Ge AnalysisGe AnalysisGeneral Electric was formed in 1892 when the Edison General Electric Company and the Thomas-Houston Company combined forces. Since then, General Electric has been a company that prides itself on innovation and incorporating originality into the real world. GE is a powerhouse that specializes in products and services that include appliances, aviation, consumer products, electrical distribution, energy, business and consumer finance, healthcare, lighting, media and entertainment, oil and gas, rail, software and services, and water (GE.com). GE did not limit itself to being a local domestic company. Instead, it has expanded globally with a goal to unite their expanding technological discoveries with people all around the world.
Although GE prides itself on being a global company, in GEs beginning stages, it almost never considered joint ventures. The company believed that if you did not have full control over the project, then you did not go along with the partnership. GE soon learned from its mistakes, now using joint ventures as its most powerful tool. To give a few examples, GE formed joint ventures with Hyundai to enter the South Korean market, formed joint ventures with banks in Spain, joint ventures with French company Snecma to make engines for commercial jet aircrafts, and many more. The joint venture strategy allows GE to save money while expanding globally. GE can share its knowledge with other companies while learning about other management techniques and local markets to expand its own knowledge and increase productivity. Expanding its international presence has worked greatly in the companys benefit.
One major component to GEs success is healthcare. GE has worked on developing healthcare globally to help improve rural communities. The company does not just focus on profit and improving technology, but helping others in need. GE started developing its Global Healthcare program in 2004 with a twenty million dollar investment in African communities. Growing from its success, it increased this process to a five year thirty million dollar investment. It now works with eleven different countries in Africa and Latin America. For example, the company has helped countries such as Ghana by donating medical equipment and installing water and power. Many projects such as these not only help GE grow as a reputable company, but improve society as a whole.
GEs current CEO Jeffrey R. Immelt is a revolutionary leader determined to drive the company to success. Immelt took over as CEO September 7, 2001. He has designed an innovative growth strategy to strengthen the company by using its size and diversity. Although September 11th created an economic upset, Immelt did not let that distract him from making advances within the company. He decided to focus on technical leadership, services acceleration, commercial excellence, globalization, and growth platforms (GE Case). With this mindset GE has continued to grow and advance into the 21st century.
There are many aspects of GE that lead to the companys great success and growth over the years. One such quality of GE that led to this growth was Immelts unwavering view of the long term for the company. Against some of the advice of his associates, Immelt kept his sights on his goal for the future and did not focus as much on the present or the short-term. Many people, especially from the view of the stockholders, saw this plan as a weakness of GE due to the fall in value of the companys stocks and no short-term profits being raised. In 2001, GE stock prices dropped 39% due to an increase in spending in research and development to $327 million. On the positive side, Immelts recommitment to the R&D department and Scott Donnelly, lead researcher of R&D, as well as the increase in spending led to long-term projects that would eventually bring high returns
The GE
By this time the world was in turmoil. The government had declared war against North Vietnam. For many, it was an all-out war for control of the energy system of the planet.
The GE was a major asset that did not need a government bailout because it was available to the majority of the American population. In fact, it was being sold for many years on credit agencies and large corporations.
But what was really driving this was the failure of GE, particularly its sales model. It was not able to find enough buyers for its core group and the whole organization seemed to be in a state of constant flux and collapse. The stock market crashed and almost all of the executives who held the keys to GE’s business were gone, replaced with people who went to work for them, who were desperate to save money, who were trying to win their jobs because they were losing millions of dollars at the time, and who would do anything for GE, including make money on the company—except, of course, buy shares.
The company, as we know it now, had become even more complex when Steve Jobs and Dick Cheney left that day.
To be sure, the stock market continued to plunge. But the company’s stock plummeted dramatically over the course of the decade, falling to $32.54 and rising to $64.75 during the year. For two other years, GE has grown in value to about $60 and then plummeted to the bottom dollar of almost all the other stocks that it sold. Many analysts say this was a one-time event, which in their opinion was just the beginning.
But with the global recession and the recession itself just an off-year, GE’s stock plunged far too much. So the company was unable to keep growing as it never had before. The company also had lost big money because it had become so big it had never been profitable—even with a $1 trillion corporate income plan to protect it against the worst downturn of the 19th century. GE was able to go beyond its original goals in one huge “investment” round that investors agreed was necessary without being forced to invest in companies that were also not viable and failed to make the big bets the company was offering.
The company was in fact getting out of the corporate business entirely so that it could become an independent company that operated on the principle of having all of its assets put in the company’s own fund for investment into the long term, rather than just the sale of its assets. It was doing so because it was desperate to get back to profitability.
A few months after becoming a shareholder, the stock market plunged into the deep depression that had ravaged the entire industry over the past few decades. As investors and employees began fleeing the company, GE began losing more shares out of desperation than were left.
The companies continued to get higher in value until around January 1998, when just over six months before the global recession, Steve Jobs left the company and made a $12 billion deal with Bain Capital to buy GE and its other assets. During this period of turmoil, the company lost half its market value—enough that it now is worth less than it was in the early 2000s.
For investors, and certainly for employees at GE, the loss was huge.