General Electric Analysis - Essay Example

? GENERAL ELECTRIC REPORT Executive Summary The general electric company is one of the highly regarded companies in America and globally. According to the company’s 2011 annual general report, the company had total assets worth $584 billion and a net income of $6.5 billion (Fulton, 2012). The company is considered among the best companies in the world due to products and as well as the profits margins over the recent financial periods. To be specific in this particular case and considering the 2011 rankings, the company attained the sixth position of the best companies in the United States. The General Electric Company also obtained the fourteenth rank of among most profitable companies globally. The General Electric Company is an American transnational conglomerate business integrated in Schenectady. The company is located in New York but has its headquarters in Fairfield, Connecticut situated in the United States. General Electric Company operates in four main areas of production and service to their customers. The areas include Technology Infrastructure, Industrial and Consumer, Capital Finance and Energy. General Electric has endeavoured into the world market hence achieving global acknowledgment for its exclusive goods and services.  In the year 2009, Forbes magazine graded GE as the world's biggest company.  Hurbert in 2007 noted that General Electric's brand is the globe's most identified brand.  This kind of detection has given it an aggressive advantage over other organizations due to its capacity to be a focus for more customers. The technology infrastructure incorporates the company’s business group consisting of the General Electric Company’s constituents such as transportation, healthcare and the General Electric aviation. The formulation of this unit resulted from the staggering losses experienced by the company in the year 2008. The General Electric capital finance entails the major financial services of the company that are grouped into five elements. The financial services include the General Electric money, capital aviation services, energy financial services and the capital real estate. The General Electric Capital offers commercial lending and leasing services within the company. The sectors gaining from the capital are the aviation, entertainment, communications, healthcare, consumers and media. The General Electric Energy concerns with the creation of the energy necessary for the running of the company’s activities as well as making profits from the consumers. The energy of the company is based in Georgia and Atlanta in the United States of America. The company’s energy is categorised into Power and Water, oil and gas and the energy management. The industrial and consumer refers to the company’s businesses and their solutions to the company and the consumers. The unit targeted efficiency in customers’ services through increasing their productivity. The critical tool used by the company in this case is the employment of superb information management and the automation of the specific solutions at every instance of their application. The basic categories of the industrial solutions of the General Electric are the appliances, intelligent platforms and lighting. Statement of Financial position ASSETS 2011 2010 Cash and equivalents $ 84,501 $ 78,943 Investment securities 47,374 43,938 Current receivables 19,531 18,621 Inventories (Note 5) 13,792 11,526 Financing receivables—net 280,378 303,012 Other GECS receivables 7,561 7,571 Property, plant and equipment—net (Note 7) 65,739 66,212 Investment in GECS Goodwill (Note 8) 72,625 64,388 Other intangible assets—net (Note 8) 12,068 9,971 All other assets (Note 9) 111,707 94,299 Assets of businesses held for sale (Note 2) 711 36,887 Assets of discontinued operations (Note 2) 1,255 12,425 Total assets (a) $717,242 $747,793 LIABILITIES AND EQUITY 2011 2010 Short-term borrowings (Note 10) $137,611 $137,611 Accounts payable, principally trade accounts 16,400 14,656 Accounts payable, principally trade accounts 10,402 11,142 Dividends payable 1,797 1,563 Other GE current liabilities 14,796 11,396 Non-recourse borrowings of consolidated securitization entities 29,258 30,018 Bank deposits 43,115 37,298 Long-term borrowings 243,459 293,323 Investment contracts, insurance liabilities & annuity benefits 29,774 29,582 All other liabilities 70,647 55,271 Deferred income taxes (131) 2,753 Liabilities of businesses held for sale 345 16,047 Liabilities of discontinued operations (Note 2) 1,635 2,587 Total liabilities (a) 599,108 623,595 Objectives This analysis of the General electric Company has various targets of accomplishments throughout the exercise. This would be done mainly by offering full information and the provision of recommendations that would assist in the development of the company. The analysis intends to produce a concise external marketing audit using appropriate analysis models, and identify key issues facing the organisation arising out of the audit. There will be explanations of the organisation's current segmentation, targeting and positioning (STP) strategies. There will also be elaborate discussion and justification of the most appropriate marketing strategy for this organisation. The analysis will prioritize the recommendation of an effective extended marketing mix (7Ps) in relative to the importance of customer relationships for the organisation (Cheng, Lee and Kotler 2012). Evaluation of the importance of customer relationships for the organisation and explain how customer relationships can be developed and supported by the marketing mix. After the evaluations, it will be appropriate to suggest budget and evaluation methods for the marketing plan. This would offer an appropriate rationale for conclusion since the main intention is to offer analysis that would critically improve the productivity of the company and budget is a fundamental aspect. Strategy GE will apply various techniques and activities to achieve the anticipated objectives. The use of appropriate analysis model in of audit to identify key issues facing the organisation will be achieved through the analysis of the respective models. Then the appropriate model will be determined from its merits and relevance to the objectives. The elaborations on the organisation's current segmentation, targeting and positioning (STP) strategies will result from the determined customer demands and their numbers in different locations of the world where the company targets or has its operations going on (Wong, 2010). Effective market mix will be determined from the seven possible options. This will also be based on the prevalent criterion of choosing according to the business environmental demands stipulated by the market forces and the business anticipations. Examination of the essence of the customer relations will result from the direct observation of the customers’ behaviour and their reactions to the company’s products and the overall services. The brand loyalty among the customers on the company’s products as well as its services can provide a fundamental source of determinant to the way in which the customers relate with the company and its staff. The subject marketing mix can also determine the relations of the customers to the company, this also provide the rationale on the scrutiny of the marketing mix. The budget evaluation methods would emanate from the models that tend to increase the profit margin and discourage unaccountable expenses (Comstock, Gilati and Giluori, 2010). Tactics The approaches of how the immediate strategy will be implemented and the period of implementation will be determined by the company’s environmental forces such as technology level and the demographics of the consumers (Immelt, Govindarajan & Trimble, 2009). There are strategies that will be applied in the short term whilst others will be employed in the long term. The periods of the strategies’ implementation will vary according to the urgency of its applications and effects. Action The actions that are direct and simple will be employed to realize the objectives and ensure a precise piece. Even in situations of complex applications, there will be necessity of simplifying them into smaller portions that are easy to understand and implement. Control and Metrics Regulation of the models and techniques is a critical aspect for harmonization of the applications involved in the models. Appropriate control is possible through monitoring and measuring of the repercussions of each model (Brady, 2005). Appropriate management is only possible through effective evaluations of measurements of the factors of models and the significant effects in the business. The External Marketing Audit Global Strength and Competitiveness The Company’s products have been identified for their value and the organization is known for satisfying customer-actual needs.  Consequentially, it has engrossed many clients including corporations and government agencies and its competitive position is quite favourable (General Electric 2009).  GE is the largest lender in most of the countries where it spends with exemption of the United States (Hurbert 2007).  Its power production equipment contributes a quarter of the world's electricity daily. Exceptional Management General Electric utilizes a matchless management mode, in which business activities are categorized into business units.  Every business unit performs a distinct function within the corporation and has its own sovereign management.  Instances entail GE Consumer Finance, GE Commercial Finance, General Electric Energy, GE Equipment Services and GE Insurance.  This form of management style elevates productivity because of the high extent of accountability and competence that industry unit managers are anticipated to uphold (Hutt and Speh, 2012). Variant Lines of Operation GE has devoted in different products in its units.  These operations originate from dissimilar fields such as energy, automotives, technology, and aviation and home appliances to financial services and insurance services.  This form of variation offers flexibility to and protects the company from risks in case of troubles in a single unit. Environmental Initiatives GE has gained a good reputation in the world due to its endeavours in environmental initiatives. The company appreciates the green economy and improved social accountability.  For instance, 'Ecoimagination' program is undertaking the production of environmentally friendly technologies, energy sources, low discharge engines for airplanes, hybrid locomotives as well as water purification (Makower 2005).   Weaknesses Under-Performing Energy Unit Considering the worldwide shortage and the severe vacillations in fuel costs, the energy unit is not performing as anticipated (Hurbert, 2007).   Vacillations in prices of petroleum product have been mainly resulted from the supply shortages which have compromised the company’s viability. Threat to flexibility Over diversification is frequently regarded fatal for a company.  Greater extent of diversification is detrimental since it leads to strain which typically drags decision making process.  At GE, the many units need consideration and could pose as challenging to handle if excessive diversification results (Hill and Jones 2012). Opportunities Mergers and Acquisitions GE has executed many amalgamations in the current past. The mergers have enabled the company to expand worldwide and expand its operations into new avenues hence increasing productivity. The company has amalgamated with others such as Interbanca S.P.A and VetcoGrey among others. The merger of NBC with Vivedi creates best opportunities for GE in the media sector. Research and Development Deepened research and development typify the company's operations as it look for upholding a competitive advantage over others in the similar industry. (Hurbert, 2007). The company is ready and provides adequate resources to maintain the research activities for its development. Threats Competition The General Electric Company risks losing its customers to some of its existing and emerging competitors both in the global and domestic markets. The situation is common even in other sectors and industry. The competition may be intensified if the competitors improve in their production skills, innovation and technology. Information security General Electric joins other companies in suffering from data security victims. The company is threatened of losing vital information to hackers, employee dishonesty, accidents, natural disasters and employee dishonesty.  This could greatly affect the company’s processes and productivity. Financial Crisis The GE has also suffered from the worldwide experienced specially among companies. The elevating prices and reducing bank lending rates have underprivileged businesses of the much required profits and capital in that order. Negative Media Campaign The manner in which the media exposes a company can greatly influence the company’s activities and the customers’ attitude on it. Media may victimize a company through deception for instance; 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 (Chasnoff, 1991).  Competitors may also use the deceptions to bring down a company. Evaluation and Analysis Through the above examinations, it is obvious that GE has a number of strengths that target its development by improving profitability.  The company’s international recognition, strengths and aggression renders GE at a positive position as contrasted to other companies in the similar industry.  The incorporation of business units for administration presents an efficient system to manage the expanding organization. The style reduces the likelihood of devastating senior administration with work. The system also enhances productivity with regards to responsibility anticipated from the company unit managers.  The corporation carries out numerous operations which greatly contribute to profitability.  This is improved by the amalgamations and achievements that have varied the company's production range and in turn resulting to upgrading on profits realized. The strengths and opportunities have not realized constraints.  Most threats and weaknesses intimidate the performance of the business by availing limitations to the organization's management.  Elevated extents of competition, financial limitations and menace of data loss are potential threats to the company’s continued existence.  Weaknesses within the company counting the deprived productivity of the energy unit and flexibility threat could impact harmfully on the company’s management. In order to lessen the effect of threats and weaknesses, General Electric Company could use the strengths and opportunities to control them.  For instance, the company's reputable research and development could be utilized to restrain competition by inventing superior novel products from every time.  This would enable the company to create and operate within its own advanced level that its competitors cannot achieve within the period. The well-organized management can also be used to avert loss of data through putting into practice appropriate control mechanisms and to evade losses that could demonstrate the circumstances that result from the financial crisis and other related sources. Statement of Earnings General Electric Company and consolidated affiliates For the years ended December 31 (In millions/-share amounts ($)) REVENUES 2011 2010 2009 Sales of goods $ 66,875 $ 60,812 $ 65,067 Sales of services 27,648 39,625 38,710 Other income (Note 17) 5,063 1,151 1,006 GECS earnings from continuing operations GECS revenues from services (Note 18) 47,714 48,005 49,655 Total revenues 147,300 149,593 154,438 COSTS AND EXPENSES Cost of goods sold 51,455 46,005 50,580 Cost of services sold 16,823 25,708 25,341 Interest and other financial charges 14,545 15,553 17,697 Investment contracts, insurance losses and insurance annuity benefits 2,912 3,012 3,017 Provision for losses on financing receivables (Notes 6 and 23) 4,083 7,176 10,585 Other costs and expenses 37,384 38,054 37,354 Total costs and expenses 127,202 135,508 144,574 Earnings (Loss) From Continuing Operations before Income Taxes 20,098 14,085 9,864 Benefit (provision) for income taxes (Note 14) 5,732 1,033 1,142 Earnings From Continuing Operations 14,366 13,052 11,006 Earnings (loss) from discontinued operations, net of taxes 77 (873) 219 NET EARNINGS 14,443 12,179 11,225 Less net earnings attributable to non-controlling interests 292 535 200 Net Earnings Attributable to the Company 14,151 11,644 11,025 Preferred stock dividends declared (1,031) (300) (300) Net Earnings Attributable To GE Common Shareowners $ 13,120 $ 11,344 $ 10,725 Amounts Attributable to the Company Earnings from continuing operations $14,074 $ 12,517 $ 10,806 Earnings (loss) from discontinued operations, net of taxes 77 873 219 Net Earnings Attributable to the Company $ 14,151 $ 11,644 $ 11,025 Per-Share Amounts Earnings from continuing operations Diluted earnings per share $ 1.23 $ 1.14 $ 0.99 Basic earnings per share 1.23 1.14 0.99 Net earnings Diluted earnings per share 1.23 1.06 1.01 Basic earnings per share 1.24 1.06 1.01 Dividends Declared Per Share 0.61 0.46 0.61 Consolidated Statement of Changes in Shareowners’ Equity (In millions) 2011 2010 2009 CHANGES IN SHAREOWNERS’ EQUITY GE shareowners’ equity balance at January 1 $118,936 $117,291 $104,665 Dividends and other transactions with shareowners 10,530 5,701 5,049 Other comprehensive income (loss) 2011 2010 2009 Investment securities—net 606 16 2 659 Currency translation adjustments—net 219 (3,874) 4,135 Cash flow hedges—net 104 454 1,598 Benefit plans—net (7,048) 1,079 (1,804) Total other comprehensive income (loss) (6,119) (2,325) 6,588 Increases from net earnings attributable to the Company 14,151 11,644 11,025 Comprehensive income (loss) 8,032 9,319 17,613 Cumulative effect of changes in accounting principles (a) (1,973) 62 Balance at December 31 116,438 118,936 117,291 Noncontrolling interests (b) 1,696 5,262 7,845 Total equity balance at December 31 $118,134 $124,198 $125,136 (a) On January 1, 2010, we adopted amendments to Accounting Standards Codification (ASC) 860, Transfers and Servicing and ASC 810, Consolidation, and recorded a cumulative effect adjustment. We adopted amendments to ASC 320, Investments—Debt and Equity Securities, and recorded a cumulative effect adjustment to increase retained earnings as of April 1, 2009. See Notes 3 and 15. (GE Annual Report, 2011) The Current STP Strategies STP incorporates market strategy, target market, positioning market segmentation and demographics. The General Electric Company employs this mode in its marketing of products and services. The segmentation, targeting and positioning (STP) strategies is a compound tool that is critical in marketing practices of a company since it offers direction and accuracy of the strategies selected (Nijssen & Frambach, 2010)). Segmentation GE has identified its market throughout the world and classified the different portions into segments for its products and services. The company provides a broader range of products and services therefore, there is need to break the market into segments that are easier to manage. Another objective is to regroup the market segments. The association of segments according to the products and services demanded provides ease in product supplies and prompt service delivery. Finally the company uses the segmentation to identify the specific segment to be targeted and the methodology to be employed. Moreover, the company has also ensured that the various segments meet ideal standards of a segment such as accessibility. The company staff and representatives should be capable of reaching the segment without difficulties to accomplish their operations in that location. The segments should be measurable and quantifiable during operation, examination and analysis. Segments have to be unique from one another. The distinct segmental differences provide an opportunity to avoid repetitions especially of service provision that would have been obtained by many from one source. Most importantly, the segment should be profitable. This means that the operation costs should be less than the output for reasonable benefits. This also concurs with the general aim of the business that is profit realization. Positioning GE employs the skill of positioning in locating different aspects in the market, firms and customers amongst other elements. Positioning involves the use of perceptual maps to establish the position of a person, product, and company, service or business idea. Positioning maps can be used or perceptual maps are straightforward and very efficient marketing instruments. The company believes that strategy can barely be planned in the mind of the consumer rather than the marketplace. Positing demands a critical understanding of the levels of competition but since GE involves in competition of different levels, the company considers nearly all the levels of competition. For instance, the company considers product, category, corporate and industry levels of competition. This is the reason that prompted for the ranking of the company into different levels hence, its recognition in the world among greatest companies. GE competes well in nearly all levels of competition especially the product corporate and industry levels. Targeting GE has specific targets to achieve in both the short run and the long run in the market. The company intends to achieve dominance in the international products. The company has embarked on producing superior products such as the electrical appliances and provision of excellent services to customers. This has improved the customer’s confidence in the company and their products equally to their services. The Most Appropriate Marketing Strategy GE Company applies several strategies in its marketing practices such as the market leader, market challenger, market niche and market follower marketing strategies. Nonetheless, the degree of employment of the variant marketing strategies varies according to the intentions of the business and its level of operation. The Market Leader Strategies Under the market leader, the GE Company employs three means of dominating the market. First, the company has expanded its total market to more than fifty five countries in the world. The company has over seventy thousand employees as well. GE employs variant techniques in obtaining new customers for its products internationally. The company source customers in their various locations and enforce on the promotion activities (USSAEC, 2012). This also assists in identification of the company’s products in case they have never been recognized. The second means leading the market is by defending the market share that has already been achieved. GE has retained its market share through continuous improvement on the quality of its products. This practice has assisted the company in retaining its customers. The third means employed by the company is the expansion of its market share. The expansion is possible through aggression in the counter of completion. The company ensures that it executes functions that its competitors are not capable of matching. GE Company advertises its products using the most suitable promotion mix that matches the business, services and products. Market challenger Marketing strategy The market challenging demands intensive research to meet the consumer needs that have never been met by the competitors. The GE Company are determined to develop more efficient products for its consumers. The company’s segments consider consumers as per their demands. There is a group of researchers who are targeting the improvement of the existing products and creating newer products with increased efficiency (Penn & Demand, 2012). Market Niche Marketing Strategy The GE Company has differentiated the market into variant segments to enhance the efficiency of addressing the consumer needs. The company has been able to address the varying preferences of the different customers. Therefore, the customers have shifted their focus on the company as one that cares for their needs (Marlow, 2002). Market Follower Marketing Strategy This strategy depends on the follower waiting for the competitors to identify and perform their market research. The follower would then improve the weaknesses of its competitors. GE Company does not operate as a market follower; instead it improves on the weaknesses of its competitors in the frontline as well as following for newer innovations. Conclusion According to the provided analyses on the marketing strategies, the GE company best suits the market leader strategies. The market leader encompasses all the trends in accordance to the company as well as concurring with its objectives of leading the market in the industry (Tanner & Raymond, 2010). Importance of customer Relationships The essence of customer relationship is to create new customers, retain the customers, maximizing and enjoying the profitability of good customers. The handling of customers especially the external customers is critical for the determination of the customer’s satisfaction and the relations with the company. The relations of the company and the customer will determine whether the company will keep the customer or the customer will opt for a different company (Nijssen and Frambach 2010). The relationship is critical in maximizing the customers’ demands for the company’s products. This would also entail the customer referring other customers the company. Hence, GE Company has embraced adequate training of its staff to acquire all the values and etiquette for the customer care and service (Doole and Lowe 2005). Recommendation Suggestion of the budget and the evaluation methods for the marketing plan should entail a number of methods. First, the sales should be observed to ensure that they are increasing (USSAEC, 2012). Clients can be asked of where they heard about the company and its products. This would assist in the identification of the covered locations (McKey, 2003). Determine of the promotional or the advertisement activities produce direct feedback. Evaluate whether the marketing activities lead to new opportunities. Sales conversion rates can be determined through the history of sales. References Chasnoff, D. (1991). Deadly deception: General electric, nuclear weapons and our environment. Newday. Cheng H, Lee N & Kotler P (2010). Social Marketing for Public Health: Global Trends and Success Stories. 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