General Electric Organization

General Electric Organization

1.1 Current and Historical Background

General Electric is a United States multinational Company which is located in New York and has it’s headquartering in Boston. A business by the name Thomas Edison in 1889 had an interest in Electric related companies. During that period, there existed companies like; Edison lamp Company which was dealing with the production of lamps, Bergmann, and the company which dealt with the manufacturing of electric lighting fixtures and other electric lighting devices. There also existed Edison Machine Works Company which was specifically dealing with the production of dynamos including electric motors. Hence, there was stiff competition among these companies since they all produce almost related products and services. It was in 1892 when Thomson-Houston and Edison General Company agreed to merge thus leading to the formation of General Electric. The two plants thus operated under the General Electric banner up to the present time. Although it started as an Edison home laboratory, today it is one of the largest companies in the world. It has transformed into conglomerate making advanced steps from technologies to different services.

• Four years after the formation the company was listed in the Industrial Average and managed to remain part of the index for quite some time.
• In 1911 the company preoccupies the National Electric Lamp Association and recruited it into its lighting business.
• Eight years down the line, Owen founded the Radio Corporation of America under the umbrella of the General Electrical.it was of great advantage to the Company since it used it for radio sales.
• Radio Corporation of America in 1926 was able to found the National Broadcasting Company. Following these, two radio broadcastings networks were put in place.
• The following year, there was a demonstration of the television network which was led by Alexanderson.
• In 1928 there was the first broadcast publically in the United States. The pictures appeared in the screens 9.7 centimeters square while the audio output was WGY. Since then a lot of improvises have been done from W2XAD, WRBAD until the latest WRVE.
• During the period of World War 1 and World War 2, the company was able to invent the superchargers. It became very effective as it could be applied in the bomber engines. This attracted the United States Army as the company produced the first engine jet that was widely used during the war era. The General Company, therefore, became one of the world largest engine manufacturers in the world shortly after World War 2.
• However during the 1980s and 1990 have several consumers abandoned the Company’s products. That entailed refrigerators, bulbs, and other related products simply because Generic Electric was participating in nuclear weapons manufacturing.
• In 2002 the company suffered bankruptcy. This made it to adopt wind power assets. The company managed to increase engineering activities to the Wind Division since it was the only producer of the large wind turbine in the States during that period. Hence, it was able to get the Scan Wind the year 2009.
• 2018 saw the company adopting the new and the most effective model 9HA which tends to use the current technology. The company, therefore, was able to come up with some segments ranging from aviation, digital industry, healthcare, power, renewable energy, lighting, additive manufacturing, venture capital, and finance.
• In 2019 to date the company was ranked among the largest firms in the United States brought about by the sales sold to the consumers. At the end of the year, the company stock was about 50%. Culp has made tremendous changes which include reducing the number of debts and also selling of the stakes which were no longer vital to the company. The transportation segment has also been sold into Wabtec. All these steps have led to the increase of capital for the company.

1.2 The company’s mission

Just like any other Organization, General Electric has a mission which is; “ to invent the next industrial era, build, move, power and cure the world.” This means the company believes in the evolution of when it comes to industries and markets. The company, therefore, keeps on producing new products that fit the current situations and technologies to sustain the industry. The company also aims at healing the world by producing the most necessities the world needs; healthcare, oil and gas, electric lighting, and aerospace.

1.3 External environments

These may be attached to all the outside factors that influence the operation of the organization either direct or indirect. Hence, the company must react to remain functional. Therefore for the company to identify threats, challenges, and opportunities there was a need to use the PESTEL analysis.  They are as explained below;

• Remote Environment

The remote environment comprises of the following components:

• Political factors

Political activities tend to influence the General Electric Company to the largest extent. The government makes political decisions that happen to have a great impact. The most common affected areas involve the aviation and the lighting sectors. For example the government may choose to create room for global trade which may happen to be both an opportunity and threat at the same time.

• Economic factors

Economic factors impose a direct effect on the company affecting the level of business growth and the revenues. Most countries do not have a stable economy which keeps on fluctuating and these possess a threat especially to the oil selling globally. However if the economies are stable it happens to be an opportunity.

• Social factors

Changes in the way people behave affect business performance. With the advancement in the technologies, the customers may choose to adopt something new for instance mobile phones. This decision will help improve the company’s performance as it will embark on more production. On the other hand if the customer’s will of a view of renewable energy is therefore a threat and opportunity.

• Technological factors

These are factors that affect General Electric’s technological resources. But advancement in technologies is an added advantage to the company since it is the central focus of the company. The increase in digital technology for instance is a great opportunity for the company.

• Ecological factors

It constitutes the natural resources used by General Electric in its production. Thus these happen to affect the company directly and may have long term effects. The company oil as its natural resources, therefore if it becomes limited, it imposes a threat of where to locate it. But it is also an opportunity since the company has access to many oil fields and thus an opportunity to sell to other firms.

• Industry Environment

The industrial environment refers to the overall conditions for the competitors affecting the business as a result of providing related goods and services. General electric company has many competitors like Mitsubishi Electric, Honeywell, and Philips among others that offer the same products and services. Therefore the company had to form a strategy to help cope with the competition. These include;

• Through broad research and survey the company was able to come up with a method that modified products both in the aviation and health sectors.
• The company made an effort of producing more products which it sold to more than 65 countries worldwide.

• Operating Environment

Entails factors found in the immediate competitive situation that hinders the company’s ability in accessing the required resources. The common problem faced by the company is the change in the buyer’s behavior which tends to be unpredictable. In the long run it affects business sales. But since it is located in New York, it has gained a competitive since the place is densely populated hence, being in a better position of selling its products and services.

1.4 Internal Environment

It comprises of components within the organization. These include; the management, the employees, and the social corporate. Some of these constituents tend to affect the organization as a whole while others only affect the manager.

1.4.1 Strengths of General Electrics

1. Global recognition. In 2011 the company became one of the biggest firms in America at position 68. It also featured among the largest in the world something that made it to recognize hence helping it to gain competitive advantage.
2. Historical background. It happened to be one of the oldest companies in the United States hence, familiar with many people.
3. Highly Diversified portfolio. The company operates in different industries thus allowing it to produce a range of products and services.

1.4.2 Weakness of General Electrics

1. Breaching of accounting rules. In 2009 the company violated the accounting rules which are accepted and respected worldwide. As a result it suffered a negative influence.
2. Difficulty in operations. Many times it becomes hard to make certain decisions since the company is widely diversified.
3. Since the formation the company has been borrowing from different money lending institutions to finance its services thereby creating debts that became so huge as time passed on.
4. Limited access to the Asian market. The company has not much penetrated the Asian market which has a lot of business opportunities. These hinder its efforts in making profits and being in the best position worldwide.

1.4.3 Financial situation

The company’s revenue has been fluctuating since 2005 where the company recorded U$ 136,580. The highest was 2018 were managed revenue of U$ 181,581 while the lowest was 2013 with U$ 113,245. In 2018 the company recorded U$ 121,615. By February 2020 the company reported the shares to have dropped by 59% since 2017. The company market cap stood at U$ 262 billion but currently has dropped to U$ 107 billion.

• Generic Strategy

The company has a generic strategy for competitive advantage. Therefore the company adopted Michael Porter’s strategy which has played a greater role in maintaining the company’s competitive advantage in the healthcare, oil, energy, aviation, transportation, gas, and electric lighting industries.

• Long-term Objectives

Generic Electricals has goals that it intends to achieve in more than five years to come. The company focuses on coming up with structured machines that will produce pure energy and a reduction in greenhouse gas emissions. Less use of resources to build more power to cure the world is also one of the company’s objectives.

• Grand Strategies

The company uses grand strategies to enable it to achieve its long term objectives. It has taken efforts by marketing the products worldwide and that has enabled it to stand a chance in business. There has also been an organizational development through diversification.

1.8 Short term Objectives and Action plans

The oil price is high and keeps on changing. General Electrical, therefore, aims at stabilizing and keep the price down that the customers may be able to afford its products. It also aims at creating more economical energy and reducing carbon footprints.

1.9 Functional Tactics

General Electric does daily routine activities in each functional area which includes; finance, marketing, production, and human resource. All this is done to ensure the production of quality products and higher chances of marketing.

1.10 Strategy Execution Policies

Through various departments the company has taken steps in making communication within and outside the organization. It has also clarified its products and services and besides the implementation of different policies. These efforts have helped increase the rates of investment.

1.11 Executive Bonus Compensation Plans

Just like other companies, General Electric does provide extra benefits to competent executives and employees. The plan has helped in retaining the key employees and executives as they play a major role in the success of the company.

1.12 Organizational Structure and Leadership

The company is headed by Mr. Lawrence Culp Jr who the C.E.O is appointed September 2018. Under him there are other 19 holding different positions and departments for the mutual operation of the company. These leaders have improved the general condition of the company by their commitment to attaining the set goals and objectives. They have also played a key role in motivating employees to produce quality products. Technology has also been improvised to make the work more efficient and effective.

1.12.1 Culture

The company has well-established customs, values, and behaviors that help in determining the employees’ behaviors. The most important is when it comes to the managerial decision-making process. The company keeps on modifying its culture to fit in the previous business needs and the industry trends.

1.13 Strategic Control

This involves the management efforts in identifying challenges that exist in the underlying premises and making the required efforts reducing them. Therefore General Electric implemented the PPC that ensured the security and good performance of all the assets.

1.14 Entrepreneurship and Innovation

Entrepreneurship involves the process of which different ideas and skills are brought together to improve the general condition of the organization aiming at creating wealth and resources. Innovation on the other hand is the process of producing and selling new products. Both are very essential to Generic Electricals. Currently the company has continued to innovate in electric power which includes energy storage technology. Entrepreneurs like Jack Welch played a greater role in the company by making major economic decisions.

Key Strategic Issues and Problems

• Financial crisis

The company suffered a tremendous financial challenge in 2008 that made the stock fall up to 42%. The capital financial sector almost overturns the company as a result of a huge recession. This came about since the company lacked a competitive advantage over financial services companies that were in operation. The problem still exists to date since the balance sheet is blurred and unusual. A great loss was made when the company bought the French transportation company. Thus the company was forced to abandon the capital and had to focus on manufacturing. Later in 2017 thousands of employees lost their jobs as the company’s stock failed by 3.5%. 2020 the Company suffered more loss as a result of the coronavirus.

• Power problems

General Electric power is in charge of making steam turbines and gas. However the company has faced a major blow as a result of the emergency of renewable energy. This led to the rose of fossil fuels and as a result many workers lost their jobs.

• Debt

General Electric encounters a huge debt amounting to U$ 7.8 billion that may take a lot of years to cover. To manage its operations the company borrows a lot from outside sources. By December 2018 the total borrowings amounted to U$ 90.9 billion. The presence of huge debts has forced the company to scramble for cash which includes selling more businesses. As a result it has affected its profits to a greater extent. Generally the business has gone down leaving the company with lesser firepower in its efforts of trying paying the debts.