External Analysis Ge
Join now to read essay External Analysis Ge
External Analysis
An external analysis is one of the most important tasks to complete when completing a strategic analysis for a given corporation. By looking at our Internal Analysis of General Electric (GE) we identified Strengths and Weaknesses and we were able to recognize the Distinctive and Core Competencies that exist within the General Electric organization. Our external analysis consists of two major analyses: The Competitive Analysis and the Industry Analysis. By taking a closer look into what our competition and overall industry has to offer, we will further get a better understanding of the overall market and will be able to make a clear and well-supported recommendation for General Electric.
General Electric distinguished itself as the major player in the energy/technological field. However, not too far behind are Siemens and Alstom, the second and third largest corporations that compete directly with General Electric. Siemens is headquartered in Munich, Germany and offering its services in over 190 different countries. In 2006 they recorded sales at 87.325 billion Euros. Over those 190 countries they employ about 475,000. Siemens is very similar to General Electric for the fact that they both offer a lot of the same products/services. Both companies also have strong brand name equity. Alstom specializes in energy, ship buildings, marine systems, and transport infrastructure. Their current headquarters is in Paris, France and the currently operate in 70 countries employees approximately 70,000. Their biggest acquisition came in 2000 when the acquired Asea Brown Boveri (ABB) who was a leading competitor to General Electric. In 2006, Alstom recorded sales of 14.208 billion Euros, which has been on a constant increase of about 6% in the last 5 years. The makers of substitute products that consumers could fall back to consist of Philips and Citigroup. Adaptac and Adept Technology are two other makers for substitute products. For all of these companies it is all about gaining market share from the energy segment, transportation, healthcare, and consumer goods industries. With GE, Alstom, and Siemens making up the majority of the competition, the threat of new entrants is very minimal. It is very hard for inspiring organizations to pinch a sizable chunk of the market share from these corporations. Consumer brand loyalty plays a big role in the success for these corporations. What can be said about the performance of the overall industry is that it is below GE’s standards. GE records annual revenue of approximately $141 billion, while the industry average is at approximately $7 billion. Overall GE has fairly good leverage ratios compared industry competitors. GEs total debt ratio proves to its creditors that it that can maintain a high amount of leverage. GE also has a high long term debt ratio compared to the competitors which indicates that the firm can handle a significant amount of debt and still profit. Between GE and Siemens, they employ 740,000 people. The industry average of the number of employees is 290. The one positive ratio in regards to the industry versus GE was the Revenue Growth percentage. GE is increasing its revenue by an average of about 1.9% per year, while the industry is going strong, increasing at 7.4% per year. This shows that there are many competitors out there in this industry that are gaining their respect from consumers.
The next analysis that we looked at was on the Macro Environment. To begin with the social trends, it is definitely known to all that the amount of energy and water consumption has been increasing exponentially in the last few decades. The World Wildlife Fund (WWF) estimated that people worldwide drink 89 billion liters of bottled water each year. Last year, Americans consumed an estimated 3.4 billion gallons of bottled water, and that has been increasing year-to-year. In 1995 the