General Electric

"I never perfected an invention that I did not think about in terms of
service it might give others"
- Thomas Alva Edison, GE Founder
It all started with the flicker of a light

bulb and soon enough GE was off and running…

– In 1890, Thomas Alva Edison established the Edison General Electric Company in Menlo Park, New
Jersey
– At the same time Charles A. Coffin was growing his business, The Thompson Company
– It was increasingly difficult for Edison and Coffin to remain competitive based their own technologies

The two companies united in 1892
and formed The General Electric Company

Key Facts About GE
Headquarters
– Fairfield, Connecticut
Number of Employees
– Over 315,000
Locations
– Over 160 Countries
Symbol on Stock Exchange
– GE
Number of Shareholders
– 4 Million
Number of Shares
Outstanding
– 10 Million
Historical Number of Share
Splits
– 9

Annual Revenue From 1994- 2003

GE Stock Price Relative to S&P 500 From 1999-2004 .

and above all.5MM on lobbying . a capacity to keep their poise amid the cross-currents of change. worldmindedness.Reginald H. political sophistication. strategic capability.’ Relationship between business and government Today…GE spends 7. Jones Chairman & CEO. 1972 – 1981 Managerial qualities: ‘Intellectual breadth. social sensitivity.

.” Customer-Focused Methodology to Improve Quality Through Defect Reduction Today…Rigorous Employee 6σ Certification .it is the way we work. Chairman & CEO. Welch Jr. “..Jack F. 1981 – 2001 On Six Sigma Welsh said.

Immelt Chairman of the Board and Chief Executive Officer. design small (private) jet engines . 2001 – Present Today… New Frontiers & Strategic Alliances for GE – NBC-Universal acquiring interest in Telemundo network – GE and Honda form GE Honda Aero Engines LLC.Jeffrey R.

GE is Organized Along 11 Businesses .

Cash Generator Energy Commercial Finance Transportation NBC Universal Healthcare Consumer Finance Advanced Materials Consumer and Industrial Insurance Infrastructure Equipment Services .Growth vs.

Perceived Drivers for Change Globalization Technology Innovation Diffusion of technological knowhow Regulatory influences and government policy changes .

Four Values Translates Into Action .

6 Key Areas Critical to Quality Defect Process Capability Variation Stable Operations Design for Six Sigma . 5. 3.4 defects per million opportunities. 2. An "opportunity" is defined as a chance for nonconformance. 1. 6. 4. or not meeting the required specifications. GE strives to be flawless in executing their key processes.Action At Work: Six Sigma Product Standard Must produce no more than 3.

Four Objectives of Work Out Meetings – Create a New Paradigm for GE – Empower Employees – Eliminate Unnecessary Work – Build Trust .

Action Fosters Business-Wide and Personal Growth Toastmasters is an international organization dedicated to improve/ facilitate communication within an organization 4 Goals of Sessions – Deliver great presentations – Easily lead teams and conduct meetings – Give and receive constructive evaluations – Be a better listener .

The $1Billion GE Talent Factory – Program began in 1919— oldest training program of its kind Engineering Finance Info Management Operations Sales and Marketing – Several assignments within discipline – Acquire broad overview of GE – Develop leadership/ professional skills .

The Ultimate Driving Machine… Just Got Better GE’s Advanced Materials has teamed up with BMW to design and produce lightweight. durable. chip resistant fenders for their high performance 6 Series .

GE’s Financial Statements .

41% 4.58% Infrastructure 2.31% 0.22% 17.02% 13.99% .33% 10.19% Corporate items and eliminations -2.15% Commercial Finance 15.Revenue By Operating Segment % of 2003 Total Revenue % of 2002 Total Revenue % of 2001 Total Revenue % of 2000 Total Revenue Advanced Materials 5.04% Equipment & Other Services 3.52% 7.99% NBC 5.56% Healthcare 7.98% 10.76% 7.63% -0.35% 10.46% Consumer Finance 9.62% 18.77% 6.57% 9.88% 16.51% 14.30% 4.15% Consumer & Industrial 9.64% 12.57% 7.75% 10.27% 5.44% 0.56% 5.12% 5.05% -1.29% 1.12% 11.26% -1.82% 14.07% 10.37% Insurance 19.27% 5.19% 6.59% 6.60% 6.65% 5.52% 17.21% Transportation 10.28% Energy 14.90% 18.

GE’s Revenue Breakdown in 2003 .

Revenue Growth 2001-2003 **Values in millions of dollars .

61% 2.67% Consumer Finance 8.07% 2.49% 9.46% 8.87% Consumer & Industrial 4.96% -0.Profit By Operating Segment % of 2001 Total Segment Profits % of 2002 Total Segment Profits % of 2003 Total Segment Profits Advanced Materials 7.10% Commercial Finance 15.74% 3.89% 19.36% 8.73% 10.11% Healthcare 7.14% 1.56% Infrastructure 0.39% .32% Insurance 9.41% 3.57% 13.10% -2.96% 10.59% 5.95% 34.66% 13.67% Equipment & Other Services -1.94% 8.26% 17.05% Transportation 13.51% 10.18% -2.90% Energy 25.57% NBC 7.03% 20.

Net Earnings Growth 20012003 **Values in millions of dollars .

16% 18.84% Debt-to-asset Ratio 87.97% 86.02% 61.13 2.Ratio Analysis 2002 2003 ROE 22.44% Current Ratio 2.38% 710.88% Debt-to-Equity Ratio 794.35 .95% Gross Profit Margin 60.

70% 34.40% Revenue 140.40% 7.34B 696.52 N/A 15.544 -4.76% 28.74B -2.96 4.67 PE 21.23B 475.90% N/A 4.93% 0.40% Net Income 15. and its Competitors GE ALSTOM Siemens Industry Revenue Growth 1.69M Oper.67M 9.42% 14.719 1.78B 6.44M EPS 1.24 .74B 20. GE. Margin 13.35B 259.62 21.32% 10.38% 5.24 4.06B Gross Margin 61.89B 92.44% EBITDA 27.Finances.

Competitors of GE .

a leading competitor to GE) A force to be reckon with.Main Competitors ALSTOM – specialize in energy. – Headquarters in Paris. ship buildings and marine systems and transport infrastructure. France – Acquired ABB (Asea Brown Boveri. would be GE’s ultimate competitor .

information and communications. medical. Germany Subsidiaries headquartered in New York – Very similar to GE. strong brand name equity.Main Competitors Siemens – electronics and electrical engineering company 6 groups:. Information and Communications. Transportation. has business operations in over 190 countries . power transmission. Power.Automation and Control. lighting. Medical. and transportation products and services – Headquarters in Munich. and Lighting provides industrial automation and control.

in particular – Creating competitive advantages to gain bigger market share Acquisitions. mergers and jointventures Battle for innovation and technological improvements .5 Forces Model Rivalry among competitors – ALSTOM and Siemens.

ALSTOM or Siemens for now – Tough for new entrants to pinch a sizable chunk of market share from GE.5 Forces Model Potential of New Entrants – Adaptac (1981) and Adept Technology (1983) – Late bloomers. ALSTOM or Siemens . but slowly gaining market share – Does not pose too much of a threat to GE.

components. GE Consumer and Industrial Manufacturing) – Has to be aware of suppliers that might integrate forward . other resources – Vertically integrated (GE Advanced Plastics. parts.5 Forces Model Suppliers – Materials.

5 Forces Model Substitutes – Has many substitutes that might pose a threat – Very well-diversified which means that GE is spreading the risk of failure in every market – Eg. . GE Healthcare’s buyers are hospitals and pharmacies. GE’s NBC-Universal’s substitute are pirated VCD’s or DVD’s Buyers – Similar to its substitutes. ranging from consumers to large corporations – Eg. GE has a broad line of buyers.

Strategic Group Map .

Performance/Product Quality High General Electric Adaptac Adept Technology Alstom Siemens Low Less Diversified More Diversified Product Range .

NBC) Financial Services (contributes to 40% of GE’s revenue) Spreading the risk of failure in every market and not just one . operating in more than 160 countries – Excellent management Proven leadership and business model Confident investors – raising capital – Diverse product range Long Term (GE Aircraft engines) Short Term (GE Lighting.GE’s SWOT Analysis Strengths – Global strength and recognition 5th in Fortune 500 list. Plastics.

no signs of near future recovery – Flexibility Large and diverse businesses might overstretch the company and reduce reaction times to shifts in targeted markets .SWOT Analysis Weaknesses – Company size/ acquisition restriction Eg. was rejected by the EU – Energy Segment Underperforming. specializing in aerospace products. GE’s planned acquisition of Honeywell International. a diversified technology and manufacturing company.

China) – Merger between NBC and Vivendi Further opportunities in the media business – Improved customer services Adopted a new customer focus initiative .SWOT Analysis Opportunities – Research and Development Immense capital allows GE to contribute a lot to R&D for product development and improvement – Increased geographic growth Global expansion = more opportunities (Eg.

since 40% of the revenue is generated overseas Exposed to currency fluctuations – Intense scrutiny after Enron More transparency and disclosure.tough to be the best in all industry . skeptical investors Public image of all large companies suffered – Competition Constant change in technology heats up competition Very diverse:.SWOT Analysis Threats – Exposure to global economy Economy slowdown would affect GE.

12 8/0.13 7/0.11 9/0.98 8/1.44 8/1.70 Innovation/Technology 0.88 10/1.11 10/1.91 Flexibility 0.70 7/0.99 7/0.40 7.91 Customer Service 0.0 8.26 7/0.12 Distribution network 0.04 7/0.6 7/0.1 Managerial Ability/Leaders 0.96 Sum of importance weights 1.77 9/0.91 7/0.81 Weighted Overall Strength Rating .43 7.91 8/1.28 7/1.96 7/0.17 7/0.1 8/0.Weighted Strength Assessment Ratings Score Importance Key Success Factors Weight GE ALSTOM Siemens Product/Performance Quality 0.13 9/1.84 8/0.12 Recognition/Brand name 0.10 6/0.16 9/1.14 9/1.99 Financial Resources/Capital 0.

Jeffrey R Immelt. Reginald H. Jones – Expertise More capital can be invested in R&D Core Competence – Innovative – Desire to strive for perfection (6 Sigma) . Jack Welsh.Key Competencies Competence – Great and proven leaders Eg.

Key Competencies Distinctive Competence – Ability to respond to the drivers of change by understanding the important global trends – Acquisition of rivals and other companies .

FTC gave approval but deal is still not finalize . GE made it public – September 16. 2004. 2004.Recent News GE’s $900 million acquisition of InVision Technologies – March 15.

has signed a 5 year contract to license the GE logo and use the slogan. a financial company part of GE. “Built on GE heritage” – Genworth is planning to allocate $30 million into advertising this coming year .Recent News Advertising Campaign – Genworth.

Recent News October 11. 2004.6 billion in tax relief for multinational companies – Additional capital from the tax break could be used for reinvestment.5 billion in new tax relief for the manufacturing sector – Includes $42. etc . Senate passed a $136 billion corporate tax package that cuts taxes for businesses – Includes $76. increase dividends.

Conclusion GE recognizes that part of being successful and well-respected is being socially responsible as well Has huge potential to remain successful without any major threats from competitors – “Staying Power” Will only continue to expand .

Questions and Answers Session .