General Electric Company

Introduction

In modern times, publicly traded corporations are very widespread all around the world. A publicly traded corporation means that a company can be owned by a large group of people. Each shareholder can influence the decision making of the company and get its dividends from the profit. Being a publicly traded corporation means disclosure of all financial statements, even if it can be used against the company by its competitors. A positive issue is the raising of funds for expansion and investment.

General Electrical Company belongs to numerous publicly traded corporations in the United States of America. It is a diversified industrial corporation. The official website of the company gives information about the company’s work in four directions: building, curing, moving and powering.

1. Building – General Electrical Company is building the world by providing capital, expertise and infrastructure for a global economy;
2. Curing – General Electrical (GE) is constantly working to make the world a healthier place by supplying the healthcare technology that saves nearly 3,000 lives every day;
3. Moving – the company moves the world in the safest, fastest and most efficient ways possible;
4. Powering – GE powers the world with the cleanest, most advanced technologies and energy solutions.

Currently, the company operates in such segments as GE Energy, GE Healthcare, GE Aviation, GE Capital, GE Lighting, and Home & Business Solutions. There are over 300,000 employees in more than 100 countries.

Mission and Vision of General Electric Company

The mission and vision are very important parts of the company’s work. The mission statement informs people what the company determines as crucial, and the vision statement shows how the company wants things to be. According to the official website of General Electric, the company’s mission is the following: “GE works on things that matter” (2014). The vision of the company is as follows: “the best people and the best technologies taking on the toughest challenges, finding solutions in energy, health and finance. Building, powering, moving and curing the world. Not just imagining. Doing” (General Electric Company, n.d.).

The mission and vision of General Electric make it obvious that the company does everything possible to provide its customers with the best technologies and make people’s life easier, secured and more comfortable.

Five Forces of Competition

According to Porter (2008), there are five forces of competition. They are the following: the threat of entry, the power of suppliers, the power of buyers, the threat of substitutes and rivalry among the existing competitors.

1. The threat of entry means that “new entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs and the rate of investment necessary to compete” (Porter, 2008, p. 80). General Electric is in a very large-scale economy, which is difficult to break into. New entrants will require a big capital for advertizing to bring a new company brand name into the public.
2. The power of suppliers means that suppliers are in their right to demand their own prices. This force of competition is a great threat only for the technological products of General Electric. Technology is constantly developing and is becoming more efficient.
3. The power of buyers. Buyers can force down prices, demanding more service or higher quality. General Electric has a considerable power of buyers for most of their products. GE always stays competitive in price wars with its competitors.
4. The threat of substitutes. “A substitute product or service performs the same or similar function as an industry’s product by a different means” (Porter, 2008, p. 84). This type of threat is relatively low for all the General Electric industries. The majority of the suppliers of GE cannot survive if they lost GE’s business. In addition, the company has the advantage of the size of its business segments.
5. Rivalry among existing competitors. The level of competition for GE is very high. Although, such characteristics as brand name, market share, access to assets and customer loyalty make GE highly competitive within the industry.

SWOT Analysis

The abbreviation SWOT stands for “Strength, Weakness, Opportunity and Threats” (Fine, 2009). Strengths and Weaknesses belong to internal attributes, while Opportunities and Threats – to external. SWOT analysis is a great technique that helps to create an overview of a company’s strategic situation and define strong and weak sides of the company in general. SWOT analysis for General Electric Company is given below:

Strengths:

• Strong brand name (5^th Best Global Brand);
• Global recognition (6^th in Fortune 500 list, 19^th Most Innovative);
• Diverse product range;
• Excellent management (proven leadership and business model);
• 300,000 employees in more than 100 countries.

Weaknesses:

• Weak growth of revenue of industrial segment;
• Company size;
• Pollution (4th largest corporate producer of air pollution in the USA);
• High debt burden;
• Flexibility.

Opportunities:

• Development of infrastructure;
• Green Technology;
• Growth in the aerospace industry;
• Geographic growth;
• Improvement of customer services;
• Merger between NBC and Vivendi.

Threats:

• Technology disaster;
• Economic slowdown in the USA and Europe;
• Relations problems;
• Intense scrutiny;
• Competition.

GE’s Strategy Based on SWOT Analysis

General Electric Company states that “strategy is about making choices, building competitive advantage and planning for the future. It is not set through one act or one deal. The company builds it sequentially through making decisions and enhancing capability” (GE 2012 Annual Report, 2012). Based on SWOT analysis, one can present a strategy for GE that is formed through the following important actions:

1. to remade GE as an “Infrastructure Leader” with a smaller financial services division:
   • to continue reducing the size of GE Capital from the $600 billion of assets it had in 2008 to a goal of $300-400 billion;
   • to continue developing infrastructure platforms by investing in adjacencies;
   • to create a more focused financial services company;
   • to simplify GE;
   • to do everything possible for the infrastructure earnings to reach 70% of the total.
2. to allocate the capital in a balanced and disciplined way:
   • to grow the dividend;
   • to continue executing on focused acquisitions;
   • to continue to focus on acquiring specific capabilities.
3. to increase the investment in an organic growth:
4. to focus on R&D and global expansion;
5. to build deep consumer relationships based on an outcomes-oriented model;
6. to position GE to lead in the big productivity drivers of this area.

To achieve positive results and keep up its success on the global market, the company needs to pay attention to all these actions and perform them with the highest level of accurateness and responsibility.

Types of Strategies

According to Michel E. Porter (1980), there are three main generic strategies. They are the following:

1. overall cost leadership;
2. differentiation;
3. focus.

Tight cost, overhead control and aggressive construction of efficient-scale facilities are the main issues required by the overall cost leadership strategy. Quality and service are not ignored, but the basic attention is paid to low cost.

The differentiation strategy means developing products and services that are unique. Differentiating approaches can take many forms: brand image or design, technology, customer service, and other dimensions. This strategy is more appropriate for GE Company.

The third type of strategy is focus. The company focuses on a particular buyer group, segment of the product line or the geographic market. Through the implementation of this strategy, the firm manages to achieve both differentiation and lower costs in serving the target. Though, these results can be achieved only in terms of a narrow market target.

The combined strategy of differentiation and focus implemented in different industries of GE will bring more positive results and gain more success. The advantages are the following: there will be difficulties in duplicating or imitating strategy, the products and services will be unique, and the value will be provided in an efficient manner.

General Electric Communication Plan

Communication influences the attitudes of people all around the world as well as supports the good relationships with the board of leadership, employees and stakeholders. The world’s practice determined some important steps, through which an effective communication plan can be developed. They are the following:

• to determine the goal of the plan;
• to define stakeholders (audience);
• to identify key messages;
• to specify communication methods (open house, celebrations, media, electronic media, meetings, press conferences, social media tools, public hearings or workshops);
• to pinpoint the timeline;
• to determine mechanisms needed to obtain feedback on the plan.

Communication plan for General Electric Company is presented below in Table 1.

Table 1

Communication plan for General Electric Company

This communication plan ensures that all stakeholders will be informed about the new company’s decision to implement a new general strategy of competitiveness and profitability. Through the telephone calls, emails and announcement at the official website of the company, everyone will be notified about the changes in the company, while press conference with all stakeholders enables everyone to discuss new ideas. The method of workshops will be held for employees of all company’s business segments all around the world and will assure that all workers of General Electric are aware of the positive and negative characteristics of the new strategy and will work efficiently to bring positive results.

General Electric Governance Mechanisms

Governance is defined as “systems and processes that ensure the overall direction, effectiveness, supervision and accountability of an organization” (Cornforth, 2003). Governance mechanisms include monitoring systems, governing boards, and signaling mechanisms like reporting or codes of conduct.
At the General Electric’s official website, there are presented the following committees: Audit Committee; Management Development and Compensation Committee; Governance and Public Affairs Committee; Risk Committee; and Science and Technology Committee. In this paper, Risk Committee and Governance and Public Affairs Committee will be examined.
The Risk Committee entirely consists of independent directors, and its main principles are the following:

• to oversee GE and GE Capital’s management of key risks as well as the guidelines, policies and processes for monitoring and mitigating such risks; to review and discuss with management GE and GE Capital’s risk appetite and strategy relating to key risks. (General Electric Company, 2014b)

This committee also receives reports from GE on the results of the risk management assessments and reviews the independence and effectiveness of the risk management function. The Risk Committee has the authority to approve the appointment and, if appropriate, replacement of the Company’s chief risk officer and GECC chief risk officer.

The Public Affairs and Governance Committee Charter gives the information of its responsibilities. The Committee itself selects director nominees for the Board, makes recommendations concerning the structure and membership of the Board committees, and reviews director’s benefits and compensation. It also develops and annually reviews the Governance Principles. According to General Electric Company (2014a), the Governance and Public Affairs Committee is authorized to “review trends in legislation, regulation, litigation and public debate as they relate to the Company; review the Company’s policies and practices related to political and campaign contributions, and review the Company’s support of charitable, educational and business organizations”.

Both committees play a vital role in the company’s development and success. The first committee controls and monitors the risks of the whole company and supervises the compliance with the regulatory and legal requirements needed to reduce the risks. Taking into consideration the great success of each business segment of General Electric and its growth in profit, it is obvious that the committee perfectly performs its duties. The second committee is responsible for the public affairs within and outside the company. The role of this committee is also very important as it manages to create a good working atmosphere among employees, as well as beneficial relationships with other organizations all around the world.

Leadership

In 2000, Mr. Immelt was appointed as the president and chief executive officer of GE. He has been named one of the “World’s Best CEO” by Barron’s for three times. Under his leadership, GE has been named “America’s Most Admired Company” in a poll conducted by the Fortune magazine and one of “The World’s Most Respected Companies” in polls by Barron’s and the Financial Times. During the years of Mr. Immelt’s leadership, the company has achieved substantial results and stable profit growth. Table 2 shows the profit of GE for 2012.

Table 2

The Profits of GE in 2012

Source: GE 2012 Annual Report.

GE announced fourth-quarter 2013 operating earnings of $5.4 billion.

The code of conduct in GE is named “The Spirit & The Letter”. It states that the leader is not only responsible for his/her own actions but for “fostering a culture in which compliance with GE policy and applicable law is at the core of business-specific activities” (General Electric Company, 2008).

Effective leadership brings positive thinking and desire to work harder and more efficiently. Employee performance can only flourish in a sound work environment. That is why GE is committed to supporting its employees through systems and policies that foster the open communication, maintain privacy, and assure health and safety. When employees respect, admire and value their leader, when they understand that he or she supports and pays considerable attention to their work, when they love their company and know about the benefits it brings to the world, they will do their best to do their job excellently.

General Electric Company and its Ethics

Over the years, GE has built a worldwide reputation for the lawful and ethical conduct. According to General Electric Company (2008), the leaders and employees should comply with applicable regulations and laws related to business conduct; be honest, trustworthy and fair in all GE relationships and activities. They need to promote an atmosphere where legitimate employment practices involve every member of the diversified community of GE, safeguard the environment, and promote workplace safety. Each worker in GE must recognize, exemplify and value the ethical conduct.

General Electric Company is a company with a strong brand name known all around the world. It is successful and recognizable globally. All these results are achieved through the ethic policies and hard work.

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