General Electric Essay Example
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General Electric (GE) is an American Engineering Corporation, the world's largest manufacturer of many types of equipment, including locomotives, power plants, gas turbines, aircraft engines, medical equipment, lighting equipment. Headquarters is situated in the city of Fairfield, Connecticut (USA).
The company was founded in 1878 by inventor Thomas Edison, and was originally named "Edison Electric Light", after the merger in 1892 with "Thomson-Houston Electric" got its present name.
1910 - the company began mass production of tungsten filament lamps (patent on the use of incandescent filaments from refractory metals company bought Russian inventor AN Lodygina in 1906).
1925 - produces the first household refrigerator.
1928 - opens the broadcast station and starts transmission of television programs.
1942 - is testing its first jet engine.
1947 - began serial production of automatic washing machines.
Today, GE is a diversified company operating in high-tech, manufacturing, media and financial services to solve complex problems of today. Company's activities include the production of aircraft engines, power equipment, security systems, plastics, water treatment equipment and water purification, development of imaging techniques in medicine, financial services companies and individuals, and the creation of television programs and films. More than 300,000 employees are working in more than 100 countries worldwide.
GE is made up of the four fastest growing businesses in the areas of finance, infrastructure, and media. Business units are structured in such a way as to achieve success in the markets of this and be ready for opening day of the possibilities of the future.
The Characteristics of the Company
Infrastructure businesses contribute to the creation of energy, transport, medical, oil and gas infrastructure of the new century. These business units provide products and services that make it more competitive in developing regions in the world economy, as well as update the fleet of equipment developed countries through cleaner and more fuel-efficient infrastructure technologies.
Financial business unit offers a wide range of products and services to commercial structures, private consumers and the various markets around the world. With more capacious and thus more focused structure, GE Capital focuses on the development of strategic alliances and joint ventures that would allow GE to derive maximum benefit in the implementation of the emerging market opportunities.
NBC Universal is one of the world's leading media companies, which produces, creates and markets a broad masses of movies, television and news programs, sports programs and special events. However, as a result of the increasing spread of digital form of communication and marketing information services has undergone significant changes. Whether it's increasing the role of cable television or the "monetization" of the Internet, GE contributes to the development of today's technologies, as well as in the search for new and effective ways of doing business in the future.
Scale-up business units GE is expressed in a wide range of products and services that cover many sectors of the economy and a large number of consumers around the world.
GE brand took second place in the ranking BrandZ Top-100, its cost sostavlyaet71,4 billion. Rating BrandZ Top-100 prepared by the leading international research agency Millward Brown Optimor brands and evaluates companies on the basis of current and future profits, as well as take into account the attitude to brands from the hundreds of thousands of consumers who participated in the survey.
American concern General Electric, which has more than a century, was named by Fortune magazine last year, the most respected company in the world.
Brand is the most important object of investment. For example, investment in the form of cash in a savings account over time generates income in the form of interest. The situation is similar in branding - here the money is invested in long-term maintenance of a positive perception of the brand users. This can be called - strengthening the brand, that is, an increase in the extent of its impact on consumers.
In the case of GE brand is strong enough, he has a serious impact on the buying behavior of people. People are choosing this company, as a brand they trust. For an individual brand is, in fact, the perception. So, General Electric is a brand. Large numbers of people perceive General Electric as one of the largest, most successful, reliable corporations. For a company the success of the brand is very important, because it forms a firm's reputation, and therefore success. But at the same time, the firm must continuously improve products; improve the quality to match the brand.
The traditional view is that buyers are losing money by buying the company, because they overpaid for them, and then fight for the integration of acquisitions within the existing company. Unlike acquisitions GE: General Electric buys a dozen firms annually. Such acquisitions are helping GE seize new technologies and enter new markets around the world. Sometimes a major acquisition is happen, as was the case with NBC and RCA. Others are much smaller acquisitions. But GE buys and integrates at least one company a week. Sometimes, buying the company, GE makes mistakes (as in the case of Kidder Peabody and Montgomery Ward), but in general, the acquisition brings more benefits than losses. While many companies have stopped making such purchases during the recession of the early century, GE has remained active, and it is often able to make very good deals because of low competition.
Acquisition strategy in GE: At General Electric has a well-organized strategy, according to which committed the acquisition of other firms. This strategy includes the accurate assessment of the company prior to the acquisition and detailed process of integration after the acquisition. GE can navigate very quickly when the target becomes available, as many have already carried out an assessment of potential candidates. GE quickly integrate acquired companies into its system and culture, while selling the parts that do not need it (really, GE disassemble all acquired her company). As a rule, GE makes drastic changes in the system, the culture and technology of the acquired company, which is often completely merged with GE. At GE middle managers engaged in the acquisition, report on its activities to the top management. Middle managers and board of directors carry out regular analysis of the processes of acquisition and performance of integrated units.
The traditional view is that alliances are generally unsuccessful due to a conflict of interest between the partners. Unlike alliances GE: GE initiates a dozen major alliances each year, as well as many smaller bonds. GE ventures help to gain access to new technologies, products and markets around the world. Some ventures have existed for decades (such as venture capital company with SNECMA aerospace company in France or a medical device company Yokagawa in Japan), while others are closed in a year or two.
The strategy of alliances in GE: Among programs there exist identification alliances both within individual units and at the corporate level. Managers involved in alliances, have a deep knowledge of the needs of the people and in GE, and this helps them to carry out the creation and management of the venture. At GE middle managers involved in alliances, report on its activities to the top management. Managers of alliances coordinate their work with the department engaged in the acquisition, but did not obey him.
GE Internal Strategy
1. Active strategic planning. The company conducts annual planning cycle. Senior managers meet with 500 top managers at the beginning of the year to determine the priorities of the company for the year and set new goals. During the year, middle managers and senior executives of the company were traveled to meet with thousands of employees to improve the plan. The Strategic Plan includes both high-level goals and objectives for individual business units. Managers are responsible for the creation of the plan and achievement of goals.
2. Powerful corporate programs. Over the past 20 children GE initiated a small number of programs at the corporate level, creating a common system and culture. In the 80s GE held at the corporate level program outsourcing (Note: outsourcing - the transfer of non-core activities of partner companies, subcontractors), which resulted in the cease those activities in which GE does not have a competitive advantage, and attention was focused on achieving best international standards of quality and cost for all kinds of activities that it has retained and acquired. In the early 90s GE initiated a program of quality "Six Sigma", requiring all managers of the company and all its subsidiaries in the company or to adopt a program or leave the company. In the late 90s the company focuses on the development of activities in the field of high-margin services. In the early 21st century, it focuses on the technological development of all activities. Each program includes continuous trainings throughout the company and require investments of hundreds of millions of dollars and tens of thousands of hours of work time instructors and employees.
The program has several features in common. Each program focuses on those activities that are able to increase the value of a product or service from the perspective of the end user. Each program covers the entire company and requires the participation of each department and each employee. Each program pays well. Senior managers have always been active in such programs. Each program will provide the necessary staff and investment in training. Each program has specific serious purpose, or failure to achieve that affects an employee's career. Each program involves the supply and distribution companies, as well as internal divisions.
3. Knowledge Management System. GE has a well-developed system of knowledge management. A small number of employees report to senior managers, is searching for opportunities to transfer ideas from one business to another, as well as to facilitate the dissemination of the knowledge that managers consider useful. For example, a successful technology used to reproduce the images in medical devices may also be used in monitoring the performance of the engine and monitor pacemaker. Career paths of employees often move from one business to another, from one function to another, from one country to another, switching to the activity, where workers will be most useful. Managers are awarded for the discovery of ideas beyond the boundaries of useful activity units and penalties for concealing knowledge or people.
4. The organizational structure of "small firm". In practice, GE - is a small organization in the shell of a large company. In a bit of organization and management levels, as a rule, line manager and Executive Officer (CEO) share no more than 4-5 levels. The number of employees at the corporate level is low, but those who work at this level, play an important role as facilitators to help a particular business within GE to expand its borders. The company has clear and constantly developing goals that are communicated to all employees. All employees have access to the global corporate intranet, where they can get information about the plans and resources of the company.
Despite the fact that GE is working on many of unrelated markets rallied strongly in the company. And this unity of the company uses to innovation and aggressively competes in markets around the world.
Result is efficiency, quality, speed and strong position
Internal and external policies GE provide a strong market position, characterized as consumer preferences, and the ability to impose its will on suppliers. This is not a market power in the traditional sense, monopoly power, hiding behind static barriers to entry. Instead, the company creates large businesses that have advantages over competitors by price / quality ratio, and which are capable of faster than others to develop new technologies and new markets. Organizational strategy GE denies another traditional view - that GE is successful because Jack Welch said that GE businesses must be either number 1 or number 2 or leave the company. On the contrary, the success of GE as an integrated corporation helps its individual businesses to be leaders in their industries.
Financial Indicators of GE
Today, the company specializes in the manufacture of electrical and power equipment, home appliances and transport engineering. In the product line of the company presented engines, power plants, including nuclear reactors, gas turbines, aircraft engines, medical equipment, plastics and sealants.
In 2012, General Electric income amounted to 147 billion US dollars. The size of the operating profit stood at 16.1 billion US dollars, an increase of 8% more than in 2011. It is noteworthy that during the last 5 years, the company's revenue is reduced with a mark of 180 billion USD in 2008 to 147 billion in 2012, with profits growing actively with 9.9 billion in 2009 to the current levels. By the end of 2012 we can confidently assert that the company had overcome the consequences of the global financial crisis of 2007-2009. The company's profitability in 2012 was 11.7%.
The dynamics of the company for 2013 looks optimistic adjusted profit for the 4th quarter increased by 20% due to the increase in the number of orders for aircraft engines and electric turbines. Analysts had forecast earnings growth to US $ 0.53 per share, which was confirmed, published reports. Listing companies on the New York Stock Exchange was held June 23, 1982. The company's shares were included in the calculation of Dow Jones Industrial Average. To date, General Electric - is the only company in the index, which is preserved in the basket since its inception. The company owns a large number of institutional and individual investors, but none of them belongs to a package of more than 5% of the shares. The largest shareholders in General Electric are State Street Corporation (3,51%) and Vanguard Group Inc. (3.36%).
As of early February 2014 in free float is 10,117,370,000 shares. Market capitalization is 253.44 billion US dollars. The ratio of P / E equals 16.84, suggesting that the prospects of investments in shares of General Electric.
The dynamics of the market value of the shares in the short and long run is characterized by ambiguous. At the five-year period of time the company's capitalization has doubled to 111.47%, which is 20% higher than the percentage increase in the Dow. In this case, one of the main competitors - Siemens has shown growth only 96.86%. From 2011 to 2013 the value of shares increased by only 18%, which underperformed the market by 10%, while rival 3M Company increased its market value at 41.84%. Over the last 3 months capitalization fell by 6.52%, which is a negative factor for short-term investors.
Shares of General Electric will be of interest to all types of traders. Due to the long history of the formation of the company, its uniqueness, stability and reliability, strategic investments are seen quite appropriate. Aside from the fact that the oscillation amplitude paper prices high enough, high free-float coefficient indicates the possibility to spend quality technical analysis.
"GE Fact Sheet: Businesses, Locations, Awards, Leadership". GE company website. Retrieved January 25, 2013.
"General Electric to acquire Vetco Gray for $1.9 billion". ReliablePlant.com. 8 Jan 2007. Retrieved 11 June 2014.
"GENERAL ELECTRIC CO 2013 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. February 27, 2014.
Carlson, W. Bernard. Innovation as a Social Process: Elihu Thomson and the Rise of General Electric, 1870–1900 (Cambridge: Cambridge University Press, 1991).
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