Introduction

The story of the founding of General Electric is one that is taught in many schools and

educational institutes because of the popularity of the great influence of General Electric’s

founder – Thomas Edison. Thomas Edison has been accredited for a number of innovative

discoveries, among them being the phonograph, telegraph, and perhaps his most popular, the

incandescent light bulb. His many discoveries paired with his uncanny senses as a businessman

led him to start fourteen companies and subsequently allowed him to be quite successful in his

business endeavors. In 1876, Edison embarked on a scientific exploration in his lab – he was

intent on discovering some way of emitting light from a source. Through his intent studies and

experiments, he made an invention that has changed our way of life as we know it – the

incandescent electric lamp. In 1890, Edison consolidated his businesses and named his new

company “Edison General Electric”. Edison General Electric has since become “General

Electric” and has come to be known as one of the oldest and biggest public trading companies.

General Electric has since acquired a number of companies and has expanded its product line to

provide technology, media, and financial services globally. They offer products and services in

the areas of aircrafts, household appliances, water processing, and consumer financing, to name a

few.

Currently, General Electric boasts of having a presence in over 100 countries with a total

of 320,000 employees worldwide. They are publicly traded on the New York Stock Exchange

under the symbol GE and boast of being one of the first companies to be listed on the original

stock exchange. They are continually expanding their scope of business through strategic

acquisitions, social and environmental responsibility initiatives, and a number of educational

referendums. Their ‘Ecomagination’ project has provided General Electric with an opportunity to

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display their eagerness to provide environment friendly solutions to energy while gaining profits

and popularity.

Through the many years that General Electric has been in operation, it has become an

accepted American household name and has managed to expand nationally and globally. They

have received a number of awards in the Fortune magazine, the Fast Company, and Business

Week for their innovation and sustainability initiatives. Their company slogan “GE, Imagination

At Work” has become associated worldwide with philanthropy, education, and innovative ideas.

GE continues to expand their horizons despite the global economic slowdown that has emerged

in recent years.

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 Macroenvironmental Analysis

Political-Legal

General Electric is faced with quite a few political-legal forces because it is considered

part of a conglomerate industry offering a wide range of products and services in aviation,

entertainment, finance, locomotives, electricity, medical technology, household appliances, and

many more.

There have been a number of environmental regulation and protection legislations put in

place in recent years that affect General Electric. In 2005, the U.S. Government signed the 2005

Energy Policy Act into existence. This act, also called the EPAct, puts regulations in place to

mandate certain regulations and invests capital into researching energy efficient electrical

equipment, motors, and appliances. This act also provides tax incentives to businesses and helps

companies reduce their overall energy costs. The EPAct has provided numerous opportunities for

General Electric because of the energy efficient appliances, electrical equipment, and motors

they offer and are well-known for. Their continuous energy conservation initiatives strategically

provided them with a larger market share of the electrical industry when this act was passed

because they were already known for their excellence in energy conservation. The added

incentives imposed by government for businesses making the move to implement energy

efficient appliances in their workplaces allowed General Electric to attract even more customers.

In 2007, President Bush signed the “Energy Independence and Security Act of 2007” into

law. This law includes provisions for incandescent lamps and increased energy efficiency

conditions for federal buildings. This Act also impact General Electric positively because they

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are able to implement their energy saving techniques into making their lamps, and this law

provides more market demand for their techniques.

In terms of state regulation, in 2007 California set minimum requirements for certain

light bulbs being sold in that state. General Electric saw this new law as an opportunity and is

now the main provider of energy-saving, reduced-wattage alternatives to California. These

alternative lamps have provided General Electric to be the sole provider of these specialized

bulbs.

The most recent regulation passed by Congress, the “2009 Department of Energy Lumens

Per Watt (LPW) Regulations for Linear Fluorescent and Halogen PAR Lamps”, has set new

efficiency standards for fluorescent and halogen lamps. Although this regulation will not be

effective until the summer of 2012, General Electric is using this new regulation as an

opportunity to use innovation in producing these lamps to the nation.

Perhaps the most significant act that impacts General Electric quite significantly is the

American Recovery and Reinvestment Act of 2009 (ARRA) that was passed in light of the

recent economic unsettling seen by the nation. The Act provides $787 billion in the form of tax

cuts and incentives, contract awards, and grants. This Act specifically addresses energy

efficiency funds for local climate and energy economic recovery. General Electric has targeted

this Act as an opportunity and has provided business solutions that are specific to ARRA which

impacts energy, solar, wind digital energy, and motors.

With the implementation of the Sarbanes Oxley Act of 2002 has come more rigorous

standards of financial reporting and ethical practices. The complexity and strictness of this Act

has led many companies to employ higher standards when dealing with investor confidence. The

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Securities and Exchange Commission recently charged General Electric with accounting fraud

because GE reported materially false and misleading financial statements. The claims against

General Electric accuse GE of reporting misstated earnings from 1995 – 2004 and using

improper accounting methods when calculating earnings per share (EPS) and other significant

calculations. General Electric has agreed to pay the fine of $50 million so as to settle the charges

against them by the SEC. This claim is a threat to General Electric’s business because of the

nature of the threat. Investor confidence and public trust in the accounting of the financial

statements of GE can be significantly impacted and thus drive down GE stock prices and a

general mistrust of GE business may arise. General Electric also has to pay a sizable dollar

amount to regulators in order to settle the case and clear their name to the public.

Economic

The economic slowdown of 2008 has impacted General Electric just as it has other

businesses, but perhaps not as negatively as it has other businesses. Their growth projects were

practically put at a standstill as the world seemingly sat on edge and watched the global economy

take a nose dive. Despite the recent unsettlements, General Electric’s consolidated revenue was

reported at a 5-year average growth rate with an increase of $11 billion from 2007 to 2008 while

their earnings from continuous operations took a dive from $22.5 billion in 2007 to $18.1 billion

in 2008. The losses faced by the financial services business unit were harder hit than the other

business units because of the overall financial crisis that hit the world in 2008. Despite the

economic conditions, General Electric was still able to maintain their competitive edge over

others in their industry and is still committed to new growth.

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 As the economy moves on sluggishly, interest rates have lowered significantly. The

decreasing interest rates positively impact General Electric because they sell appliances and

other goods that charge interest, but it is also good for their financial business unit. The lower

interest rates on the appliances sold will encourage more customers to invest in buying their

products than when the interest rates were high. General Electric’s Commercial Finance division

is positively impacted by the decreased interest rates because consumer spending is increased.

For GE Money, the financial services business unit of GE is also being impacted by the

decreased interest rates. Although they are not able to charge higher interest on the loans they

give out, there is a higher demand for their loans because consumers are more inclined to invest

in buying houses when the rate of borrowing the money is low than when it is high.

Recent reports by the Government are reporting a growth of 3.5% GDP in 2009 – a hope

that the U.S. economy is finally making a come-back and pulling out of the severe recession of

2008. According to these reports, consumer spending has also increased significantly – 3.4%,

another positive sign for the economy, and a good sign for General Electric as well. As the value

of the products produced in the nation increases, GE’s products gain value.

Technological

The recent technological advancements that have overtaken the world have significantly

impacted General Electric – a company that has always been devoted to innovation and

technology. The GE slogan, “Imagination at Work”, truly envelopes their goals as a company –

using their imagination and innovation to create the technology of the future! The technological

changes facing the world in healthcare, aviation, entertainment, and energy have proven to be

opportunities for General Electric to set themselves apart as the company of tomorrow.

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 General Electric has taken full advantage of the advancements of the design of turbo

engines and has come out with a line of high-quality turbo engines used in aircrafts, marines, and

commercial motors. They use the latest technological discoveries to upgrade their engines to

enhance performance and reduce costs. General Electric provides the latest advancements in

technology for both civil and military aircrafts. While the aviation industry works to find more

innovative technologies to better their equipment, GE sets themselves apart by using the latest

technology to create their own innovations in creating top-of-the-line aircrafts.

General Electric is taking healthcare and computer technology to a whole new level

through their creation of the GE Laptop Ultrasound System. This innovative technology uses

intensely high beams to heat and destroy fibroid tissue which eliminates the need for surgery

when needing to remove fibroid tissue. The advancement of computer technology has been a

huge opportunity for GE to shine through with their remarkable healthcare innovations.

With the recent global implementation of ‘digital hospitals’ – hospitals where

information, images, technology and knowledge are integrated – General Electric is seeking to

change the way healthcare is delivered by implementing a technology that technologically

monitors patients, performs imaging, delivers information, and more. Their advancement of the

simple X-Ray machine into an advanced imaging technology for multiple X-Ray solutions has

set them apart from the rest of the industry.

General Electric’s acquirement of NBC has placed them strategically in a position of

great technological advancement in the entertainment industry. With the recent change to digital

signaling in television receptions, NBC has managed to use the advancement as an opportunity

to distribute news, information, and entertainment in a way that captures new users and enable

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revenue streams. They have managed to diversify their entertainment portfolio by including

international television, cable networks, theme parks, and broadcasting on a higher level of

quality.

GE has used the scientific improvement in the field of energy to their advantage. As the

world uses scientific improvements to create coal mine gas solutions, GE has taken the initiative

and implemented their version of clean coal – a method of preventing methane of leaking into

the atmosphere so as not to cause pollution and harm the environment. This opportunity not only

sets GE apart as an innovative and technologically advanced company, it also sets it apart as a

company that seek the environmental good of the world.

The turn of the millennium brought with it a rapid advancement in technology. General

Electric has truly been able to use these technological advancements as an asset because of their

vast business units. Every business unit that GE operates in is able to use the rapid technology

changes to their advancement.