General Electric

1. General Electric

2. "I never perfected an invention that I did not think about in terms of service it might give others"- Thomas Alva Edison, GE Founder • It all started with the flicker of a light bulb and soon enough GE was off and running… • In 1890, Thomas Alva Edison established the Edison General Electric Company in Menlo Park, New Jersey • At the same time Charles A. Coffin was growing his business, The Thompson Company • It was increasingly difficult for Edison and Coffin to remain competitive based their own technologies The two companies united in 1892 and formed The General Electric Company

3. Key Facts About GE • Headquarters • Fairfield, Connecticut • Number of Employees • Over 315,000 • Locations • Over 160 Countries • Symbol on Stock Exchange • GE • Number of Shareholders • 4 Million • Number of Shares Outstanding • 10 Million • Historical Number of Share Splits • 9

4. Annual Revenue From 1994- 2003

5. GE Stock Price Relative to S&P 500 From 1999-2004

6. Reginald H. Jones • Chairman & CEO, 1972 – 1981 • Managerial qualities:‘Intellectual breadth, strategic capability, social sensitivity, political sophistication, world-mindedness, and above all, a capacity to keep their poise amid the cross-currents of change.’ • Relationship between business and government Today…GE spends 7.5MM on lobbying

7. Jack F. Welch Jr. • Chairman & CEO, 1981 – 2001 • On Six Sigma Welsh said, “...it is the way we work.” • Customer-Focused Methodology to Improve Quality Through Defect Reduction • Today…Rigorous Employee 6σ Certification

8. Jeffrey R. Immelt • Chairman of the Board and Chief Executive Officer, 2001 – Present Today… • New Frontiers & Strategic Alliances for GE • NBC-Universal acquiring interest in Telemundo network • GE and Honda form GE Honda Aero Engines LLC, design small (private) jet engines

9. GE is Organized Along 11 Businesses

10. Growth vs. Cash Generator

11. Perceived Drivers forChange • Globalization • Technology • Innovation • Diffusion of technological know-how • Regulatory influences and government policy changes

12. Four Values Translates Into Action

13. Must produce no more than 3.4 defects per million opportunities. An "opportunity" is defined as a chance for nonconformance, or not meeting the required specifications; GE strives to be flawless in executing their key processes. 6 Key Areas Critical to Quality Defect Process Capability Variation Stable Operations Design for Six Sigma Action At Work:Six Sigma Product Standard

14. Four Objectives of Work Out Meetings • Create a New Paradigm for GE • Empower Employees • Eliminate Unnecessary Work • Build Trust

15. Action Fosters Business-Wide and Personal Growth • Toastmasters is an international organization dedicated to improve/ facilitate communication within an organization • 4 Goals of Sessions • Deliver great presentations • Easily lead teams and conduct meetings • Give and receive constructive evaluations • Be a better listener

16. The$1BillionGE Talent Factory • Program began in 1919—oldest training program of its kind • Engineering • Finance • Info Management • Operations • Sales and Marketing • Several assignments within discipline • Acquire broad overview of GE • Develop leadership/ professional skills

17. The Ultimate Driving Machine… Just Got Better GE’s Advanced Materials has teamed up with BMW to design and produce lightweight, durable, chip resistant fenders for their high performance 6 Series

18. GE’s Financial Statements

19. Revenue By Operating Segment

20. GE’s Revenue Breakdown in 2003

21. Revenue Growth 2001-2003 **Values in millions of dollars

22. Profit By Operating Segment

23. Net Earnings Growth 2001-2003 **Values in millions of dollars

24. Ratio Analysis

25. Finances, GE, and its Competitors

26. Competitors of GE

27. Main Competitors • ALSTOM • specialize in energy, ship buildings and marine systems and transport infrastructure. • Headquarters in Paris, France • Acquired ABB (Asea Brown Boveri, a leading competitor to GE) • A force to be reckon with; would be GE’s ultimate competitor

28. Main Competitors • Siemens • electronics and electrical engineering company • 6 groups:- Automation and Control, Information and Communications, Medical, Power, Transportation, and Lighting • provides industrial automation and control, information and communications, lighting, medical, power transmission, and transportation products and services • Headquarters in Munich, Germany • Subsidiaries headquartered in New York • Very similar to GE; strong brand name equity, has business operations in over 190 countries

29. 5 Forces Model • Rivalry among competitors • ALSTOM and Siemens, in particular • Creating competitive advantages to gain bigger market share • Acquisitions, mergers and joint-ventures • Battle for innovation and technological improvements

30. 5 Forces Model • Potential of New Entrants • Adaptac (1981) and Adept Technology (1983) • Late bloomers, but slowly gaining market share • Does not pose too much of a threat to GE, ALSTOM or Siemens for now • Tough for new entrants to pinch a sizable chunk of market share from GE, ALSTOM or Siemens

31. 5 Forces Model • Suppliers • Materials, parts, components, other resources • Vertically integrated (GE Advanced Plastics, GE Consumer and Industrial Manufacturing) • Has to be aware of suppliers that might integrate forward

32. 5 Forces Model • Substitutes • Has many substitutes that might pose a threat • Very well-diversified which means that GE is spreading the risk of failure in every market • Eg. GE’s NBC-Universal’s substitute are pirated VCD’s or DVD’s • Buyers • Similar to its substitutes, GE has a broad line of buyers, ranging from consumers to large corporations • Eg. GE Healthcare’s buyers are hospitals and pharmacies.

33. Strategic Group Map

34. Performance/Product Quality Product Range

35. GE’s SWOT Analysis • Strengths • Global strength and recognition • 5th in Fortune 500 list, operating in more than 160 countries • Excellent management • Proven leadership and business model • Confident investors – raising capital • Diverse product range • Long Term (GE Aircraft engines) • Short Term (GE Lighting, Plastics, NBC) • Financial Services (contributes to 40% of GE’s revenue) • Spreading the risk of failure in every market and not just one

36. SWOT Analysis • Weaknesses • Company size/ acquisition restriction • Eg. GE’s planned acquisition of Honeywell International, a diversified technology and manufacturing company, specializing in aerospace products, was rejected by the EU • Energy Segment • Underperforming, no signs of near future recovery • Flexibility • Large and diverse businesses might overstretch the company and reduce reaction times to shifts in targeted markets

37. SWOT Analysis • Opportunities • Research and Development • Immense capital allows GE to contribute a lot to R&D for product development and improvement • Increased geographic growth • Global expansion = more opportunities (Eg. China) • Merger between NBC and Vivendi • Further opportunities in the media business • Improved customer services • Adopted a new customer focus initiative

38. SWOT Analysis • Threats • Exposure to global economy • Economy slowdown would affect GE, since 40% of the revenue is generated overseas • Exposed to currency fluctuations • Intense scrutiny after Enron • More transparency and disclosure; skeptical investors • Public image of all large companies suffered • Competition • Constant change in technology heats up competition • Very diverse:- tough to be the best in all industry

40. Key Competencies • Competence • Great and proven leaders • Eg. Jeffrey R Immelt, Jack Welsh, Reginald H. Jones • Expertise • More capital can be invested in R&D • Core Competence • Innovative • Desire to strive for perfection (6 Sigma)

41. Key Competencies • Distinctive Competence • Ability to respond to the drivers of change by understanding the important global trends • Acquisition of rivals and other companies

42. Recent News • GE’s $900 million acquisition of InVision Technologies • March 15, 2004, GE made it public • September 16, 2004, FTC gave approval but deal is still not finalize

43. Recent News • Advertising Campaign • Genworth, a financial company part of GE, has signed a 5 year contract to license the GE logo and use the slogan, “Built on GE heritage” • Genworth is planning to allocate $30 million into advertising this coming year

44. Recent News • October 11, 2004, Senate passed a $136 billion corporate tax package that cuts taxes for businesses • Includes $76.5 billion in new tax relief for the manufacturing sector • Includes $42.6 billion in tax relief for multinational companies • Additional capital from the tax break could be used for reinvestment, increase dividends, etc

45. Conclusion • GE recognizes that part of being successful and well-respected is being socially responsible as well • Has huge potential to remain successful without any major threats from competitors • “Staying Power” • Will only continue to expand

46. Questions and Answers Session