of people connecting to power grids will grow exponentially by 2050 .25 5 1.25 Increased demand for reliable gas and wind turbines, solar solutions, and related equipment and services $60 trillion of infrastructure spending is needed in emerging economies by 2030 .25 5 1.25 Increased demand for energy, transportation, industrial equipment, services, etc. Threats The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact capital investment .1 5 .50 50% of GE revenue comes from the financial industry Total Scores 1.00 4.85 The SFAS matrix above shows what I believe are the most important known factors that affect GE’s present and future performance. Because of the number of people who will connect to the power grid and the amount of money that will be spent on infrastructure in emerging economies within the next decades, serving customers in those markets is paramount to GE’s success. REVIEW OF MISSION AND OBJECTIVES
  • 80. 80 General Electric – Strategic Assignment #1 Tim Enalls As I showed before, here is the mission statement that is on GE’s website: These are the five strategies that GE is implementing as of 2013 in order to create value over time and gain competitive advantage: 1. It has remade GE as an “Infrastructure Leader” with a smaller financial services division. 2. It is committed to allocating capital in a balanced and disciplined way. GE’s top priority is growing the dividend and it is one of the top companies in regards to dividend payments. 3. It has significantly increased investment in organic growth, focusing on R&D and global expansion. 4. It has built deep customer relationships based on an outcomes oriented model. 5. It has positioned GE to lead in the big productivity drivers of this era. a. It will lead in the shale gas revolution. b. It is extending GE’s lead in advanced manufacturing. c. It is making a major investment in software and analytics. This is also the portfolio strategy that GE aims to follow in the coming years:
  • 81. 81 General Electric – Strategic Assignment #1 Tim Enalls On the most part, this mission and these objectives should not be changed. GE is making I clear that it wants to be the global leader in its infrastructure businesses. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY STRATEGIC ALTERNATIVES
  • 82. 82 General Electric – Strategic Assignment #1 Tim Enalls GE is actively fine-tuning its strategy to meet the energy, infrastructure, and healthcare demands in emerging markets. To be honest, the strategies I propose below were likely already decided upon years ago by GE executives who have many years of experience in these businesses and industries. Not only that, these executives are among the brightest and most conscientious in the world. The following are strategic concepts, approaches, alternatives, and considerations that would be of importance to GE: The strategic sweet spot is where a company is able to satisfy customers’ needs in a way that rivals cannot, given the context in which it operates. GE continually researches and develops products while
  • 83. 83 General Electric – Strategic Assignment #1 Tim Enalls taking into consideration the customers’ needs and its company’s capabilities. The features and benefits of its products and services are designed specifically to meet customer needs. While GE hasn’t appeared to find many long-lasting propitious niches to fill, it has the financial backing, talent, and knowledge to make it capable of continually meeting customers’ needs. A propitious niche is an extremely favorable niche that is so well suited to a firm’s internal and external environment that other corporations are not likely to challenge or dislodge it. A niche is propitious to the extent that it currently is just large enough for one firm to satisfy its demand. TOWS MATRIX Strengths S1. 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 S2. GE's expertise in energy, transportation, and health care will prove critical for developing economies in the decades ahead. S3. 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. S4. 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 S5. GE Advantage, it’s ongoing process-improvement program which is improving on 40 big processes throughout the company, has realized $800 million of Weaknesses W1. Low stock prices due to financial downturn. high debt-to-equity ratio, dividends being cut, riskiness of financial industry, etc.
  • 84. 84 General Electric – Strategic Assignment #1 Tim Enalls margin improvement in 2012 Opportunities O1. Number of people connecting to power grids will grow exponentially by 2050 O2. $60 trillion of infrastructure spending is needed in emerging economies by 2030 O3. 33,000 more airplanes will need to be built by 2030 SO Strategies S1S2O1O2. Place heavy focus on customers in emerging markets in regards to energy, transportation, and health needs 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 WO Strategies W1O1O2. Continue to seek a wider profit margin from businesses in emerging markets, have a dividend yield of at least 3%, repurchase stocks, and instill confidence about GE in stockholders.
  • 85. 85 General Electric – Strategic Assignment #1 Tim Enalls Threats T1. The present fiscal situation, repeated debt-limit controversy and tax reform negatively impact capital investment T2. Because of oversupply, solar panel prices have plummeted 82% since August 2009 T3. Because of approximately 108 different union local bargaining units, GE will face significant pension obligations in the coming years T4. Uncertainty in wind energy industry due to political uncertainty and new legislation that weakens environmental laws ST Strategies S4T2T4. Continue to research and develop new technologies in regards to solar panels, aircraft engines, wind turbines, software, analytics, communications technologies and more. WT Strategies W1T2T3. Having more advanced solar panels and wind turbines than competitors when the demand for these products pick up may positively affect the stock price W1T3. Pay down the pension obligations to possibly boost the company’s value and increase the stock price The TOWS Matrix above shoes strategies that are generated by combining strengths, weaknesses, opportunities, and threats into four sets of factors: SO Strategies, ST Strategies, WO Strategies, and WT Strategies.
  • 86. 86 General Electric – Strategic Assignment #1 Tim Enalls GE has primarily followed the differentiation strategy and I believe that it should continue to do so. It has developed many products that are perceived as unique in the industries where it does business in such as:  GE9X aircraft engine  Evolution® Series Locomotive  FlexEfficiency* 50 Combined Cycle Power Plant  CdTe thin film solar module  Discovery* XR656 digital radiography x-ray system
  • 87. 87 General Electric – Strategic Assignment #1 Tim Enalls Since GE follows the differentiation strategy, it can charge a premium for its products. The resulting brand loyalty of selling unique products lowers customers’ sensitivity to price. Furthermore, a differentiation strategy creates a better entry barrier than a low-cost strategy and usually results in higher profits.
  • 88. 88 General Electric – Strategic Assignment #1 Tim Enalls While it is usually true that differentiation is not sustained, GE continually introduces new products with better features than their predecessors in order to stay ahead of the competition. It is for this reason that I believe GE will continue to generate high profits for many years to come. GE focuses on all eight of these dimensions of quality when researching and developing its products. When GE introduces a new product (which it does relatively often compared to many companies) such as the GE9X aircraft engine, it makes sure to address each of these dimensions of quality on internal webpages and in YouTube videos:
  • 89. 89 General Electric – Strategic Assignment #1 Tim Enalls It appears that GE has all the required skills and resources needed for the differentiation strategy and most of those needed for the overall cost leadership strategy. GE seems to have all the common organizational requirements of the differentiation strategy and overall cost leadership strategy. This must be the case because while GE wants to differentiate its products and services from competitors’ offerings, it also wants to do everything possible to cut unnecessary costs. Joint Venture – GE forms numerous partnerships with companies to temporarily combine the different strengths of partners to achieve an outcome of value. To make compressed natural gas (CNG) more accessible as a transportation fuel, GE Oil & Gas and Chesapeake Energy created the CNG In A Box system, a compact refueling solution. For every vehicle filled with CNG instead of gasoline, carbon dioxide emissions equivalents are reduced about 24% or 2.2 metric tons per vehicle annually.
  • 90. 90 General Electric – Strategic Assignment #1 Tim Enalls Value-Chain Partnership - GE has a Supplier Responsibility Guidelines Program whereby it maintains one-on-one relationships with suppliers and works with them to solve problems. Additionally, General Electric's Supplier Relationships Policy requires that GE source only from suppliers who comply with local laws and any applicable GE standards in such sensitive areas as labor, environment, health and safety. Suppliers must correctly answer a series of questions as part of GE’s Supplier Certification Program. Starting in 2012, GE introduced programs aimed at encouraging and rewarding resource-efficiency initiatives within its supplier community. In that same year, GE awarded its first annual ecoSourcing Star Awards. This was designed to reward collaboration between GE sourcing personnel and our suppliers and award categories including water and energy conservation, greenhouse gas reduction, and resource efficiency. Something worth noting: GE regularly has Supplier Summit throughout the world that offer opportunities for GE employees to share experiences with peer companies, suppliers, and government and trade union officials. GE is widely known for achieving horizontal growth by increasing the range of products and services offered to current markets and expanding its operations into other geographic locations. Research indicates that when companies like GE have broad product lines, they also have high survival rates. For example, GE Energy alone offers at least 52 types of products and 26 types of services for 25 industries.
  • 91. 91 General Electric – Strategic Assignment #1 Tim Enalls Although GE doesn’t seem to have any businesses it needs to sell now, GE did sell the second half of NBC Universal for $18 billion in 2013 in order to use that capital to buy back shares it bought during the recession. It sold the first half of NBC Universal in 2010 and 2011 for $12 billion and used that capital to boost its presence in the energy sector. It was recently recommended by one analyst that GE needs to make acquisitions of small, niche industrial companies all over the world to fill in the gaps in its industrial businesses: power generation, aviation, rail, mining, and medical-imaging equipment. GE has made several recent acquisitions to protect its ability to deliver products and sales revenue. GE is seeking to gain more control over its supply chains after major disruptions due to natural disasters such as tsunamis, volcanic eruptions, flooding, and even difficult, and unbalanced negotiations Another reason GE is acquiring businesses in its supply chains is because key suppliers often dictate the terms to their customers which result in arrangements with significant business risk. Lastly, a survey conducted by the American Society for Quality (ASQ) showed that 80% of participants had been adversely affected by a supplier’s inability to meet their needs in the past. GE’s acquisitions include:  GE Aviation’s acquisition of a key supplier, Avio, for US$4.3B  An acquisition of a three-dimensional printing company to make fuel nozzles  A joint-venture with a component casting company in Montana to make small structural castings  A venture to secure access to silicon carbide, a key material used in the manufacturing of high-tech ceramic parts Not only that, GE also plans to open several parts factories in low cost areas of the USA. Last summer GE Appliances announced an in-sourcing effort to bring plastic parts and components in-house in Louisville; they also plan to bring back production of metal components. GE is also planning to use its own facility to produce castings for its new generation engines to help regain control.
  • 92. 92 General Electric – Strategic Assignment #1 Tim Enalls The following graph shows the 3 year growth rates of GE’s different business segments. Transportation, Oil & Gas, and Energy Management are GE’s fastest growing segments. However, Transportation and Energy Management don’t make nearly as much money for GE as many of its other business segments. REVENUES 2012 2011 2010 Growth Rate (3 year average) Power & Water $ 28,299 $ 25,675 $ 24,779 4.53% Oil & Gas $ 15,241 $ 13,608 $ 9,433 17.34% Energy Management $ 7,412 $ 6,422 $ 5,161 12.82% Aviation $ 19,994 $ 18,859 $ 17,619 4.31% Healthcare $ 18,290 $ 18,083 $ 16,897 2.68% Transportation $ 5,608 $ 4,885 $ 3,370 18.50% Home & Business Solutions $ 7,967 $ 7,693 $ 7,957 0.04% GE Capital $ 46,039 $ 49,068 $ 49,856 -2.62% It is difficult to assess the market shares and relative competitive positions of its different business segments within reasonable time constraints. It would be unwise to invest heavily in GE Capital due to its negative growth rates. However, even though GE Capital has a negative growth rate, it still makes GE the most money out of all of its segments.
  • 93. 93 General Electric – Strategic Assignment #1 Tim Enalls At GE, industry attractiveness includes market growth rate, industry profitability, size, and pricing practices, among other possible opportunities and threats. Business strength or competitive position includes market share as well as technological position, profitability, and size, among other possible strengths and weaknesses. I believe that the industries that are most attractive to GE are energy, aviation, and transportation because of the number of people that will connect to the power grid in emerging markets, the number of airplanes that will be built, and the amount of infrastructure that will be built in emerging markets in the next couple of decades. GE’s businesses in those industries have exceptional business strengths/competitive positions. RECOMMENDED STRATEGY These are the strategic alternatives I am recommending for GE: 1. Place heavy focus on customers in emerging markets in regards to energy, transportation, and health needs 2. Continue to develop increasingly durable and energy efficient technologies to gain more of an edge over competitors in emerging markets 3. Invest heavily in its process-improvement program regarding its core businesses in emerging markets to save more cash than competitors in those regions
  • 94. 94 General Electric – Strategic Assignment #1 Tim Enalls 4. Continue to research and develop new technologies in regards to solar panels, aircraft engines, wind turbines, software, analytics, communications technologies and more. 5. Continue to seek a wider profit margin from businesses in emerging markets, have a dividend yield of at least 3%, repurchase stocks, and instill confidence about GE in stockholders. 6. Research and develop more advanced solar panels and wind turbines than competitors so that when the demand for these products pick up years from now, GE will have a first mover advantage in those markets. 7. Pay down the pension obligations to possibly boost the company’s value and increase the stock price 8. Continue following the differentiation strategy and develop products that are perceived as unique in the industries where it does business. 9. Continue to form partnerships with companies to temporarily combine the different strengths of partners to achieve an outcome of value to all. 10. 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. 11. Continue acquiring companies in its supply chains to protect its ability to deliver products and sales revenue and decrease business risk. 12. Make acquisitions of small, niche industrial companies all over the world to fill in the gaps in its industrial businesses: power generation, aviation, rail, mining, and medical-imaging equipment. 13. Use the cash from highly profitable business segments with slow growth rates (GE Capital, for example) to invest judiciously in business units with high growth rates and potential for growth. 14. Continue promoting a culture of meritocracy where the highest achieving employees are rewarded the most heavily and the least performing employees are trained or in some cases, replaced by better talent. These strategies should be researched, revised as needed, and agreed on by the executive team unilaterally. Next, these strategies should be documented so that every feasible detail of them can be sorted out. Lastly, these strategies should be communicated from the top leadership to the employees below them and feedback and suggestions for improvement should be welcomed. IMPLEMENTATION Corporate executives need to envision how GE should be structured ideally based on future trends of the various industries it operates in and the performance of its business segments. Based on future demands globally, it would implement strategies that will help its core industrial businesses in power
  • 95. 95 General Electric – Strategic Assignment #1 Tim Enalls generation, aviation, rail, mining, medical-imaging equipment, etc. to exploit global opportunities to the fullest. This will require rotating its most skilled managers globally in order to maintain a strong knowledge base in the various markets it operates in and will market in. Furthermore, when it comes to acquisitions, GE should have integration managers establish training programs so that employees from acquired companies can integrate seemlessly with GE’s workforce. Like in most multi-industry corporations, the implementers are everyone in the organization. Managers of all levels need to put together plans for their specific plants, departments, and units to carry out the overall strategies. Every corporate and business executive down to the first-line supervisors and employees needs to be involved in the implementation of corporate, business, and functional strategies that are associated with their areas. The programs are financially feasible. GE makes more than enough money to undergo restructuring; it has happened numerous times in the past with great success. The pro forma budgets can be developed and agreed on. Priorities are appropriate to these programs because they lead to less waste, more opportunity and strength exploitation, more unity, and less business risk. The timetables implementing these strategies can range from a few months to several or more years. Standard Operating Procedures (SOPs) may need to be developed to detail the various activities that must be carried out to complete these proposed strategies/programs. Like in all companies, the procedures will need to be updated to reflect any changes in technology, strategy, or external conditions. Since GE appears to be on a trajectory to continued success, current procedures may not need to be changed considerably. EVALUATION AND CONTROL GE uses PeopleSoft, SAP, and a number of other ERP systems in its different business segments. Even though it doesn’t integrate the entire company's operations through a single system because of the immense cost and complexity that would be involved in implementing it, it can still pinpoint results by geographic areas, units, projects, functions, etc. in each individual business segment. The information is timely; they are using ERP systems that are widely renowned in the business community.
  • 96. 96 General Electric – Strategic Assignment #1 Tim Enalls GE was listed by Forbes as being one of the top 21 companies that are making IT a competitive advantage. The chart above shows what impressive business leaders the most about the admired companies. I am sure General Electric uses benchmarking to evaluate its functions and activities in cases where other businesses have more developed strengths than GE. But since GE is one of the top companies globally, it is likely that it is benchmarked most often by other companies.
  • 97. 97 General Electric – Strategic Assignment #1 Tim Enalls Appropriate standards and measures are being used. Here is the scorecard GE uses which I displayed earlier in this essay: I am also certain that GE is setting profitability goals for each of its individual business segments. There are reward systems capable of recognizing and rewarding good performance. GE claims that it has a culture of meritocracy. Fortunately, managers and employees on several websites back up this assertion by GE and they believe that their success in this company is tied mostly closely to their job performance. Perhaps Jack Welch, GE’s former CEO from 1981 – 2001, can be recognized the most for creating a culture of meritocracy in GE by implementing his 20-70-10 rule which ranked employees into performance categories of the top 20%, middle 70%, and bottom 10%. With this system, the top 20% are rewarded in an outsized way that is both soul-satisfying and financially satisfying; the middle 70% is developed with training and coaching; and the bottom 10% are moved out so that better talent can be brought in.
  • 98. 98 General Electric – Strategic Assignment #1 Tim Enalls CONCLUSION General Electric can easily be considered by most people to be one of the top five best-run companies in the world. The knowledge and skill set of GE’s business executives are nearly unsurpassable and GE’s success validates this truth. In this paper, I not only went into great detail about General Electric’s current strengths, weaknesses, opportunities, and threats, but I also suggested multiple strategies which are either already implemented or will likely be implemented in the coming decades. By all accounts, GE is on the trajectory toward many more decades of market dominance in its core businesses. REFERENCES 1 1. http://www.ge.com/ar2012/pdf/GE_AR12.pdf 2. http://www.geaviation.com/ 3. http://www.ge-energy.com 4. http://www3.gehealthcare.com 5. http://www.getransportation.com 6. http://www.geconsumerandindustrial.com/
  • 99. 99 General Electric – Strategic Assignment #1 Tim Enalls 7. http://www.ge.com/company/leadership/board-of-directors 8. http://www.ge.com/company/leadership/corporate-executives 9. https://www.google.com/finance?q=NYSE%3AGE&ei=PA6QUZCqDJ3WlgPl0QE 10. http://www.thestreet.com/story/10910028/1/ge-cuts-bad-deal-with-turkish-bank-sale.html 11. http://www.fool.com/investing/general/2012/11/30/corporate-responsibility-spotlight-general- elect.aspx 12. http://www.ecomagination.com 13. http://www.youtube.com/user/ecomagination/ 14. http://www.businessweek.com/stories/2005-01-16/death-taxes-and-sarbanes-oxley 15. http://www.ge.com/investor-relations/governance/board-of-directors 16. http://www.amazon.com/gp/product/B008UFWPOG/ref=pd_lpo_k2_dp_sr_2?pf_rd_p=1535 523722&pf_rd_s=lpo-top-stripe- 1&pf_rd_t=201&pf_rd_i=0130807842&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=1XZPT3FR EEP5NJZKRMN7 17. http://www.forbes.com/sites/afontevecchia/2011/09/13/ge-to-redeem-preferred-stock-from- berkshire-warren-buffet-makes-a-cool-1-2b/ 18. http://www.ge.com/investor-relations/governance/ombudsperson-process REFERENCES 2 1. http://www.csmonitor.com/Environment/Latest-News-Wires/2013/0304/Will-ships-sail- through-the-North-Pole-by-2050 2. http://www.environmentalgraffiti.com/space/news-solar-flares-end-world 3. http://science.nasa.gov/science-news/science-at-nasa/2010/26oct_solarshield/ 4. http://www.globalintelligence.com/insights-analysis/emerging-markets/country- reports/global-results 5. http://online.wsj.com/article/SB10001424052970204323904577038442922466470.html 6. http://www.boeing.com/commercial/cmo/pdf/2010_Farnborough_Presentation.pdf 7. http://www.forbes.com/sites/kenrapoza/2012/02/13/china-closer-to-joining-shale-gas- fracking-craze/ 8. http://www.bcbs.com/employers/healthcare-trends-report/Chart-2-1b.html 9. http://homehealthcarenews.com/2013/04/wsj-healthcare-spending-varies-widely-by-location/ 10. http://www.cmu.edu/energy/key-topics/efficient-energy/index.html 11. http://www.prweb.com/releases/2012/4/prweb9156914.htm 12. http://www.economist.com/node/8908438 13. http://www.economist.com/node/15270960 14. http://envisioningtech.com/health/ 15. http://www.airbus.com/innovation/future-by-airbus/ 16. http://www.noticias-aero.info/2012/09/airbus-unveils-its-2050-vision-for.html 17. http://www.economist.com/node/16909889
  • 100. 100 General Electric – Strategic Assignment #1 Tim Enalls 18. http://visual.ly/future-solar-energy 19. http://visual.ly/powering-world-zero-carbon-emissions-and-solar-power-alone 20. http://www.energydigital.com/renewable_energy/japanese-breakthrough-in-wind-turbine- design 21. http://3g4g.blogspot.com/2011/04/smart-grids-again.html 22. http://www.youtube.com/watch?v=raACUsLWzn8 23. http://dailyreporter.com/2011/07/03/regulatory-uncertainty-for-wind-farm-developers/ 24. http://www.euractiv.com/climate-environment/wind-power-buffeted-political-un-news- 517655 25. http://www.milliman.com/expertise/employee-benefits/products-tools/pension-funding-study/ 26. http://beta.fool.com/reubengbrewer/2013/01/29/pension-funding-is-an-increasingly- important-issue/22958/ 27. http://www.pionline.com/article/20120224/REG/120229908 28. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/23/china-might-stop- providing-the-world-with-cheap-solar-panels/ 29. http://insiderlouisville.com/news/2011/09/01/world-wide-over-supply-making-residental/ 30. http://online.wsj.com/article/SB10001424127887324449104578314140876408204.html 31. http://www.worldoil.com/February- 2013_EP_spending_to_set_a_new_record_at_644_billion.html 32. http://www.washingtonpost.com/blogs/worldviews/wp/2012/12/05/map-the-most-and-least- corrupt-countries-in-the-world/ REFERENCES 3 1. http://effectivemarketer.com/2011/07/07/reinventing-marketing-at-ge/ 2. http://hbr.org/2010/10/unleashing-the-power-of-marketing/ar/1 3. http://www.businesswire.com/news/home/20130213005817/en/30000-Mile-GE- FlexEfficiency*-Truck-Tour-Winds-York 4. http://www.gurufocus.com/news/219591/general-electric-looks-like-its-becoming-the- shareholderfriendly-company-it-once-was- 5. http://www.forbes.com/companies/general-electric/ 6. http://financials.morningstar.com/ratios/r.html?t=GE&region=USA&culture=en-us 7. http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20130118/BUSINESS/130119104/1 005 8. http://www.gereports.com/meeting-of-minds-and-machines/ 9. http://www.gereports.com/connected/ 10. http://ge.geglobalresearch.com/ 11. http://abcnews.go.com/blogs/business/2012/02/g-e-to-hire-5000-vets-expand-aviation- operations/ 12. http://www.gedigitalenergy.com/gesmartgrid.htm
  • 101. 101 General Electric – Strategic Assignment #1 Tim Enalls 13. http://www.gereports.com/from-greenville-to-bahrain-ge-turbines-in-500m-deal/ 14. http://www.youtube.com/watch?v=1_QBAdSSM_Y 15. http://www.ge.com/directory 16. http://www.ge.com/directory/business 17. https://sites.google.com/site/generalelectricbus100portfolio/swot-analysis 18. http://www.cleveland.com/business/index.ssf/2010/11/ge_investing_500_million_in_br.html 19. http://www.ge.com/careers/culture/diversity 20. http://www.gecapital.com/en/our-company/careers/diversity.html 21. http://www.ge.com/careers/culture/university-students 22. http://money.cnn.com/magazines/fortune/fortune_archive/2008/07/21/105711270/ 23. http://www.fool.com/investing/general/2013/03/18/ge-appoints-new-cio.aspx 24. http://www.nola.com/politics/index.ssf/2012/02/general_electric_chooses_new_o.html 25. http://www.businessinsider.com/ge-buys-3d-printing-company-to-make-parts-for-jet-engines- 2012-11 26. http://www.gehealthcare.com/usen/ct/vct/ad/ 27. http://www.medicalpriceonline.com/used-medical-equipment/ge/ge-lightspeed-16.html REFERENCES 4 1. http://visiblebusiness.blogspot.com/2013/03/portfolio-strategy-of-general-electric.html 2. http://www.forbes.com/sites/investor/2012/10/03/is-a-ge-turnaround-finally-here/ 3. http://www.geaviation.com/newengine/ 4. http://www.gecitizenship.com/blog/features/a-supplier-summit-in-shanghai/ 5. http://www.gecitizenship.com/focus-areas/planet/resource-optimization/supply-chain/ 6. http://www.gesupplier.com/html/sct/docs/Supplier_Certification- Complete_Set_of_Documents(en).htm 7. http://www.ge-energy.com/products_and_services/index.jsp 8. http://www.techforecasters.com/archives/vertical-integration-bucking-the-trend-or-the-new- trend/ 9. http://www.reuters.com/article/2013/02/13/us-ge-nbc-idUSBRE91B1IM20130213 10. http://www.moneyshow.com/video/VideoNetwork/100/9066/Why-Did-GE-Sell-NBC/ 11. http://www.businessweek.com/bwdaily/dnflash/content/dec2009/db2009123_795593.htm 12. http://www.information-age.com/technology/information-management/2135488/engineering- giant-ge-sees-its-future-in-it 13. http://www.forbes.com/sites/louiscolumbus/2013/04/01/21-most-admired-companies-making- it-a-competitive-advantage/ 14. http://www.informationweek.com/ge-mulls-massive-erp-implementation/160500765