Introduction and Company’s Overview.

            General Electric Conglomerate is a multi-industry company, which is established in New York. The headquarter of the conglomerate is situated in Boston, General Electric is recognized as one of the biggest and most diversified companies around the globe. In the year 2010, the company was ranked as the second largest company in the world by Forbes. The company is known to be one of the most profitable industries in the United States. Of the many companies in the world, General company is known to have a history exceeding 100 years, this is an extremely very long history. The industrial operating segments of General Electric are Power, renewable energy, Aviation, Healthcare, Transportation, Energy connections and lighting.

The Mission, Vision, and Objectives of the company

Today GE is highly honored due to their products and services, moreover their goal plan of being extremely the best, this makes them implement the strategies for developing their products and their market base. One of their big goals is pervasively spreading of their products and opening up new markets everywhere around the globe. The company is looking forward to implementing a strategy for developing their products; they plan to come up with new products fields. On the other hand, GE strategic goal plan is bringing together their market strategies, having a vision of opening up new markets at the international level. Also, General Electric is laying down a strategy of expanding its shares around the world, to increase its sales volume in different countries. Besides aiming at developing recognition of the name for their brand, they also focus on last expansion with the aim of taking over the in the electrical product and services production industry. The primary mission and goal of GE are first to become the top-ranked and big conglomerate around the globe. General Electric company has an ambition of extending its marketing regions across Africa and some areas in Asia.

Strategies of The Corporation

            The company produces different forms of electrical product which are significantly unique, the multi-industry company in question hasremained focused on its vision and have remained determined in strengthening it’s strategic and it is through this measures that the company has maintained its profitability position. The GE companies have made a step of starting its interaction with a very small-scale association, operating with a few products which generally electric.

The Organizational Structure and Operation analysis

General electric company ( GE) is very much determined to uplift its capability in advancing its business strength and taking every viable step of ensuring that weakness and identified and attended to accordingly. The conglomerate continues to develop its capabilities by putting much focus on opportunities and the threats available in the industry. General Electric employs a technique known as Strengths-Weaknesses-Opportunities-Threats (S W O T) Matrix. It is a fundamental framework which used as an analytical tool applied in analyzing both the internal and environmental factors impacting on the operations of a firm. It is essential for the evaluation of a firm’s weakness, strength, viable opportunities, and threats. According to Pickton et al. (1998) “SWOT should not be viewed as a static analytical tool with emphasis solely on its output. It should be used as a dynamic part of the management and business development process.” In this particular case, the company in question is a multi-industry company, therefore, such factors portray the activities of various industries of which the conglomerate carries its operations. The primary goal for using the swot matrix analysis is that it makes the General Electric company examine on the strategies that the company needs implement to perceive the viable external opportunities that the company can benefit from and to counteract the threats which come along with such types of opportunities. The other reason for using SWOT is to safeguard the strength of General Electric and work on its weakness.  Categorically, the SWOT analysis of General Electric can be accomplished through two distinct assessments, that is External and internal assessments.

 

 

External Strategic Factors assessment

This element of the SWOT analysis identifies the potential viable opportunities available in the industry around the firm’s external business environment. For external strategic factors, opportunities are the key elements that indicate the potential growth and development of a company. Typically, being one of the top-ranked multi-industry company in the world, General Electric company has got several opportunities which are opened to it. However, there are always threats which always comes along with opportunities, these threats can severely damage the firm in the future.

Opportunities

• The company’s expertise and competencies can lead to great success if applied in other similar products segments. Typically, noted as growth dependent on advanced technology application in all industries. Perfect example here could be the GE healthcare research taking the initiative of advancing the machines used in drilling Oil.
• Another perfect opportunity that GE enjoys is the government green drive. This opens opportunities for making sales of their products to the states and also the federal government workers. This is an opportunity for growth in developing markets.
• The legal agreement by the government to adopt the new technology standards and government free trade agreement has given the General Electric market to enter into the new market.
• The newly developed technological system has provided the company with an opportunity to adopt a pricing strategy which is differentiated in the new markets. This is a great advantage to the company since the good service it offers will enable the company to retain its loyal clients and lure new consumers.
• New Trends in consumer behavior is an opportunity for opening up new markets for General Electric Company.
• The online platform of the company helps the company get new clients through online channels.

Threats

• Lower shipping prices can reduce the costs of transportation
• GE has a great opportunity for an opening to invest in a new or existing product segment due to its stable free cash.
• The increasing trend towards isolation in the economy of America can be a severe threat to the corporation.
• The extreme competition is due to the increasing g number of companies in the industry.
• Seasonality of demand for products which are significantly profitable
• Lack of constant supply of new products
• Advancement of technologies used by competitors

The type of matrix structure used in assessing the capability of a firm to deal with external factors is known as the Externa Factor Evaluation EFE. General Electric usually uses this type of matrix to evaluate the external factors which influence its operation. The External Factor Matrix usually takes into account the threats and opportunities affecting organizational performance. The risks and opportunities recognition is from the analysis of SWOT. The weights of the opportunities vary in terms of importance.

The following tabulation represents the weighted score indicating how General Electric company is responding to the external factors influencing its operation.

 

 

Table 2 indicating the External Factor Evaluation for GE Corporation

External Assessment using the EFE matrix
Opportunities	Weight	Rate	Weight Score
The company’s expertise and competencies	0.06	3	0.18
The government green drive	0.14	4	0.56
the new technology standards and government free trade agreement	0.06	4	0.24
The newly developed technological system for the adoption of new pricing strategies	0.08	4	0.3
New Trends in consumer behavior	0.04	1	0.04
Product Innovation	0.11	2	0.22
The online platform of the company	0.12	4	0.48
Threats
Lower shipping prices can reduce the costs of transportation	0.07	3	0.21
GE has an excellent opportunity for an opening to invest in a new or existing product segment due to its stable free cash.	0.04	2	0.08
The increasing trend towards isolation in the economy of America can be a severe threat to the corporation.	0.02	2	0.04
The extreme competition this is due to the increasing g number of companies in the industry	0.07	2	0.14
Seasonality of demand for products which are significantly profitable	0.04	3	0.12
Lack of constant supply of new products	0.05	2	0.1
Advancement of technologies used by competitors	0.1	2	0.2
GRAND TOTAL	1.00		2.93

 

 

Internal Assessment

Internal assessment involves the examination of the internal activities of the company to evaluate the strength and the weakness of the organization.

Strengths are the company’s strategic abilities and the resources available for use when designing, formulating and sustaining an advantage in a competitive market place. The Strength of Ge are as follows;

• The success of a new product
• A firm band recognition
• Racking in High-Profit Margins
• Stable market leadership role
• Perverse geographic presence
• First moving product advantage
• Strong dealer society

Weakness simply can be referred to as lack of strength, and General Electric needs to trace the primary cause of the weakness majorly weakness may result due to lack of a strategic plan, this is a duty obliged to the management.

• Local monopolies and Niche markets
• The cost of substituting the present experts is high
• Imitation by the competitors
• The cost of developing a new supply chain and logistics network tends to be high
• Depletion of the per unit revenue
• The rate of investments in GE is low
• High attrition in the workforce

 

Internal Factor Evaluation Matrix (IFE) is a matrix used in the “identification and evaluation of the main strengths and weakness and assesses their relationship in the different operations of a business concern (Kipley, Analyzing the internal Environment of firm)” General Electric company applies the Internal Factor Matrix for making its analysis on the internal strength and weakness within the organization.

The following tabulation shows the Internal Factor Evaluation matrix for the GE Organization.

Internal Assessment using the IFE matrix
Internal Factors	Weight	Rate		Weight Score
Strength
The success of a new product	0.14	3		0.42
A firm brand recognition	0.11	4		0.44
Racking in High-Profit Margins	0.13	4		0.52
Stable market leadership role	0.10	4		0.4
Perverse geographic presence	0.08	1		0.08
First moving product advantage	0.10	2		0.2
Strong dealer society	0.02	4		0.08
Local monopolies and Niche markets	0.07	3		0.21
The cost of substituting the present experts is high	0.04	2		0.08
Imitation by the competitors	0.02	2		0.04
The cost of developing a new supply chain and logistics network tends to be high	0.09	2		0.18
Depletion of the per unit revenue	0.02	3		0.06
The rate of investments in GE is low	0.03	2		0.06
High attrition in the workforce	0.05	2		0.1
GRAND TOTAL	1.00		2.87

 

According to Sohel et al. (2014) “Competition is one of the most certain issues in today’s business world. No matter how a firm is big or small; it has competitors in the industry, and the strategies of these competitors affect the process of formulating a strategic plan for the company”. (p.40-47)

 

Due to this competition, it is necessary to use the Competitive Profile Matrix (CPM). Capps et al. (2012) argue that “a Competitive Profile Matrix utilizes critical success factors to allow an organization to compare itself to other competitors” (1059-1062). General Electric applies this matrix in making the comparison and evaluation of the areas that they need to advance and improve to outdo its competitors. The correlation between the competitors and General Electric is usually determined based on different critical growth and success factors. These factors include the; the product quality, satisfying the customer needs, the market shares, prices of the products, type of customer service, securing customer loyalty, brand image, and global expansion. By close examination of the preceding success factor General Electric can evaluate if they are appropriately meeting those elements to outdo their competitors;

The following tabulation illustrates the Competitive Profile Matrix for General Electric Corporation

Table 5: Showing the Competitive Profile Matrix for General Electric Corporation

 

 

 

Table 5: Showing the Competitive Profile Matrix for General Electric Corporation

		General Electric Corporation		Philips Co.		Exelon Company
Critical Success Factors	Weight	Rate	Weight Score	Rate	Weights	Rate	Weighted score
Satisfying Customer Needs	0.14	4	0.56	4	0.56	2	0.28
Product quality	0.14	4	0.56	2	0.28	2	0.28
Brand Name	0.07	4	0.28	3	0.21	2	0.14
Market Share	0.09	4	0.36	3	0.27	2	0.18
Price Competitive	0.12	1	0.12	3	0.36	4	0.48
Financial position	0.09	2	0.12	3	0.18	3	0.18
Global Expansion	0.07	4	0.28	1	0.07	4	0.28
Innovation	0.08	2	0.16	2	0.16	3	0.24
Customer Service	0.12	4	0.48	3	0.36	2	0.24
Customer loyalty	0.08	4	0.32	4	0.32	2	0.16
Total			3.24		2.77		2.46

 

 

 

From the table, it is a clear indication that General Electric is above the two competitors, Philips Co and Exelon Company have a Weight score of 2.46 while Philips Co. Has a weighted score of 2.77, General Electric is the leading with a weighted score of 3.24. This indicates that General Electric the leading company in the industry of coffee production. It meets all the critical success factors in the industry, unlike the others which are behind. Because General Electric is leading in the competition, they don’t stress out in the short run because no one is going to take them over, in terms of market share and growth.

Financial ratios also known as accounting ratios are the relative magnitude selected from two values from a financial statement. Financial ratios are essential in measuring the strength of a company in terms of finance which in turn can help in strategic management. The following information represents the financial ratios of the General Electric company as compared to its competitors.

Profitability Ratios; these are ratios which are used to measure the capability of the company to generate earnings in comparison to the expenses incurred during a given period.

Sources: General Electric Company Websites

Ratio	General Electric	Philips Company	Exelon Company
Net Profit Margi	12.7%	11.7%	15.26%
Return on Assets	3%	8.37%	6.31%
Return on Equity	18.5%	14.81%	27.39

From the above information having a higher percentage when a comparison is made with a competitor illustrates that the company’s financial performance is good. When GE is compared to Philips and Exelon. Exelon had a higher percentage in all the three classes, for Net profit margin Philips was the second but again was in position three for the Return on Assets and Return on Equity. General Electric tends to be performing well.

Activity Ratios; another name for this type of ratios is accounting ratios, this ratio measures the ability of the firm to turn different accounts in their balance sheet into sales and cash. They include the following;

Ratio	General Electric	Philips Company	Exelon Company
Inventory Turn Over	4.437	4.94	15.32
Average Collection Period	3.457	3.56	11.22
Total Assets Turnover	.234	.72	.41

In this case, the results of GE are not easy to compare with the other sectors because it heavily engages in many financial services. GE’s total asset turn over is much lower as compared to Philips and Exelon, but the values do not show complete domination of one corporation to the other they are. Having in mind that asset turn over measure’s performance together with profit margin and financial leverage, General Electric low value of .234 maybe due to the low level of either the profit margin or the financial leverage.

            Leverage Ratios; Usually, a company adopts this type of ratios when evaluating the financial leverage of the company and examine their ability to pay back their financial obligations in the required time to the creditors.

Ratio	General Electric	Philips Company	Exelon Company
Interest Coverage	2.28	–	4.93
Long term debt to Equity	.118	.06	1.13
Debt to equity	5.14	.17	1.33

From the above table, we can deduce different conclusions concerning how the three company’s finance their corporations. The Debt to equity ratio of GE is much high with a value of 5.14, and this is a clear implication that the company is relying so much on borrowing to finance its activities. Such a result may be due to the financing operation that the company gets engaged. When this value is compared with the value of the other competitors its is extremely high. However, the creditors do no fear to lend money to the company because of the company’s maturity and its reliable revenue stream.

Valuation Ratio; This is an exceptional type of ratio which is used to measure the price level of a company’s share, that is determining how low or high the value of share. The following tabulation shows the Valuation Ratio;

Ratio		General Electric	Philips Company	Exelon Company
Dividend Yield		2.8	1.93	2.06
Dividend Payout		51.2	15.83	41.76
P/E		18.512	9.62	21.00
Price to Book		3.43	1.45	5.42

If we take a look at the dividends analysis, Genera Electric is most appealing to investors, because it is very much clear that the company is having a high dividend yield and high dividend payout than the two competitors. When the price to book value is low it implies that the stock value is undervalued, this value usually varies across industries. The Price to book value of General Electric can be compared with others in the industry. This value shows the company’s value cash returns upon venturing in the company.

 

 

In summary, this business analysis report typically provides information on the strategies that General Electric corporation implements, the report emphasized the business matrix strategies that the company uses in the analysis of its operation. And strategy formulation. The grand matrices used by the firm clearly illustrates the strategic position of General Electric in the industry. On the other hand, the matrix strategies were was very informative in demonstrating that General Electric Company is appropriate and responding decently towards different opportunities and threats.

I would recommend that the company continues to use the implemented strategies for product and marketing development. Upon implementation of these strategies the company stands a high chance of extreme growth and significantly increasing their market shares and worth. Typically, when the company improves its product quantity and quality automatically will attract more consumers to its stores. Increasing the volume of sales can also be accomplished through the implementation of the product mix strategy. Moreover, when it comes to market development strategies the company can gain popularity and recognition mainly around the globe, gaining popularity and recognition will significantly help the company in its mission of expanding and being ranked the top producer. Another significant benefit that the company can get due to market development strategy is franchising; this entails the granting of authority to a corporate body to make sales of its goods and services in a specific region. Upon perfect execution of the plan, the company can significantly increase its sales volume leading to increased revenue.

The internal and external factors of the General Electric company have some significant impacts on its growth and future progress. The company has a lot of potential capabilities to outdo the other companies in coffee production and supply; the company is in a position to take over the industry of coffee production.

For the ratio analysis, I would recommend General Electric company as the best company to invest in long term basis. This is because the company has a low risk. The low risk of the company is because the company’s rate of growth is slow and steady having minimal volatility. However, as a business-oriented individual I would advise any person who is looking for high returns upon investment, the GE is not the appropriate company because if you expect high returns, definitely you need to go for high risk.

References

Sohel, S. M., Rahman, A. M. A., & Uddin, M. A. (2014). Competitive profile matrix (CPM) as a competitors’ analysis tool: A theoretical perspective. International Journal of Human Potential Development, 3(1), 40-47.

Pickton, D. W., & Wright, S. (1998). What’s swot in the strategic analysis? Strategic Change, 7(2), 101-109.

Capps III, C. J., & Glissmeyer, M. D. (2012). Extending the competitive profile matrix using internal factor evaluation and external factor evaluation matrix concepts. Journal of Applied Business Research, 28(5), 1059.

The General Electric Company Annual Report

 

 
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