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Examines the strategic placement of General Electric now & in the future by analyzing strengths, weaknesses, opportunities, and threats.... More...
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Examines the strategic placement of General Electric now & in the future by analyzing strengths, weaknesses, opportunities, and threats.
General Electric 1. Description General Electric's growth strategy is based on developing businesses -- from TV broadcasting to jet engines and power plants -- that are some of the most vital markets of this century. Located in Fairfield, Connecticut, it is the fifth-largest US company and has a market value of more than $160 billion, making it the most valuable (1997 Annual Report). Its products include: aircraft engines, electronic appliances, kitchen and laundry equipment, industrial products and systems, lighting, electrical distribution, and control equipment, plastics, silicones, laminates, and abrasives (1997 Annual Report). GE Capital Services (GECS) provides consumer and specialized
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* Maintaining strong financial position as more markets face currency crises which can have a major impact on cash revenues (Henry, 1998, 8B). GE's current competition reads like a Who's Who of business andincludes: ABB Asea Brown Boveri; AIG; Alcatel Alsthom; Caterpillar; CBS;CIGNA; Cooper Industries; Electrolux; Krupp; General Motors; General Re;GTE; Hitachi; ITT Industries; Johnson Controls; Matsushita; Maytag;Mitsubishi; Mitsui; News Corp.; Philips Electronics; Polaroid; Raytheon;Rockwell International; Rohm and Haas; Rolls-Royce; Siemens; Textron; TimeWarner; Toshiba; United Technologies; U.S. For instance, as people became more interested in investing, itbought mutual fund wholesaler GNA in 1993 (Welch, 1998, 42). New York: John Wiley & Sons. GE spends upwards of $8 million ayear on training and leadership development -- about half what it spends onR&D -- and from all reports the leadership and motivational training iswell done. Its products include: aircraft engines, electronic appliances, kitchenand laundry equipment, industrial products and systems, lighting,electrical distribution, and control equipment, plastics, silicones,laminates, and abrasives (1997 Annual Report). Its money market diversification is strong. (1994, October 3). (1998, February 27). how toanticipate change, how to cope with change, how to change a very bigcompany that does many things well" (Stewart, 1998, 7 ). It gets rid of losers quickly. * Identifying market niches. Early products included Edison legacies suchas lightbulbs, elevators, trolleys, motors, toasters, and other appliancesunder the GE and Hotpoint labels. When scandal hit Kidder, Peabody, GE quickly sold it to PaineWebber (Greenwald, 1994, 56). In the 192 s GE joined AT&T and Westinghouse in a radio broadcastingjoint venture, Radio Corporation of America (RCA). Jack in the box TIME, 56. Before Jack, wethought GE was big and good, but not big and great" (Stewart, 1998, 72).6. In 1995, GE developed a new electric power generator that converts arecord 6 % of fuel to energy. Fortune Magazine said of Welch in 1998: "[he] has rewritten the bookon management while keeping GE huge, nimble, and immensely profitable.Welch and GE get credit not only for what they have accomplished during hisalmost 17 years at the helm but also for what they have avoided" (Stewart,1998, 72). GE employs 239, people worldwide, including 155, in the United States.1997 ResultsRevenue: $9 .8 billion, up 15%Net income: $8.2 billion, up 13%Earnings per share: $2.5 , up 14%(1997 Annual Report).2. In the multimedia area the companysold its GEnie online service in 1996, while NBC and Microsoft formedMSNBC, a cable news channel that had better prospects (Welch, 1998, 66). Jack Welch speaks : Wisdom from the world's greatestbusiness leader. Located in Fairfield, Connecticut,it is the fifth-largest US company and has a market value of more than $16 billion, making it the most valuable (1997 Annual Report). General Electric1. Sales revenues from these spin-offs were used to buy: * Employers Reinsurance ($1.1 billion); * RCA, including NBC ($6.4 billion); * Kidder, Peabody ($1.2 billion); * CGR Medical Equipment (Traded from Thomson of France in return for GE's consumer electronics division). Also that year GE acquired Lockheed Martin's medical imagingbusiness, and purchased Stewart & Stevenson's gas turbine division for$6 million.5. GE's Welch sees opportunity in Asiacrisis, USA TODAY, 8B. Industries; Viacom; WaltDisney; and Whirlpool. Greenwald, J. Welch, J. GE entered the computerindustry in 1956 (but sold the unit to Honeywell in 197 because ofoperating losses). Insurance is of concern to consumers so GE bought Amex Life Insuranceand Life Insurance Co. America's most admired companies.Fortune, 7 +. Strategic Issues for the Future One issue will be to clone Jack Welch, and all reports on the companysuggest that this is not being done. History of Corporate Strategies General Electric began in 1892 in New York when the Thomson-HoustonCompany and the Edison General Electric Company merged. GE sold off air-conditioning (1982), housewares (1984), and semiconductor (1988)businesses. GE and joint venture CFM International won the bulk of the world'sorders for commercial aircraft engines in 1996, its lighting business hasdeveloped a global presence, and the plastics unit has achieved recordgrowth by supplying the computer and consumer electronics industries. (1998). That's the outstanding attributeof the company, and it's largely a result of Jack's vision... * Maintaining Innovation to keep a flow of new ideas and products coming into the GE pipeline. Description General Electric's growth strategy is based on developing businesses -- from TV broadcasting to jet engines and power plants -- that are some ofthe most vital markets of this century. Other strategic issues include: * Developing more global markets in the area of joint ventures since its appliances market is facing threats in Asia and Europe (Welch, 1998, 84). References Davenport, T.H.; Prusak, L. GE's Diversification Strategy GE's diversification seems to be based on finding out what theconsumer wants, and then buying a company that provides that good orservice. GE Capital Services (GECS) provides consumer and specialized financingand property and casualty reinsurance, accounts for the largest portion oftotal sales. In the early 199 s GE expanded its lighting business. However, you can't train people to have vision and how to becreative. The Impact of Jack Welch Jack Welch became president in 1981 and shook up the company, whichhad become rigid and ingrown. In 193 , GE sold offits RCA holdings based on an antitrust ruling (one of 65 antitrust actionsagainst GE between 1911 and 1967)(Greenwald, 1994, 56). Cambridge: Harvard Business SchoolPress. Stewart, T. Investment guru and wizard Warren Buffet says of Welch:"People admire Jack for what he has done at GE more than they would if hehad been at IBM and merely maintained it at the top. 1997 General Electric annual report. In1997, bought aircraft engine maintenance firms Greenwich Air Services, andUNC. (1997). Gertrude G. GE Investment Managementruns the corporation's pension assets and started selling mutual funds tothe public. That statement was referring to the fact that since 1981 nearlyevery other corporate giant -- AT&T, Exxon, Ford, GM, Sears, IBM, PhilipMorris, Prudential--collided with serious trouble (Davenport & Prusak,1997, 116). Henry, D. of Virginia (1995) and life insurer First Colony for$1.8 billion in the following year. According to its 1997 annual report, GE is a "diversified technology,manufacturing and services company with a commitment to achieving worldwideleadership in each of its 12 businesses." GE operates in more than 1 countries around the world, including 25 manufacturing plants in 26different nations. Subsidiary National Broadcasting Company (NBC) is profitablewith strong ratings leading to higher advertising revenues. He decentralized operations and pursued astrategy of retaining and pursuing only high-performance ventures, with theaim of making GE #1 or #2 in every industry in which it operates. That year GE and United Technologies' Pratt & Whitney subsidiaryformed a joint venture to build engines for a new Boeing jumbo jet. Revenues increased sixfold from 194 to 1952. (1998, March 2). Under Welch's leadership, between 198 and 1989 GE sold operationsthat accounted for 25% of its 198 sales and focused on medical equipment,financial services, and industrial plastics and ceramics. Working knowledge : Howorganizations manage what they know. By 198 GE's revenues had reached $25 billion fromsales of plastics, consumer electronics, nuclear reactors, and jet engines.3. GE was backed bythe Morgan banking house and research led to the company's initialsuccess(1997 Annual Report). SWOT AnalysisSTRENGTHSSize can eliminate competitionDiversified PortfolioAggressive ManagementWEAKNESSESSize eliminates employee innovationWeak in consumer entertainment sectorsHighly leveraged aircraft divisionOPPORTUNITIESGlobal ExpansionGood markets for Medical sideStrong growth for Information ServicesTHREATSEnvironmental Groups (Asia)Currency FXX risksAntitrust Legislation4. Michelson, who joined GE's board of directors in 1976,five years before Welch became CEO says: "I've served on a number ofboards, but GE is singular not only in its top leadership but in theinstitutional development of leadership.
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