General Electric Presentation

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General Electric Presentation

  1. 1. Aaron Trigg, Lindsey Mauro, Michelle Milkovich, Sean Smith
  2. 2.  In 1890, Thomas Alva Edison established the Edison General Electric Company in Menlo Park, New Jersey At the same time Charles A. Coffin was growing his business, The Thompson Company It was increasingly difficult for Edison and Coffin to remain competitive based their own technologies The two companies united in 1892 and formed The General Electric Company Headquartered in Fairfield, CT 300,000 employees In over 160 Countries CEO - Jeffrey Immelt
  3. 3.  Although GE does not have an exact mission statement it operates under the following four main values: Values - Imagine, solve, build and lead - four bold verbs that express what it is to be part of GE. Their action-oriented nature says something about who we are - and should serve to energize ourselves and our teams around leading change and driving performance. Vision – “ We Bring Good Things to life”
  4. 4.  1879 – Thomas Edison Invents light bulb 1890 – Edison General Electric Created 1892 – Edison merges with Thomas-Houston Electric (owned by Charles Coffin) 1896 – One of first 12 companies listed on Dow Jones Industrial Index 1919 – Founded Radio Corporation of America (RCA) to further international radio (later sold) WWI – Developed Aircraft turbosuperchargers 1941 – Whittle w.1 jet engine – GE Aviation 1950s – GE began Computing branch (Sold to Honeywell in 1970) 1968 – American Airlines and United Airlines chose to purchase new GE jet engines 1981 – Jack Welch named CEO (GE worth $13B) 1986 – Purchased RCA & NBC 1992 – Purchased Britain’s General Electric Corp (Overseas growth) 1995 – GE Adopts Six Sigma management approach 1998 – Revenues over $100B for first time 2001 – Jack Welch Retires (GE worth $410B)/Jeffery Immelt named CEO 2001 – Honeywell Merger Blocked 2002 – Acquired wind turbine assets from Enron 2004 – Reorganized GE’s 13 businesses into 11 focused on customers 2007 – Acquired Smith Aerospace/Sold GE Plastics 2010 – Acquired gas engine manufacturer Dresser Inc.
  5. 5.  World’s Largest Producer of Solar Panels
  6. 6.  NBC is an American commercial broadcasting television network
  7. 7.  UK pharmaceutical company, specializing in medical diagnostics and life science products
  8. 8.  Conglomerate Company based out of Gotham City
  9. 9.  Energy Energy Services Oil & Gas Power & Water Technology Infrastructure Aviation Healthcare Transportation GE Capital Americas Asia Pacific Aviation Financial Services Consumer Finance Europe, Middle East & Africa Energy Financial Services Real Estate Home & Business Solutions Appliances & Lighting Intelligent Platforms
  10. 10. GENERAL ELECTRIC SIEMENSRatio 2010-2011 2011-2012 Ratio 2010-2011 2011-2012Total Asset T.O. .2 .2 Total Asset T.O. .77 .71ROA 1.48 1.79 ROA 3.94 5.94ROE 9.6 11.15 ROE 14.18 20.53EPS 1.24 (ttm) EPS 8.72 (ttm)FCF/NI 2.26 1.46 FCF/NI 1.8 .91Current 3.01 2.73 Current 1.22 1.21EBT Margin 9.46 13.64 EBT Margin 7.65 12.57Debt/Equity 2.72 2.34 Debt/Equity .62 .45Receivables T.O. 12.99 10.34 Receivables T.O. 5.17 5.24Inventory T.O. 6.1 5.39 Inventory T.O. 3.74 3.42
  11. 11.  Six Sigma  Business Management Strategy ▪ Originally created by Motorola Inc.  John Francis "Jack" Welch, Jr.– GE CEO (1981-2001) ▪ Early adopter (1995) ▪ In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues increased to nearly $130 billion. ▪ The company had gone from a market value of $14 billion to more than $410 billion, making it the most valuable and largest company in the world. Interview with Jack Welch about Six Sigma
  12. 12.  Strengths  Global strength and recognition ▪ 6th in Fortune 500 list, operating in more than 160 countries ▪ 5th Best Global Brand ▪ 19th Most Innovative  Excellent management ▪ 7th Best Company for Leaders ▪ Proven leadership and business model ▪ Confident investors – raising capital  Diverse product range ▪ Long Term (GE Aircraft engines) ▪ Short Term (GE Lighting, Plastics, NBC) ▪ Financial Services (contributes to 40% of GE’s revenue) ▪ Spreading the risk of failure in every market and not just one
  13. 13.  Weaknesses  Conglomerate ▪ Complexity in management and difficult for analysts and investors to understand operations  No Mission Statement ▪ Without a clear mission, it can be difficult to make decisions and set the direction of the company  Company size/ acquisition restriction ▪ Eg. GE’s planned acquisition of Honeywell International, a diversified technology and manufacturing company, specializing in aerospace products, was rejected by the EU  Energy Segment ▪ Underperforming, no signs of near future recovery  Pollution ▪ History of being a heavy polluter ▪ 4th Largest Corporate Producer of Air Pollution in the United States  Flexibility ▪ Large and diverse businesses might overstretch the company and reduce reaction times to shifts in targeted markets
  14. 14.  Opportunities  Green Technology ▪ Had a history of being polluters, so finding environmentally friendly alternatives ▪ $850 Million investment into Renewable Energy ▪ Investment into Solar Technology for use in Plants  Divesting Consumer and Industrial Businesses  Research and Development ▪ Immense capital allows GE to contribute a lot to R&D for product development and improvement  Increased geographic growth ▪ Global expansion = more opportunities (Eg. China)  Merger between NBC and Vivendi ▪ Further opportunities in the media business  Improved customer services ▪ Adopted a new customer focus initiative
  15. 15.  Threats  Technology Disaster ▪ Produced nuclear reactors that contributed to Fukushima disaster  Exposure to global economy ▪ Economy slowdown would affect GE, since 40% of the revenue is generated overseas ▪ Exposed to currency fluctuations  Publix Relations Problems ▪ $84 Million used for political lobbying ▪ Pay no taxes and $4.7 billion in tax rebates ▪ Laid off over 4,000 workers while increasing executive pay by 27%  Intense scrutiny after Enron ▪ More transparency and disclosure; skeptical investors ▪ Public image of all large companies suffered  Competition ▪ Constant change in technology heats up competition ▪ Very diverse:- tough to be the best in all industry
  16. 16. Threat of New Entrants Tough for new entrants to pinch a sizable chunk of market share from GE or its competitors All of GEs companies are in very large-scale economies, which are difficult to break into. It would require a great deal of capital in advertising to get a new companies brand name out to the public
  17. 17. Threat of Substitutes The financial segment of GE is not as susceptible to a threat of substitutes as other units of GE. i.e.: it is much easier for a customer to switch their brand of appliances than its financial institution GE NBC is highly prone to substitutes as viewers can easily change the channel to another network Just about every technological product GE creates has the threat of substitutes, technology is constantly evolving and becoming more efficient.
  18. 18. Bargaining Power of Buyers Due to the size of General electric, they have considerable bargaining power for most of their products. For companies such as GE Healthcare the volume per buyer is very high in quantity of goods and cost of goods, making the switching cost high for buyers, giving GE the advantage For other companies such as GE financial, it is easier and not as costly for buyers to switch, making it essential that GE stays competitive in price wars with the competition.
  19. 19. Bargaining Power of Suppliers The bargaining power of suppliers is relatively low for GE’s many industries Because of the shear volume of goods that GE buys for their suppliers, suppliers have very little ability to bargain with GE Most of GE’s suppliers could not survive if they lost GE’s business GE has to be aware of suppliers that might integrate forward
  20. 20. Competitive Rivalry Within Industry Rivalry with Siemens – biggest competitor  Creating competitive advantages to create bigger market share Acquisitions, mergers and joint-ventures Battle for innovation and technological improvements GE has high brand recognition, market share, access to assets and competencies and customer loyalty making it highly competitive within the industry
  21. 21.  Do not become complacent  Understanding Growth Potential of each division and how to be #1 ▪ “Expect to be industry leaders in market share, value and profitability, if a business cannot meet our financial goals, or could be better run outside GE, we will exit that business rather than erode shareowner value”  Divesting ▪ Are all of the divisions necessary?  How competitors are performing, to stay ahead
  22. 22.  Making sure they make smart decisions  Know the company culture, values and performance before acquiring in order to make sure they align with GE’s ▪ Ex. Kidder, Peabody (Brokerage Firm) Investment into Environmentally Efficiency

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