Key Events and Timeline of General Electrics - Assignment Example

?Introduction: Key Events and Timeline of General Electrics Standard of life is improving as we move forward. Electric appliances are making your life easy and washing machine is one of that appliances. The production of Washing machine is increasing and new structures in machines making your life easier and faster as well. Statistics of National Bureau calculated the increase in percentage of washing machine production. As compared to last year it rises up to 32% in 2010 for 42.8 million units. Data collected by State Information Centre for the sales of washing machine from January to October 2010, sales of domestic market shoots up to 25.17%. Increase in urban consumption is also emphasis. Consumption rate is drastically improved and future structures are under planning. Operational profit of GE Consumer &Industrial is 2.1% and revenue is 6.1%. They sell home appliances, industrial equipment and other services related to them (Brooks, 2009). General Electric Company or GE is a multinational company in New York, headquarter is in Fairfield. Company is providing their services in four major sectors. These sectors are Energy, Industry, Technology setup, Capital Finance and last but not least are Consumer. According to Fortune ranking, GE in 2011 is the sixth largest organization is US and also ranked on 14th position for the most profitable setup. The other ranking of 2011 are Interbrand ranked them on 5thfor best global brand, Newsweek gives them 82nd position for green company, Fortune gives them a title of most admired one and kept them on 13th rank and Fast Company rate them as 19th rank in innovative company. In 1890, Edison General Electric Company comes in market by the owner Thomas Edison. In the same year Charles Coffin also host the flag for Thomson-Houston Electric Company. The increase in number of competitor introduces new patterns and strategies. In 1892 the merger of both companies, Thomson-Houston Electric Company and Edison General Electric give the emergence to General Electric. The integration of company takes place in city of New York. Canadian General Electric also came in to being in same era (Shim and Siegel, 2008). The future plans of GE are to introduce new appliances and technology which reduce the consumption of energy. Energy refers to electricity. Global Research section of GE makes management strategies to control the use of electricity by consumers in home and industry sectors. Many of the research programs want to help the customers globally and face all the challenges gifted by environment. Researchers of GE are studying the techniques to implement systems that will use smart appliances. The efficiency will increase in grid of power-transmission. We can consider any home having multiple electric appliances like washing machines, microwaves, refrigerators, air conditioners and other are working simultaneously will affect the power consummation on overall basis. Consumer will go to pay less as compared to consummation because of proper management control on out of electricity (Tennent, 2008). The basic aim of GE is to introduce such technology in market which is efficient in electricity usage and reduce the use the emission of greenhouse gas footprints in air. Key Events-GE Timeline 1876 First laboratory in New Jersey opened by Thomas Addison. 1892 Edison General Electric (formed 1890) and Thomas Houston (formed 1879) merged to for m The General Electric Company 1932 GE Credit corporation formed 1942 First American Jet Engine developed by GE 1981 Jack Welsh becomes CEO 1985 GEnie developed 1989 CNBC Developed 1996 Genie is sold out 2001 Honeywell and GE merger 2003 GE acquires Transamerica finance 2004 Partly acquires Vivendi Universal, and fully, InVision technologies 2006 Acquires IDX and Zenon environmental systems 2007 Acquires Microwave data systems, Smiths Aerospace and Vital Signs 2011 NBC sale to Comcast completed by retaining 48% share. Source: www.ge.com General Electric Company Business Model: General Electric Company, headquartered in New York is one of the biggest multinational conglomerates in the United States. It started as the personal laboratory of Thomas Edison and has evolved into a company dealing with a diverse range of services from electric installations to healthcare and financial services. Since the last 125 years the General Electric Company has grown massively using its expertise in technology and management to change the way people think today. Today their net income is $ 12.163 billion ranking 6th in Fortune 2011. Innovation and research has been the key to provide technological solutions for not only its clients but also the ordinary citizens. Through the years it has expanded to attain a number of companies with diverse portfolios. Its success lies at creative and cutting edge research along with an innovative business strategy and strong culture to ingrain trust in its partners. Over the years GE has kept up with modifications in the market tailoring their business strategies and innovation to meet the challenges and maximize profit. Initially GE had a centralized management however it did not prove very useful and had to be changed. Globalization and building small growth platforms have been its most successful business model. Today its initiatives for future capital growth as quoted in the letter to the stakeholders are launch, grow, expand, lead, create and solve. GE is constructing new growth platforms to provide opportunities to accelerate growth in industries using its technology.GE follows a special strategy for growth. They start acquiring small platforms. And then use their technology and innovation to grow them for solid returns. Recently it has also adopted a new approach for growth which is shared value scheme. It adopts the strategy investing in goods that are most required in under developed countries meanwhile helping in the global affairs by countering a large array of problems encountered by people there. It is now developing low cost health and technology solutions for these countries and expanding their business at the same time. GE has a number of competitors, but most of them specialize in one industry. GE, on the other hand, has services and operations in a diverse range of industries, thereby eliminating strong competition from one source. However it does mean that it has to keep itself ahead of a number of competitors at the same. Siemens AG (SI) is the biggest of GE’s competitors as it is also a multi-disciplinary company most which are similar with GE. GE has a 40-50% market share of the US market which is the 2nd largest in the world. Also it ended the year 2010 with $ 79 billion cash making it a formidable force in the industry which is continuing to grow even in these difficult economic times (Brigham and Ehrhardt, 2010). GE washing machines are one of its top electrical appliances. It claims to have the cutting edge technology to conserve water making it an eco-friendly device many environmentalists vouch for. It is appliance that is claimed to be a work of innovation. And along with its brand name, it continues to be a top choice of the customers though not low priced. Competitive Positioning: GE or General Electric is consider as a diversified company, have multiple branches in the world. It makes this company as one of the largest one. Headquarter is located in Fairfield, Connecticut. Company introduces vast range of electric appliances. The range starts from wind turbines and jet engines as well and ends to entertainment and finance. Product range is considered as one of the ideal, perfect, classic, typical and having standard quality. Competitors of GE are divided in two tiers Tier one includes Honeywell (HON), 3M Company (MMM), Siemens AG (SI), Corp (UTX) and United Technologies. Tier two includes Bank of America (BAC), The Walt Disney Company (DIS), JPMorgan Chase (JPM), Viacom (VIA) and News Corporation (NWSA). Customers defined its pros and con both. WJRE5500GWW is one of the models of Washer from GE. Different people give different reviews. It has a large basket, spin most of the water and treat gently to cloths; this is less expensive model as compared to others. The disadvantages are user manual is not appropriate and tangle in cloths after spinning. It price is $391.93. Whirlpool Cabrio WTW5600XW is $609, expensive than GE this model. Top four manufacturers of machine are GE, Whirlpool Kenmore (Sears) and Maytag. GE is one of the biggest Washing machine producers (Brigham and Ehrhardt, 2010). Change in Products The first washing machine, which was a modern one, was introduced by Bendix. It introduces the first washing machine in US, year 1937. After Bendix, General Electric comes with its washing machine in 1947. It was automatic and first top loading machine. The features were almost the same as compared to other washing machine. Top four manufactures of washing machine are GE, Maytag, Whirlpool and Kenmore (Sears). European brands are Miele and Asko. Paykel and Fisher are imported from New Zealand. Samsung and LG are from Korea. Haier is of China. The one of the largest manufacturers of washing machines in the world is consider as GE. It has got the excellent service system as compared to others. The recent products consist of environmental machines. It uses a HydroHeater. The purpose of HydroHeater is to kill germs of common laundry. GE is categorized as a top loading machine. It got variety of technology used for agitating. GE WBSR3140D and GE WWRE5240D are the two machines of GE, which are top rated by customers. In sector of washing machine, the name of GE comes on top as compared to other which comes under same roof. It gives excellent service, efficient in work, consider as reliable after customer review and in the end support back up as well. When entering a new market there are many entry strategies GE has followed so far. While entering a local market they have focused more on buyouts and franchising, while in international market they have focused more on strategic alliances, joint ventures and mergers and acquisitions. Strategy for entering a new market for GE has always been specific to that market and this is one reason of success of GE in international market. The Total sales figure of GE is 147,963 (million USD). GE Capital provides the biggest share which is 47,040 (million USD). Technology infrastructure and Energy infrastructure are the next 2 biggest contributors. The share of home and business solutions sector in total revenue of GE has decreased over the years. GE consists of six divisions GE Technology Infrastructure makes technology for transportation includes aviation, engines and other. Operating profit is 39% and 27% of total revenue is calculated. GE Healthcare is making medical equipments including PT, X ray imaging, MRI, CT and other. Total revenue in 2009 is the 10% of GE. GE Energy Infrastructure makes energy equipments like generators, turbines and industrial appliances. Operating profit is 35% and 24% of total revenue is calculated. NBC Universal works as a broadcaster of motion video in US. Operating profit is 12% and 3.2% of total GE Capital provides loans and leases. Operating profit is 12% and 3.2% of total revenue is calculated. GE Consumer & Industrial produces industrial and home appliances and have wide range of products. Operating profit is 2.1% and 6.1% of total revenue is calculated. General Electric triggers the Herfindahl index and it rises up to 320 points. Herfindahl index is the comparison between the size of company and place in industry with competitors. 0.9965839 % share is the HHI figure for GE in 2010. Entropy measure is the diversion in production of product. 1.4747 which indicates strong diversification. Looking at the figures and charts of Entropy and Herfindahl index, it is clear that product diversification is on the rise in this case. Changes in Country Diversification Foreign Assets of GE in 2010 is $358.6. Foreign assets are the percentage of amount of material present in country, which is required in making of product. Total assets in last five years are 2010 $751216 2009 $781,901 2008 $797841 2007 $795741 2006 $697311 As the GE is moving forward, the number of assets used by company in production of materials is increasing. The huge increase in noted in between 2006 and 2007, almost the increase of 10 figures. Minute increase in between 2007 and 2008 is figure out. One figure is drop down in 2009 and further decrease in 2010. Foreign assets over total assets ratio in 2010 was 0.81025697 which is a little lower than 2009 figure. Foreign sales of GE is around 18bn in the year 2009 Total sales figure of last three years are 2010 100437 2009 103777 2008 112769 The figures are quiet close as compared to each other. But the decrease is observed in 2009 and 2010 as compared to 2008. Foreign sales over total sales ratio figure in 2010 was 0.336187097 which was a little lesser than 2009 figures. Foreign employees in last five year are 2010 154000 2009 170000 2008 171000 2007 172000 2006 164000 The large increase in number of employees in 2007 is observed as compared to 2006. Decrease by 1000 in 2009 and further big decrease in 2010. Foreign and total number of employees’ ratio is 0.536585366 which is again a little lower than 2009 though general trend is of rise. Total number of employees in last five years 2010 287000 2009 304000 2008 323000 2007 327000 2006 319000 Continuous increase and decrease is observed. The figure is down to three places as compared to 2010 with 2006. The ranking among multinational company around the globe is on 6th in rank given in Fortune 500 of 2011. The brand is considered as the most popular in market of electrical specifically washers. It comes on fourth rank. It almost have the assets of $49billion. The changes in brand took place in 2004 by its CEO Jeffrey Immelt. Changes included like modification in logo, change in color palette, change in font and a most capturing one is change in slogan. The previous slogan was "imagination at work". The present slogan for GE is “we bring good things to life". General Electric is a big multinational company emerges in the year 1892. It sells washers from appliance division. The top loading and automatic is introduced in the year 1947. The washer of GE is cheaper than other brands of washing machine. GE is obviously a better competitor as compared to others. The figures give a clear idea about the expansion rate of company and its growth in various factors. Regional assets are the main blocks that required in construction of economic building of any country or region. Regional Assists includes workforce, skillful person, strength of organizations, assets of profit and non-profit organization. Resources of private and public organization are also included. Economic and physical resources are also considered (Brigham and Houston, 2009). Regional assets of GE in last three years are 2010 $751216000 2009 $781901000 2008 $797769000 The value of regional assets is decreasing as we are moving forward. It is necessary to maintain regional assets for development of country and their organizations. Regional assets of GE in the US in 2010 were 387300 million USD. In Europe regional assets were 199200 million USD in 2010. The Regional to total assets ratio is highest in the US which was 0.515564099 is 2010 in the US. Europe is the second most important region in this regard followed by Pacific Basin, Other areas and Americas. Total assets of GE in last five year are 2010 $ 751216 2009 $ 781901 2008 $ 797841 2007 $ 795741 2006 $ 697311 The value of total assets is increasing from year 2006 to 2008. It starts decreasing from 2008 and continuously decreasing till 2010. The value of 2006 and 2010 shows a big difference and present scenario gives a feeling of improvement. Total sales of GE in last five years are 2010 100437 2009 103777 2008 112769 The total sales are decreasing as we are moving forward. In 2008 to 2010 the sales was $112769 and in 2010 it is $100437. Regional employees in GE for last five years are 2010 133000 2009 134000 2008 152000 2007 155000 2006 155000 The number of employees remains constant in 2006 and 2007. It decreases in 2008 by 3000. It further decreases in 2009 and 2010. Total numbers of employee in GE for last five years are 2010 287000 2009 304000 2008 323000 2007 327000 2006 319000 Total numbers of employees are constantly decreasing as we are moving forward. In 2006 there were 319000 and in 2010 the number decrease to 207000. Regional affiliates of GE in last five are 2010 29 2009 29 2008 39 2007 39 2006 38 The number of regional affiliates is increasing as we are moving forward. The difference of 10 figures in recorded. In 2006 they number is recorded. In 2006 the number is 38 and in 2010 it is 29. The increase in number of partner is expending business but division in assets is also associated with it. The GE recorded worldwide profits. The amount is $14.2 billion. The share of $5.1 billion is earned form United States operation. Most of the figures including assets, sales, employees and affiliates are decreasing in last five years. Decrease in assets is the worried option for company. Country GDP( 2010) Economic Development (2010) Social Development (2010) Homicide Rate (2008) Accountability (2010) China 5,878,629,246,677 7,570 0.663 -1.649501221 USA 14,582,400,000,000 47,120 0.902 5.220973751 1.16180876 Germany 42,130 0.451713436 1.047643331 Australia 43,290 1.345103086 Canada 1,574,052,204,913 0.937 1.2337255 1.428903554 UK 0.888 1.668703738 1.379444766 Italy 2,051,412,153,370 38,560 1.352112676 1.312851012 South Korea 1,014,483,158,314 31,130 0.854 0.927387521 India 29,010 0.877 2.30310938 0.708519291 Japan 1,340 0.42402758 Canada GDP of Canada is 3.2% in 2010. Export sector gives a vulnerable impression because of depressed demand from USA. Canada has second largest oil and third largest gas reservoirs. CO2emission from industry contributes largely to carbon foot prints. It is stable country with respect to social political risk. Population in 2010 is 34 million. GDP per capita of Canada is US$44,070. GPD in context of intermediation rebounded was 0.2% in 2009 and increase to6.0% in 2010. Budget deficits of 5.5% of its GDP are recorded in 2009 and 2010. India GDP in 2011 is 8.2%. Poverty is the main concern with 37% of people below poverty line. Export of 12.4% and import 19.2% of its total GDP. Rate of budget deflect is 9% of GDP in 2010. Fourth largest energy consumer, import of mineral oil is US$104 billion. It is third populated country and emission of 1.7 billion ton of CO2 in 2010. UK Export good contribute 18.3% and import to 25% of GDP. Budget deficit to 10.4% of GDP in 2010. Largest oil producer in 2010 and second largest gas is produced. CO2 emissions are reduced to 10.8% by 2010. USA 2.6% of real GDP. Highest GDP per capita that is US$47,423. Fossil fuels meet 90% of energy needs in 2010. Second largest producer of CO2. The other countries which are included in top ten are: China, Japan, Germany, Australia, Italy and South Korea. The Economic development index of all these countries in 2007 was positive. (China, 1.44; Japan, 3.44; Germany, 2.54; Australia, 1.77; Italy 1.1; and South Korea 3.47). All of these countries are growing and stable markets where GE has entered through joint ventures and mergers. Financial performance: Financial performance of any company is measured through calculation of financial ratios. Various ratios indicate strength or weakness of a company from various points of views. Foreign and total assets figures and foreign and total sales figures of General Electrics give an idea that assets of the company are divided between home nation and the other countries. This indicates that the financial strength of General Electrics is balanced. Total number of employees from home country and from other countries ratio shows that a certain degree of decentralization exists. Total Sales ratio against R & D shows that the more Research and Development GE has done, the more successful they have been. Return on Assets and Return on Sales figures are stable over the period of last five years. The other ratios as provided in the given table are all a proof that General Electrics is in general a financially stable and successful company. Ratio 2010 2009 2008 2007 2006 Foreign/total assets figures 0.477359 0.500191 0.501854 0.528187 0.494614 Foreign/total sales figures 0.489914 0.508475 0 2.670807 0 Foreign/total no. of employees 0.536585 0.559211 0.529412 0.525994 0.514107 Region employees/total no. of employees 0.463415 0.440789 0.470588 0.474006 0.485893 Total sales/R&D 8.897436 10.72727 11.45161 10.73333 10.82143 Total sales/Capital expenditure 3.540816 4.10197 2.21875 1.798883 1.825301 Total sales/Total assets 0.046192 0.045274 0.044495 0.040465 0.043453 Total sales/No. of employees 0.000121 0.000116 0.00011 9.85E-05 9.50E-05 Return on Assets (ROA) 0.0155 0.0141 0.021821 0.027909 0.029746 Return on Sales (ROS) 0.409452 0.282345 0.556901 0.854907 0.769967 Free cash flow/Operating Cash flow 1.516807 1.055794 2.544503 1.158537 2.081633 Operating cash flow/Sales 0.685879 0.658192 0.538028 0.509317 0.485149 Tobin’s Q 0.23 0.24 0.30 0.64 0.71 Looking at the above figures and the industry trends, it is very safe to confirm that GE is a stable company with a strong market share. GE is 6th largest company in the United States with a 40-50% share of washing machine market in the US. This figure makes GE one of the top washing machine producers in US. Globally too, GE lands in the top percentile. The closest competitors are Honeywell (HON), 3M Company (MMM), Siemens AG (SI), Corp (UTX) and United Technologies and none of these has beaten GE in US or global market in recent years. Looking at the sales figures of washing machine industry and GE itself, the company is one of the most successful ventures in this industry. References: Brigham, E. F. and Ehrhardt, (2010) Financial Management: Theory and Practice. South Western College Publications. Brigham, E. F. and Houston, J. F. (2009) Fundamentals of Financial Management. South Western College Publications. Brooks, R. (2009) Financial Management: Core Concepts. Addison Wesley Publishers. Shim, J. K. and Siegel, J. G. (2008) Financial Management. Barron’s Educational Series. Tennent, J. (2008) Guide to financial Management: The Economist. Bloomberg Press. Read More