SWOT Analysis of General Electric Company

STRENGTHS
Global recognition: General Electric has ventured into the world market thus gaining global
recognition for its unique goods and

services
. In the year 2009, Forbes magazine ranked GE as the world's largest company. Hurbert
(2007) notes that General Electric's brand is the world's most recognized brand. This kind of
recognition has given it a competitive edge over other companies due to its ability to attract
more customers.
Global strength and competitiveness:The Companys products have been recognized for their
quality and the company is known for meeting customer-specific needs (General Electric,
2009). As a result, it has attracted numerous clients including corporations and government
agencies and its competitive position is quite favorable. GE is the biggest lender in many of the
countries where it invests with exception of the United States (Hurbert, 2007). Its power
generation equipment generates a quarter of the world's electricity everyday.
Excellent Management: GE utilizes a unique management style, whereby business operations
are divided into business units. Each business unit plays a distinct role within the company and
has its own independent management. Examples include GE Commercial Finance, GE
Equipment Services, GE Energy, GE Insurance, and GE Consumer Finance among others. This
kind of management style increases productivity due to the high level of accountability and
efficiency that business unit managers are expected to maintain.
Diversified lines of operation:GE has invested in a wide range of products under its
units. These activities range from technology, energy, automotives, and aviation and home
appliances to financial services and insurance services among other undertakings. This kind of
diversification shields the company from risks in case of misfortunes.
Environmental initiatives: GE has ventured into environmental initiatives as it embraces the
green economy and increased social responsibility. Its 'Ecoimagination' program is undertaking
the production of environmentally friendly technologies, energy sources such as solar, low
emission engines for airplanes, hybrid locomotives and water purification (Makower, 2005). This
has earned a good reputation for the company which is considered socially and environmentally
responsible.
WEAKNESSES
Under-performing energy sector:Following the global crisis and the serious fluctuations in fuel
prices, the energy sector is not performing as expected (Hurbert, 2007). Fluctuations in prices
of oil and gas have mostly been caused by supply shortages and this has threatened the
company's profitability.
Threat to flexibility:Too much diversification is often considered dangerous for a
company. This is because it results in over-stretching which usually slows down decision

making. At GE, the numerous units require attention and could prove hard to manage if
excessive diversification occurs.
OPPORTUNITIES
Mergers and acquisitions: GE has performed several mergers in the recent past. These not
only help the company to expand globally but to diversify its activities into new areas thus
increasing productivity. Some of the companies include Interbanca S.P.A, Whatman Plc,
VetcoGrey and Turbomecanica Combustor Products (General Electric, 2009). The merger of
NBC with Vivedi opens better opportunities for GE in the media business.
Research and development:Intensified research and development characterize the company's
activities as it seeks to maintain a competitive edge over others in the same industry. A
substantial amount of resources are committed in the company's relentless efforts to ensure the
production of innovative products which meet current customer demands (Hurbert, 2007).
THREATS
Competition: Operating in an environment where stiff competition is present is a threat in
itself. Just like any other company, GE risks losing its customers to competitors. Competition
could be intensified by better production techniques and technology among competitors such that
the company's goods may be outdone in the market.
Information security:When it comes to information security, every company faces a threat of
losing important information through hackers, natural disasters and employee dishonesty. Loss
of information could greatly affect the company's activities and cause a slow-down in production.
Financial crisis: The global financial crisis has had an effect on most companies in the world
today. The rises in prices and shrinking bank lending rates have deprived businesses of the
much needed profits and capital respectively.
Media depictions: Depictions put forth by the media on certain occurrences about a company
could ruin its operations. GE has been a victim of media deception and was associated with the
Enron scandal which brought a lot of criticism and loss of investor confidence. The documentary
named 'deadly deception' aired in 1991 displayed GE as a threat to human life for participating in
testing and building of nuclear weapons (Chasnoff, 1991). Such depictions could be used by
competitors to tarnish the company's name.
Evaluation and Analysis
It is notable that GE has a number of strengths that work to its advantage by enhancing
profitability. Its global recognition, strengths and competitiveness put GE at a favorable position
as compared to other companies in the same sector. The use of business units for management
presents an effective way to manage the expansive company. This not only reduces the
possibility of overwhelming senior management with work but also promotes productivity based
on accountability expected from the business unit managers. The company undertakes
numerous activities which highly contribute to profitability. This is enhanced by the mergers and
acquisitions that have diversified the company's product range and in turn leading to
improvement on profits incurred.

The strengths and opportunities however have not come without constraints. Various threats
and weaknesses threaten the performance of the company by presenting constraints on the
company's management. High levels of competition, financial crises and threat of information
loss are a threat to the companys survival. Weaknesses within the company including the poor
productivity of the energy sector and flexibility threat could impact negatively on the company.
In order to reduce the impact of threats and weaknesses, the company could use the strengths
and opportunities to mitigate them. For

example
, the company's established research and development could be used to curb competition by
coming up with innovative products from time to time. The efficient management can also
be used to prevent loss of data through implementing proper control measures and to avoid
losses which could exemplify the situation caused by the financial crisis.
References
Chasnoff, D. (1991). Deadly deception: General electric, nuclear weapons and our
environment. Newday.
General Electrical. (2009). Our company. Retrieved from www.ge.com
Hurbert, P. (2007). General electric company profile. United States: Market Research.
Makower, J. (2005). Ecoimagination: Inside GEs power play. World Changing.

General Electric SWOT Analysis

Strengths
INDUSTRY RECOGNITION

Although it is most prominently known for its products in the consumer & industrial
segment with products such as home appliances, refrigerators, freezers, gas ranges, and
microwave ovens, General Electric is one of the worlds most respected companies in at
least a dozen other market segments. Would you like a lesson on SWOT analysis?

Weaknesses
LOW DEBT RATINGS

In January 2009, Moodys Investment

Services
placed the long-term ratings of GE and GE Capital on review for possible downgrade. The
review of companys rating for downgrade was primarily due to uncertainty regarding GE
Capitals asset quality and earnings performance in future periods. Further, Standard &
Poors downgraded the companys ratings outlook from stable to negative. Lower credit
ratings represent higher borrowing costs and reduced access to capital markets for GE.
Under debt instrument guarantees and covenants, GE would have to post additional collateral

if the ratings were cut below AA-/Aa3 or A-1 and P-1, or four levels, the company said in its
annual filings with the U.S. Securities and Exchange Commission
SUBSTANTIAL DEBT BURDEN

GE has a high level of indebtedness, which could adversely affect its financial condition
and future operations. In 2008, the companys total debt (short and long term) amounted
to $523,762. General Electrics high debt produces an interest burden which could
increase in the period of rising interest rates. In 2008, the interest coverage ratio of the
company declined to reach 3.8, as compared to 4.2 in 2007, and 4.5 in 2006. The
companys substantial debt limits its ability to obtain additional financing to fund future
working capital, capital expenditures.

Opportunities
INCREASED DEMAND FOR COMMERCIAL AIRPLANES

It is projected that passenger traffic would grow at 4.8% annually till 2027; requiring
approximately 28,600 new commercial airplanes to meet the increasing traffic. The
commercial airplane market is expected to grow to $2.8 trillion by 2027. By that year, the
global commercial airplane fleet is expected to double as compared to the existing fleet
size. The Asian-Pacific region is projected to be the largest segment at over 35% of a
$2.8 trillion market. General Electric is positioned to take advantage of the projected
increased demand. The companys commercial aircraft financing business owns 1,494
aircraft and its customers include over 230 airlines located in 70 countries. GEs product
inventory includes jet engines, turboprop, turbo shaft engines, and related replacement
parts.

CONTINUED GLOBAL PROJECT OPPORTUNITIES

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.

KEY ACQUISITION STRATEGY

General Electric continues to implement a strategic plan to acquire high margin assets in
financial services sectors. Its goal is to develop newcustomer 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.

Threats
ENVIRONMENTAL AND OTHER GOVERNMENT REGUL ATIONS

Many of General Electrics operations come under the jurisdiction of various federal,
state local and even foreign environmental regulations. These governmental entities
seek to monitor the adherence to guidelines regarding discharge, treatment, storage,
disposal of materials. In 2008, GE incurred mandated remediation expenses equaling
$0.3 billion.
It is anticipated that the company may face ongoing remediation costs averaging $0.35
billion over the next two years. In addition to these costs, government compliance may
force the GE to modify its business models and objectives or affect its returns on
investment by making existing practices more restricted.

PROJECTED LABOR COST INCREASES

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.
In 2009, GE was ranked among the top 10 in Fortune magazines listing of the 50 Most
Admired Companies in the World, ranked ninth overall, and first in
the electronics industry. In addition, 2008 found GE ranked fourth among Business
Weeks Worlds Most Innovative Companies. GE was also ranked 11th in Fast

Companys annual list of the worlds 50 most innovative companies in 2008. A strong
recognition across varied categories has ensured its status as one of the strongest
players in the industry. Such recognition and respect will further enhance its brand
image and gives it a competitive advantage.

DIVERSIFIED PRODUCT PORTFOLIO

The company is one most diversified technology, media, and financial services
corporations in the world. General Electrics portfolio boasts the following segments:
Capital Finance, Commercial lending and leasing products, GE Money Financial
Products,
Real Estate
Capital and Investment Solutions, Energy Financial Services, GE Commercial Aviation
Services, Technology Infrastructure, Enterprise Solutions, Healthcare Business, Energy
Infrastructure, Oil & Gas business, NBC Universal Broadcasting, and of course the
Consumer & Industrial Segment. Such diversity contributes to a well balanced array of
revenue streams. In 2008, the companys largest business division, capital finance accounted
for 37.1% of the total revenues, while its technology infrastructure segment contributed
25.6%; energy infrastructure segment 21.4%; NBC universal segment 9.4%; and consumer &
industrial segment 6.5%. Such balance has helped General Electric ride out an economic
slowdown which has occurred over the last three years.
STRONG REVENUE GROWTH

General Electrics Compound Annual Growth Rate increased by 10% from 2006 through
2008 with revenues rising from $151,568 million to $181,515 million. The revenues from
its largest business segment, capital finance, increased by 1.1% when compared to
FY2007. In addition, revenues from technology infrastructure increased by 8.2%, energy
infrastructure 25.6%; while NBC universal grew by 10.1%. This growth is also reflected
in key geographic markets, for example, revenue from Europe increased by 10.3% in
2008, revenues from Pacific Basin increased by 8.3%; Americas 17.5%; Middle East and
Africa 26.3%; and other global by 17.5%. General Electric expects 2010 to generate
solid earnings growth, even if the economic recovery is uneven. The company is
optimistic about achieving this growth while generating substantial free cash that could
further enhance investor returns