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GE Four Corners Analysis


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GE Four Corners Analysis

  1. 1. GE’s Smart Grid Strategy for China <br />
  2. 2. Key Intelligence Topic & Questions<br />Key Intelligence Topic (KIT)<br />GE capitalizing on China’s Smart Grid market<br />Key Intelligence Questions (KIQs)<br />How can GE’s existing investment and relationships in China benefit its Smart Grid efforts?<br />What technological adjacencies will assist GE in developing a superior Smart Grid?<br />What strategic partnerships will assist GE in developing a superior Smart Grid?<br /> <br />
  3. 3. GE’s Drivers<br />“We are the world’s best infrastructure company” – Jeffrey Immelt<br />Diverse product portfolio – moving towards Green Energy with Jeffrey Immelt (also known as the Green CEO)<br />Revenue Growth is focus– Reductions in capabilities to keep financials strong <br />Geographic Growth/Expansion – Maintaining diversity in both industry & country<br />A diversified, worldwide corporation.<br />Maintaining or achieving perception of superiority in all competing industries<br />Strong focus on innovation – Annual investment in R&D $486,018 million<br />
  4. 4. GE’s Assumptions<br />About Ourselves<br />Diverse portfolio mixture = economic stability & superior positioning supplemented by acquisitions<br />GE is able to solve China’s infrastructure issues and satisfy Chinese government regulations<br />Able to acquire and retain top talent<br />An industrial company first, a financial/capital lending company second<br />An R&D powerhouse/ innovative technology and services company<br />GE is a global company and will win if political culture is fair – the playing field might change<br />About the Industry/Competitors<br />Clean energy and infrastructure will be high growth markets<br />Growth drivers will come equally or more from developing countries as from West<br />Support from Chinese civic leaders not exclusive nor permanent <br />China will continue to seek commercial smart grid solutions to offset industrial pollutants<br />
  5. 5. GE’s Capabilities<br />Strengths<br />Global reach, industry excellence and dominance across multiple sectors<br />Brand recognition and reputation is sterling <br />Diversified product portfolio and balanced revenue streams<br />Energy Infrastructure Expertise (23% of 2009 rev.)<br />Strong presence in growth markets specifically China (Smart Grid Demonstration Center)<br />60% of sales are overseas<br />Clean energy innovator – Ecomagination(2005)<br />Weaknesses<br />Dependence on third parties for raw materials<br />High debt burden<br />Historically dependent on mergers and acquisitions<br />Lack of international experience in Smart Grid implementation <br />Competencies<br /><ul><li> Emerging market penetration
  6. 6. Company-to-Country Approach
  7. 7. Integrating Acquired Firms into GE Structure
  8. 8. Worldwide Multi-industry network – strong adjacencies
  9. 9.   Proven energy generation, transmission/distribution, efficient end use
  10. 10. Technical proficiency and vertically integrated manufacturing and distribution of products </li></li></ul><li>GE’s Current Strategy<br />GE Corporate Current Strategy<br />Divest in financial lending – maintain high liquidity – jump on strategic growth opportunities<br />Clean Energy<br />Infrastructure<br />Strong Investment in Infrastructure<br />“long-term growth through building out adjacencies”<br />“There will be more than $10 trillion invested in infrastructure by 2015, with a significant portion in emerging markets.”<br />Strategic technology-advancing partnerships w/ Intel, Google, Eli Lilly and Company<br />Demonstration Center with 100,000 sq. ft. space in Yangzhou already implemented<br />Awards $55 million to 12 companies competing in Smart Grid Contest to speed updates <br />Ecomagination plan <br />GE pledged to increase the revenues in Ecoomagination to more than $25 billion by 2012<br />Continue to increase global presence (China, India)<br />
  11. 11. GE’s Future Strategy<br />Product: Provide the most comprehensive end-to-end solutions to win $100b smart grid industry<br />GE’s ability to work within the Chinese business and government communities is equally important as technical prowess. <br />Chinese firms will likely make a play to own all or part of a multinational player; GE may have to consider selling a stake in its business or partnering with a Chinese firm.<br />GE needs to understand the strategic difficulties of Chinese nationalism in the guise of domestic firms and re-think market strategy to win support from Chinese business community. <br />Transmission capacity must be increased exponentially to meet Chinese market demand. This must be weighed with the likelihood of the Chinese to comply or reject global carbon emissions initiatives and carbon pricing. The smart grid will expand fastest if Chinese policy supports carbon reduction. <br />Promotion: Partner with local Chinese companies and be willing to provide all culturally acceptable incentives to win government support for GE products AND negotiate with competitors where needed. <br />Price: GE has stated goal of seven percent annual growth and a 20% market share of Smart Grid business.<br />Place (Distribution): Continue to expand demonstration centers such as the Yangzhou facility in <br />2ndtier cities across the country to earn market share, brand loyalty and municipal favor.<br />
  12. 12. What makes us think we can implement it?<br />We are uniquely positioned to succeed in the Chinese market<br />Already in China and invested in demonstration centers at Yangzhou <br />Partnerships with Chinese based companies (South Rail Group, Ministry of Railways, Shenhua Group)<br />Heavily invested in clean energy and energy infrastructure since 2005<br />Revenue from ecomagination products has grown from $5 billion to $18 billion in 2009<br />Ecomagination generated $953 million in China in 2009<br />Track record of success working with Chinese companies & government agencies<br />13 billion partnership with Harbin Power Equipment Company<br />In 2009, $4.5 billion on product sourcing in China<br />13k employees in China (Feb. 2010)<br />Substantial investments to commercialize smart grid solutions:<br />sodium and lithium battery technology<br />offshore wind<br />smart appliances and multi-fuel gas turbines<br />Recently launched new division (focusing on home energy management market)<br />Ahead of competitors in this division <br />We remain committed to introducing a new generation of nuclear reactors and clean coal technology<br /> Will facilitate energy security and job creation.<br />
  13. 13. What do you think the response of the other players will be?<br />Other Players = Siemens, Cisco and IBM<br />Competitors will also focus on partnerships with private and state-owned firms<br />Siemens <br />Focus on winning the minds of the people through exhibitions like GE’s Smartgrid Demonstration Center<br />Attacks on GE’s lack of service implementation and perceived inability to run and maintain a completed smart grid system<br />IBM and Cisco will focus on technology and systems superiority<br />Siemens would focus on already existing Smart Grid partnerships in China<br />