Group Case Analysis

General Electric
Shannon Wenger, Justin Jonas, John Lee
February 23, 2015

Table of Contents
EXECUTIVE SUMMERY

MISSION AND VISON

MISSION
BUILDING
CURING
MOVING
POWERING
VISION

3
3
4
4
4
5

OBJECTIVES

FINANCIAL OBJECTIVES
STRATEGIC OBJECTIVES

8
9

DRIVING FORCES

10

ECONOMIC CONDITIONS
LEGISLATURE/LEGAL
DEMOGRAPHICS
SOCIAL & LIFESTYLES
TECHNOLOGY

10
10
11
12
12

INDUSTRY KEY SUCCESS FACTORS

13

COMPETITIVE ANALYSIS

13

COMPETITIVE STRATEGY

16

EXTERNAL ANALYSIS

16

INTERNAL ANALYSIS

19

FINANCIAL ANALYSES

22

WORKS CITED

28

Executive Summery
When you think about innovation, you think of newer ideas,

Mission and Vison

Mission

General Electrics mission is made up of four parts; Building,

Curing, Moving, and Powering. All of these different segments that
General Electric shares a hand in, helps people understand what
General Electric is all about, and helps describe what they do
every day. General Electrics mission is as follows: GE imagines
things others dont, builds things others cant and delivers
outcomes that make the world work better. GE brings together
the physical and digital worlds in ways no other company can. In
its labs and factories and on the ground with customers, GE is
investing the next industrial era to move, power, build and cure
the world. (GE About Us/Building) These components also
provide information on the different market segments that
General Electric covers. Such an example is that of the Curing
component, which tells us that General Electric provides the
appropriate health care technology to assist with providing
exceptional healthcare. Other venues that General Electric covers
is that of Building, Moving, and Powering. Each covers the
respective market segments of appliances, lighting, and power
systems, helicopter engines, and of course different methods of
energy. Such venues are described below which make up General
Electrics Mission.
Building
GE is building the world by providing capital, expertise and
infrastructure for a global economy. GE Capital has provided
billions in financing so businesses can build and grow their
operations and consumers can build their financial futures. We
build appliances, lighting, power systems and other products that
help millions of homes, offices, factories and retail facilities
around the world work better. (GE About Us/Building) This first
venue pertains to the many products that many households all
have. Such examples range from the basic household appliances
such as refrigerators, washing-machines, and dryers, to the

lightbulbs be they florescent or LED. All of which in the end help

create a better overall home, which also in turns refers to the
vision General Electric holds.
Curing
GE is constantly working to make the world a healthier
place by supplying the healthcare technology that saves nearly
3,000 lives every day. Our focus is on helping medical
professionals make an earlier, more accurate diagnosis of disease
and then better equipping them to treat it. Were also designing
the tools that make healthcare available in even the most remote
parts of the world. Anywhere there is a need for better healthcare
tools, we are there. (GE About Us/Curing) Curing, refers to the
health care market with better products for healthcare workers,
which in turn provides a more accurate diagnosis of the individual.
This in turn also refers back to General Electrics vision of
providing a better place.
Moving
GE moves the world in the safest, fastest and most efficient
ways possible. Were moving airlines on the worlds largest and
most efficient jet engine. We move freight using the most
advanced locomotives and signaling systems. We even make the
helicopter engines that perform life-saving rescue mission. If
there is a better way to move people and goods, GE is behind it.
(GE About Us/Moving)
Powering
GE powers the world with the cleanest, most advanced
technologies and energy solutions. From FlexEfficiency Combined
Cycle power, to smart grids that help utilities manage electricity
demand, to gas engines that run on organic waste, our
technology currently helps to deliver a quarter of the worlds
electricity. GE Oil & Gas is currently operating in more than 120

countries working on the safest, most reliable and cost-efficient

innovations in the field. (GE About Us/Powering)
Vision

General Electric has a strong vision that states; We are

repositioning GE to be the worlds best infrastructure and
technology company, with a smaller financial services division.
Our focus is on driving infrastructure leadership, investing in
innovation and achieving a culture of simplification to better serve
our customers around the world. (GE Our Strategy) This vision in
other words states that General Electric drives for innovation
above all along with the desire to make the world an overall
better place.
For a mission to be considered a well thought out statement,
it must also be able to define the companys current purpose,
and a set of core values to guide the pursuit of the vision and
mission. (Strickland) General Electrics Mission and Vision are
adequate for their company considering the markets General
Electric are involved, as well as what they desire to achieve; a
better world, which can safely be said to be GEs current purpose.
General Electrics mission is also a clear and understandable
mission; a characteristic that a mission statement of any
company should have. If the mission statement was unclear, then
people would not understand who they are, what they do, and
why they are here. (Thompson) In the beginning of the mission,
pertaining to the Building concept, General Electric portrays a
clear and understandable idea about what they do for one of four
venues they take part in explained in the above paragraphs;
GE is building the world by providing capital, expertise and
infrastructure for a global economy... We build appliances,
lighting, power systems and other products that help millions of
homes, offices, factories and retail facilities around the world work
better. (GE About Us/Building) Other examples from the other
three segments General Electric takes part in, are similar in that
what General Electric does is clear for every segment. For Curing,
General Electric states; GE is constantly working to make the

world a healthier place by supplying the healthcare technology

that saves nearly 3,000 lives every day. Our focus is on helping
medical professionals make an earlier, more accurate diagnosis of
disease and then better equipping them to treat it. (GE About
Us/Curing) For Moving, General Electric states; Were moving
airlines on the worlds largest and most efficient jet engine. We
move freight using the most advanced locomotives and signaling
systems. We even make the helicopter engines that perform lifesaving rescue mission. (GE About Us/Moving) These examples
are all similar in that they are clear and understandable, as well
as provide an insight on who the target markets are and what
General Electric is doing within these markets.

These examples also show the values General Electric takes

pride in; efficiency, cleanliness, etc. Whatever you can think of
that can be made better and more efficient while at the same
time providing an environmental friendly product, General Electric
is clearly striving for that goal. General Electric explains this goal
in two ideals: Ecomagination, and Healthymagination. General
Electric states; Ecomagination the companys commitment to
technology
solutions that
save money
and reduce
environmental
impact for
its
customers
and GEs own
operations
has
generated
more
than US$160
billion in
revenue. GEs
own
operations
have
seen a 32
percent
reduction
in
GHG emissions since 2004 and a 45 percent reduction in
freshwater use since 2006, realizing $300 million in savings.
(Ecomagination) From 2005 when this strategy was approached
and implemented, General Electric overcame a number of
milestones. One such example is shown in figure above, which
states General Electric, surpassed 500 installations for the 1.5
MW wind turbine. (Ecomagination)
The second strategy General Electric implemented, is that of
Healthymagination which General Electric states; Weve
committed to continuously develop and invest in innovations that
deliver high quality, more affordable healthcare to more people
around the world. Weve assembled a unique team to drive

innovation combining: Corporate Venture Capital - Investing and

partnering with startups to accelerate growth and commercialize
innovative ideas. Collaboration - Expanding healthymaginations
work to team up with key industry partners on significant global
health. Incubations - Driving GE growth by testing and developing
market-shaping business platforms. Walking the Talk - Continuing
our partnership with GEs human resources team to deepen our
internal culture of health. (Healthymagination) Both concepts
refer to the imagination of individuals pertaining to making the
world an overall healthier and more efficient place. These two
concepts are again, two things General Electric seeks to achieve
through their mission.

Objectives
General Electric makes striving efforts to achieving their
vision, as well as maintain their mission. By doing this, General
Electric has a number of strategic and financial objectives that
help General Electric reach and maintain these goals. Such
examples can be derived from certain strategies General Electric
pursues continuously. Strategic Objectives are decided by upper
management, and maintained throughout the company down to
the employees. Customers are a major part when financial
objectives are considered, General Electric tries to create a
working strategy that directly influences the financial portion of
their business. Their goal is to overall tackle their portfolio with
targeted 75% General Electric Industries, or in other words, the
industry portion of the company, and a 25% Financial Capital.
General Electric does this by the following financial and strategic
objectives.

Financial Objectives

In the year of 2014,

General Electric was
able to accomplish a
number of objectives
shown in the figure.
As we can see,
General Electric was
able to match a
number of their goals
such as growth in
overall industrial
segments involving
revenue and margin,
and capital
allocation. The only category where the goals were not met was
that of GECC dividend, which was posted one billion less than
goal.

For the year of 2015, General Electric posted the chart

below.
Industrial Operating EPS The first goal General Electric wishes to
pursue that falls in line with their mission and vision, is that of
operating EPS or Earnings Per Share. Their planed range is from
$1.10 to $1.20 billion as shown in the 2015 chart. This particular
financial objective was comprised of double-digit EPS growth as
well as margin expansion which would help General Electric
achieve the goal stated in the 2015 Financial Objectives chart. In
accordance with General Electrics strategy this, as well as other
financial objectives, pertain to providing a more efficient business
and in turn, better results and more change to the world, which
again is General Electrics main goal.
GE Capital Operating EPS The second goal discusses the overall
operating cost GE has. Their goal is to decrease the overall cost
by 60 cents on the dollar, cutting the overall costs by 60 cents per
dollar.
Free Cash Flows & Dispositions The third goal pertains to the
overall flow of cash in and out of the business. Their goal is from
12 to 15 billion.
Cash Returned to Investors The fourth goal pertains to the
overall profit given to stakeholders.
Strategic Objectives

The strategic objectives General Electric has include:

Be in Markets Where we win In other words, GE desires to take
place in the markets where they are already the leading business.
In doing so, General Electric has a plan to become the recognized
leading business in their markets.
Building Competitive Advantage General Electric has the desire
to expand software and analytical products, mainly that of
products for the healthcare market. At the same time, they also
provide newer products such as the new Tier 4 Locomotive, and
the SIGNA PET/MR scanner.

Create Shareowner Value With the shareholders in mind,

General Electric desires to reduce cost as much as possible and
where they can. Such examples that General Electric include are
reducing corporate costs.
Unified team General Electric also has the desire to strengthen
their team; their employees more and in turn create a stronger
workforce. Such goals is that of the GE Beliefs, a set of beliefs
that General Electric wishes to instill into all of their employees
with state: Customers Determine Success, Learn & Adapt to Win,
Empower and Inspire each Other, Stay Lean to Go Fast, and
Deliver Results in an Uncertain World.

Driving Forces
Industries are affected by a number of external factors that
they do not have control over. Such influences are the Economic
Conditions, Legislature/legal matters, Demographics, Social &
Lifestyles, and Technology. All of these criteria are found to
directly affect an industry, and at the same point, a business.
Being how General Electric finds itself in a number of different
venues, GE has to maintain a vigilant outlook on such external
factors.
Economic Conditions

Economic Conditions are the overall economic standing of a

state or country. When Economic Conditions are good, of course
business will do better. Such issues that may arise with this
driving force are the overall number of jobs that influence any
business, even General Electric. Pay for employees may even be
influenced either way. It could rise which means that employees
will have to be paid more, or fall which means that employees will
have to take cuts in pay. General Electric more or so is influenced
in the sense by the change in overall economic conditions in
Europe, one of many countries General Electric provides for. Due
to economical struggles in such a large section of their business,
General Electric had to down size their business.

Legislature/legal

Legislature has always seemed to be difficult to meet, due to

the number of growing regulations there seem to be every year.
Being a power company, General Electric has a number of
regulations they must see to in order to perform as a business.
Such regulations include the new regulations proposed by the
Federal Government which will create a number of changes
including the appointing of new board members that are separate
from the company, among other changes.
Demographics

Demographics
include the age
of population,
income
brackets,
educational
levels, etc.; in
other words
factors that
separate the
overall
population of a specific location into subgroups. Such an example
of how this driving force can influence the market General Electric
is involved in can be that of income. With people that make
higher income usually purchase higher end products that cost a
great deal. The opposite can also be said for lower income level
people. For General Electric, this can be compared to the number
of appliances GE provide. While there are some higher end
products such as refrigerators with touch screen controls and of
course, provide more storage, would appeal more to a higher
income individual due to the fact they can afford it. While at the
same time, a more economical sounding choice with just the basic
freezer on top and the refrigerator on bottom would be the choice
for those in the lower income level. The same can also be said for
age. General Electric in recent news understood that their
products were not appealing to everyone, and a newer line of
appliances were made that appealed to the younger generation
(20 30 years old) at Appliance Park in Louisville, KY called the
Artistry Series. (AP)

Social & Lifestyles

Social & Lifestyles are more along the lines of trends or fads
that people may have at any point in time. For the market the
General Electric takes part in, the only changes that may affect
the company would be that of the healthy outlook people have
now, mainly
with what
people eat.
General Electric
takes part in the
health field with
providing
products that
are created to
provide again, a
more accurate
diagnosis for
the doctors.
With General
Electrics mission in mind: GE imagines things others dont,
builds things others cant and delivers outcomes that make the
world work better (GE About Us/Building), General Electric
always keeps in mind the ideal of making the world a better place,
and to some extent healthier as well. With the HealthAhead ideal,
General Electric tries to provide as much information on leading a
healthier lifestyle and tips to help people do just that. (Live
Healthier) Such aspects that are included involves eating healthy
and exercising to maintain a healthy physical body, but also
mental health with tips on how to maintain your brain as well.
Technology

Technology involves new and improved machines; innovative

products such as wireless, smart devices, etc. General Electric
and the market that they are involved in are influenced a great
deal by this driving force due to the fact that the majority of what
General Electric deal with, are appliances; for consumers as well
as health care, engines, turbines, lightbulbsthe list can go on

and on. With new technology comes the need to meet those new
innovative ideas. Being how General Electric again deals with a
number of products that includes different degrees of technology,
GE must meet those new innovations and keep a sharp eye on
new advances in order to maintain their position. Such examples
of technology that has changed includes lightbulbs, refrigerators,
stoves, microwaves, engines, turbines, alternate energy source,
again the list can go on and on. Technology is always changing
and advancing, and so the need to meet those changes are also
never ending.

Industry Key Success Factors

Strong research and development is a major key success
factor for General Electric. Strong R&D capabilities enables the
company to bring new and innovative products to market and
maintain technological leadership, which in turn enables GE to
expands its customer base and generate incremental revenues.
Superior branding separates General Electric from
competitors. Its brand is recognizable to most people through its
electronic appliances and emotionally touching commercials.
Differentiation in their product line allows them to grow more
seamless vertically and horizontally. Their product growth in one
segment helps them advancement in many other segments.

Competitive Analysis
Industry Definition
GEs business summary and stock price read as on Yahoo Finace
as, General Electric Company (GE) operates as an infrastructure
and financial services company worldwide. The companys Power
and Water segment offers gas, steam and aero derivative
turbines, nuclear reactors, generators, combined cycle systems,
controls, and related services; wind turbines; and water treatment
services and equipment. Its Oil and Gas segment provides surface

and subsea drilling and production systems, equipment for

floating production platforms, compressors, turbines, turbo
expanders, reactors, industrial power generation, and auxiliary
equipment. The companys Energy Management segments offers
plant automation hardware, software, and embedded computing
systems, including controllers, embedded systems, advanced
software, motion control, operator interfaces, and industrial
computers. Its Aviation segment offers jet engines; aerospace
systems and equipment; and replacement parts and repair and
maintenance services for commercial and military aircraft, marine
applications, and executive and regional aircraft. The companys
Healthcare segment provides medical imaging, software and
information technology (IT), patient monitoring and diagnostics,
drug discovery, biopharmaceutical manufacturing technologies,
and performance improvement solutions. Its Transportation
segment offers freight and passenger locomotives, and diesel
engines for rail, marine, and stationary power applications;
railway signaling and communications systems; underground
mining equipment; motorized drive systems; IT solutions; and
replacement parts and value added services. The companys
Appliances & Lighting segment manufactures home appliances;
and lighting products for commercial and industrial applications.
Its GE Capital segment offers commercial loans and leases, fleet
management, financial programs, credit cards, personal loans,
and other financial services.

New Entrants
Entry into General Electrics field would be all but impossible
without substantial funding. The about of time and man power to
research on the level of GE would be difficult without major labs
and some of the brightest minds. Many companies would also be
hesitant to go with a new company even if cost was lower for
bigger contracts, the customer base with such large ticket cost
want brand recognition and history.
Substitutes
Substitutes in their home appliance segment include Maytag,
Kenmore and LG. Recently these three companies have been
producing the same type of products with the same brand
recognition as GE. In a side-by-side comparison on many sites like
http://www.allbrandservicenaperville.com/productsrefrigerator.html they state they see the new up in comer in the
kitchen appliance ring, LG, is actually better with cheaper repairs
and better design. The substitutes are becoming to be more and

more similar making it easier to just buy the low cost instead of
the brand loyalty customers once had.
Rivalry
With the new emphasis of energy efficiency and the high market
entry into the home appliance it is becoming more and more
tense rivalry due to the small number of differences in products.
The market being more of an occasional product in the home
segment, it makes that purchase more important especially with
more electronic companies entering the market.
Suppliers
Found on GEs website reads, this about their suppliers, Suppliers
are critical partners in GEs value chain. As GEs businesses have
globalized, so has our supply chain, including in locations where
environment, health, safety, labor, human rights and other
practices can be problematic. We expect our suppliers to obey the
laws that require them to treat workers fairly, provide a safe and
healthy work environment, and protect environmental quality.
GEs Supplier Expectations govern all facets of the Companys
relationships with suppliers, and include specific prohibitions
against forced, prison, or indentured labor, and prohibitions
against subjecting workers to any form of compulsion, coercion or
human trafficking. GE obviously values their suppliers but as
explained later in the weakness, a large number of them are
global limiting the availability of receiving goods and the control
over them resulting in scandals about fair labor and the safety of
their products produced overseas.
Customers
General Electric given its diverse customer base serves varies by
type of customer. Their customers range from corporate in their
segments of aviation and power but also household sales as well
in terms of their better know segment of appliances.

Competitive Strategy
General Electric strives to be the best-cost provider and the
focused-differentiation strategy. With such a broad rang of
products they dont all fit into one realm of strategy. Their
household appliances more easily fall into the middle price range
and they have better quality goods then the low cost. GEs
aviation, fuel and other more narrow markets fit more easily into
the focused differentiation. The products are only marketable to a
certain number of people.

External Analysis
Opportunities
GE has the opportunity to growing the US credit card market.
The credit cards profile covers the consumer credit market. The
US credit cards sector has seen very strong overall growth in
recent years, having bounced back dynamically in 2010. The
sector is expected to grow at a moderate rate over the forecast
period to 2017. According to MarketLine (a unit of Informa plc),
the US credit cards market recorded a value of approximately
$625 billion in 2013, an increase of about 1% over the previous
year. Moreover, MarketLine estimates the market to grow
consistently over the next four years to record revenues of
$approximately $674 billion in 2017, an increase of approximately
8% from 2013.
The world is becoming more and more energy conscious. GE
having such a large R&D department means that they will
increase focus on energy sector could generate sustainable
business performance. The companys oil and fuel sector is the
fastest growing right now.

Tied with the initiative to go more energy conscious the

aircraft field is expected to grow. There is a greater need for
energy efficient aircrafts now then ever before.
According to Boeing's commercial market outlook for the
period 2014-2033, the world's fleet, which includes both
passenger (from 100 seats to very large aircraft) and
freighter aircraft, will grow from 20,910 in 2013 to more than
42,180 by 2033. Over the next 20 years, the airline industry
needs 36,770 new airplanes, of which more efficient models
will replace approximately 15,500. The traffic on long-haul
routes is forecast to grow 5% annually over the next 20
years, creating demand for 25,680 single-aisle airplanes and
8,600 new twin-aisle airplanes by the end of 2033.
Passenger traffic is expected to grow at an average rate of
5% each year for the next 20 years. Asia Pacific region is
forecasted to be the largest market with a value of over $2
trillion. During the next 20 years, nearly half of the world's
air traffic growth will be driven by travel to, from, or within
the Asia Pacific region.
General Electric continues to implement a strategic plan to
acquire high margin assets in financial services sectors; it has the
opportunity to develop even more partnerships and acquisitions.
Its goal is to develop new customer relationships and deliver more
profitable growth for its shareholders. In 2008, GE Capital
acquired assets of CitiCapital, a commercial leasing and
commercial equipment finance business. Another acquisition
reflecting the goal of serving a broader base of customers is the
purchase of Kelman of Lisburn, an Ireland company engaged in
providing advanced monitoring and diagnostics technologies.
Other recent acquisitions include MicroCal, Agility Healthcare
Solutions, Vital Signs, and Interbanca.
General Electric works in more than 100 countries around
the world. China leads a long list of international contracting
opportunities being developed by GE. In 2008, the company
contracted to supply China with equipment for pipeline

compression in the countrys natural gas transmissions pipeline.

In that same year, General Electric executed an agreement to
provide power generation equipment for the Iraqi Ministry of
Electricity. In addition, it was announced in 2009, that GE had
agreed to GE Energy signed an agreement to build a new power
technology center in Russia. The company will also deliver 25 new
locomotives to Nigeria in 2010. More than half of GEs revenues
come from outside the United States, other contracting
opportunities will take place in Mexico, South Africa, India, Italy,
and Japan.
Threats
With the opportunity and strength of a diverse global market.
Unstable and weak conditions over seas though bleeds into GE
also faces major headwinds from the weak economic conditions in
Europe, which is expected to continue into 2014 and beyond,
especially in countries undergoing fiscal austerity programs.
Recently, the European Union (EU) cut its growth forecasts for
2014 and 2015, citing a lack of internal investment and political
tensions in Ukraine and the Middle East. Inflation in the Eurozone
will also remain below the close-to 2% targeted by the European
Central Bank (ECB) until at least 2016, according to the European
Commission, the EUs executive arm. The combination of low
growth and low inflation create problems for high-debt countries
such as Italy and Greece. It also makes it more likely that the ECB
could be prodded toward more aggressive stimulus measures,
such as large-scale purchases of government bonds and other
assets. The Eurozone forecasts were dragged down by lower thanexpected growth in the biggest countries, Germany, France and
Italy, the latter of which is expected to shrink 0.4% in 2014.
With the governmental regulations forever growing this
poses a threat to GE. New regulations delay the market growth an
innovation and are more costly. Due to new regulation, the
company incurred expenditure for site remediation actions of
$400 million in FY2013 and FY2012, $300 million in FY2011.

Further, it expects that such remediation actions will require

average annual expenditures in the range of about $400 million
over the next two years.
GE has significant competition. Being in so many markets
just add to their competition list. The company competes with a
number of international companies, including 3M, Hitachi,
Honeywell International, Mitsubishi Corporation, Siemens, Textron,
Thermo Fisher Scientific and United Technologies, among others
and US. Thus, operating in intense competitive environment could
result in pricing pressure risks, which in turn may adversely
impact GEs margins and profitability.
As of July 2009 the U.S. federal minimum wage rate is $7.25
an hour. This increase along with increased overtime, and a
higher proportion of full-time employees are resulting in an
increase in labor costs, which could have an impact the General
Electrics operational costs. With Wal-Mart and Target raising
their minimum wage to $9 and $10 it will put more pressure on
GE to seek higher pay for their employees.

Internal Analysis
Strengths
General Electric has one of the largest and most diverse
infrastructures and financial services corporations in the world.
General Electric has right different business segments ranging
from GE Capital to power to healthcare. With their infrastructures
strength GE is able to not only reach consumers on multiple
platforms but they are also able to more broadly help them at
each. The Capital segment offers a range of financial products
and services from leases to home loans to credit cards. The power
and water business segment covers power plants to design and
installation. Not only with diversification in product but also in
revenue stream.

In addition to the diversified product portfolio, the company

has developed a balanced revenue stream. For instance in
FY2013, GE Capital, the company's largest business
segment, accounted for 29.8% of the total revenues,
followed by power and water (16.5%), aviation (14.9%),
healthcare (12.6%), oil and gas (11.6%), appliance and
lighting (5.8%), energy management (4.7%) and
transportation (4.1%). Thus, broad product portfolio and
revenue streams reduce the business risks and provide cross
selling opportunities, which in turn enables the company to
tap opportunities in new as well as existing markets.
GEs inorganic growth strategy is another strength for them.
They seek market growth not only in their own lines but also in
acquiring other as evident with there acquisition of Milestone
Aviation Group for $1.8 billion and Monsal for their Biosolids and
Biowaste division.
An expanding customer base is key to GEs success. They
are able to have extensive research and development in their
world leading research labs. They have labs in Germany, India,
Shanghai, New York, Bangalore, and China. The R&D teams have
created new software that is cloud based that enables a global
community to share and design cyber models securely on the
Internet. Strong R&D also leads to the capabilities to being new
and innovative products to the market and strengthen
competition.
Through GE is primarily known for their strength in
household appliances they are very well known in a lot of fields.
They are well known in at least a dozen other market segments
than household ware. They have outstanding brand recognition
across a large number of fields.
GE globalization is strength. They have multiple companies
in multiple countries. They often acquire new companies in
further efforts to globalize their brand. With more market come
more profits.

The company said its financial services earnings grew

37% globally, as strong risk management helped the
business weather volatile market conditions.
Weaknesses
Due to General Electrics strength of a substantially diverse
portfolio they have a lot of cost tied in legal cases that affect their
cost structure.
Moreover, WMC, GEs US mortgage business, has five cases
pending in the US District Court for the District of
Connecticut. Four of these cases were initiated in 2012, and
one was initiated in the third quarter of 2013. Deutsche Bank
National Trust Company (Deutsche Bank) is the adverse
party in four cases, and Law Debenture Trust Company of
New York (Law Debenture) is the adverse party in one case.
The Deutsche Bank complaints assert claims on
approximately $2,800 million of mortgage loans and seek to
recover damages in excess of approximately $1,800 million.
The Law Debenture complaint asserts claims on
approximately $800 million of mortgage loans, and alleges
losses on these loans in excess of approximately $425
million. General Electric Capital Corporation was initially
named a defendant in each of the Connecticut cases and has
been dismissed from all of those cases without prejudice. Of
the mortgage loans involved in these lawsuits,
approximately $3,900 million were included in WMCs
pending claims at December 31, 2013.
As you will see, General Electric maintains a large level of
debt, which will expose them to unnecessary risk. The company
holds around $221 billion in externally borrowed funds. As of 2013
they have been attempting to lower there level, though. Due to
the companys amount of debt it means that cash flow will have
to be allocated for the payment of interest and the payments into
the debt. The amount of long-term debt also affects their credit

level considering Moodys Investors downgraded their credit level

two notches.
GE primary depends on third parties for raw materials, which
will cause fluctuations in price dependent on their market rate
and availability. It also allows room for reputational damage. With
third parties delivery, contract terms and negotiations are all left
to cause further turmoil in production.
Recently, General Electric CEO Jeff Immelt seems like he
might be retiring earlier than expected. Investors speculate that if
Immelt leaves his position then the board member not selected
for the CEO position will leave the company and attempt to work
for other companies to become an officer there.
GE is expanding and growing. They are taking on more and
more risk while trying to become more of a global competition
after acquiring Alstom. There extensive time of change has made
many investors wary of investing money with such a volatile
company.
GE is simply in a grand period of change. Its change will
likely be clear once the dust settles, but until then there are
many moving parts. GE's total 2013 revenue was $146
billion, but Synchrony revenue was almost $11.3 billion of
that (before "other" and before retailer share arrangements).
More than $8 billion of the revenue was tied to appliances.
Add in whatever you think GE will get from Alstom in Europe,
and GE's revenue mix is in a state of change. The dust will
settle here, and GE will likely look great at that time. For
now, GE may simply be in too much of a state of change for
many investors to embrace without backing up first.

Financial Analyses
Current Ratios
Current Ratios represent a companys liquidity. General Electric is
obviously below the industry normal. General Electric have a high

level of debt and that significantly shows with their current ratio
being almost three times lower then Benchmarks.
Current
Ratio 2014

Current
Ratio 2013

Current
Ratio 2012

Current
Ratio 2011

Current
Ratio 2010

Peer
Avr: 2.11

Peer
Avr: 2

Peer
Avr: 2.05

Peer
Avr: 1.91

Peer
Avr: 2

Benchmark Electronics, Inc.

3.87

3.37

3.67

3.41

3.79

Eaton Corp plc

1.51

1.78

1.44

1.6

1.7

General Electric Co

0.86

0.83

0.74

0.65

0.68

Harris Corp.

1.79

1.5

1.84

1.55

1.91

Hubbell Inc.

3.26

3.5

3.25

2.75

2.76

Long-Term Debt to Equity

To further prove General Electrics unusually high debt is their
Long-term debt to equity ratio. Due to their rapid growth, GE is far
over industry standard of debt.
LT Debt
to
Equity 2014

LT Debt
to
Equity 2013

LT Debt
to
Equity 2012

LT Debt
to
Equity 2011

LT Debt
to
Equity 2010

Peer
Avr: 0.63

Peer
Avr: 0.65

Peer
Avr: 0.68

Peer
Avr: 0.67

Peer
Avr: 0.69

Benchmark Electronics, Inc.

0.01

0.01

0.01

0.01

0.01

Eaton Corp plc

0.51

0.53

0.65

0.45

0.46

General Electric Co

1.56

1.7

1.92

2.09

2.47

Harris Corp.

0.86

1.01

0.97

0.75

0.54

Hubbell Inc.

0.31

0.31

0.36

0.41

0.41

Total Debt to Equity

Moreover, put in a different way this graph and table show how
GE has continued long term debt and a lower value do to it. It is
extremely different showing its outlier status and the multiple
acquisitions explain why.
Total
Debt to
Equity 2014

Total
Debt to
Equity 2013

Total
Debt to
Equity 2012

Total
Debt to
Equity 2011

Total
Debt to
Equity 2010

Peer
Avr:
0.75

Peer
Avr:
0.77

Peer
Avr:
0.84

Peer
Avr:
0.88

Peer
Avr:
0.86

Benchmark Electronics, Inc.

0.01

0.01

0.01

0.01

0.01

Eaton Corp plc

0.57

0.57

0.72

0.51

0.47

General Electric Co

2.12

2.29

2.74

3.27

3.46

0.9

1.11

1.06

0.83

0.55

Harris Corp.

Hubbell Inc.

0.31

0.31

0.36

0.41

0.41

Revenue per Employee

With the cost of an employee going up it is more import to know
how you employee compared to industry standard and how
valuable each employee is. General Electricals employees are
extremely valuable in comparison, most likely due to their high
profits in so many segments.
Revenue
per
Employee
- 2014

Revenue
per
Employee
- 2013

Revenue
per
Employee
- 2012

Revenue
per
Employee
- 2011

Revenue
per
Employee
- 2010

Peer Avr:
280444.5

Peer Avr:
374107.57

Peer Avr:
361160.57

Peer Avr:
375186.14

Peer Avr:
346625

Benchmark Electronics,
Inc.

255673

227385

247402

225641

240455

Eaton Corp plc

221098

216137

157927

219849

195929

General Electric Co

487177

475717

481824

489369

523383

Harris Corp.

358984

366125

359623

351531

330405

Hubbell Inc.

218143

222650

223241

212711

195477

Research and Development

With one of General Electrics Strengths being their world know
research facilities, this chart and table gives you a better idea of
how much GE spends even though they havent disclosed the
information for all of the years and ever company leader. It is very
interesting to see Harris Corp spends more money than General
Electric and especially such high percentages apparently signaling
a new product launch in the upcoming future.
R&D %
TR 2014

R&D %
TR 2013

R&D %
TR 2012

R&D %
TR 2011

R&D %
TR 2010

Peer
Avr: 2.9

Peer
Avr: 2.65

Peer
Avr: 4.93

Peer
Avr: 4.89

Peer
Avr: 5.45

2.87

2.92

2.69

2.6

3.1

3.22

3.05

3.12

2.6

Harris Corp.

5.27

4.97

16.76

16.59

20.11

Hubbell Inc.

Benchmark Electronics, Inc.

Eaton Corp plc
General Electric Co

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