Business & Finance

SWOT Analysis of General Electric Company

2010-08-26T07:01:00.000-07:00

STRENGTHS
Global recognition: General Electric has ventured into the world market thus gaining global recognition for its unique goods and services. In the year 2009, Forbes magazine ranked GE as the world's largest company. Hurbert (2007) notes that General Electric's brand is the world's most recognized brand. This kind of recognition has given it a competitive edge over other companies due to its ability to attract more customers.

Global strength and competitiveness: The Company’s products have been recognized for their quality and the company is known for meeting customer-specific needs. As a result, it has attracted numerous clients including corporations and government agencies and its competitive position is quite favorable. GE is the biggest lender in many of the countries where it invests with exception of the United States (Hurbert, 2007). Its power generation equipment generates a quarter of the world's electricity everyday.

Excellent Management: GE utilizes a unique management style, whereby business operations are divided into business units. Each business unit plays a distinct role within the company and has its own independent management. Examples include GE Commercial Finance, GE Equipment Services, GE Energy, GE Insurance, and GE Consumer Finance among others. This kind of management style increases productivity due to the high level of accountability and efficiency that business unit managers are expected to maintain.

Diversified lines of operation: GE has invested in a wide range of products under its units. These activities range from technology, energy, automotives, and aviation and home appliances to financial services and insurance services among other undertakings. This kind of diversification shields the company from risks in case of misfortunes.

Environmental initiatives: GE has ventured into environmental initiatives as it embraces the green economy and increased social responsibility. Its 'Ecoimagination' program is undertaking the production of environmentally friendly technologies, energy sources such as solar, low emission engines for airplanes, hybrid locomotives and water purification (Makower, 2005). This has earned a good reputation for the company which is considered socially and environmentally responsible.

WEAKNESSES
Under-performing energy sector: Following the global crisis and the serious fluctuations in fuel prices, the energy sector is not performing as expected (Hurbert, 2007). Fluctuations in prices of oil and gas have mostly been caused by supply shortages and this has threatened the company's profitability.

Threat to flexibility: Too much diversification is often considered dangerous for a company. This is because it results in over-stretching which usually slows down decision making. At GE, the numerous units require attention and could prove hard to manage if excessive diversification occurs.

OPPORTUNITIES
Mergers and acquisitions: GE has performed several mergers in the recent past. These not only help the company to expand globally but to diversify its activities into new areas thus increasing productivity. Some of the companies include Interbanca S.P.A, Whatman Plc, VetcoGrey and Turbomecanica Combustor Products (General Electric, 2009). The merger of NBC with Vivedi opens better opportunities for GE in the media business.

Research and development: Intensified research and development characterize the company's activities as it seeks to maintain a competitive edge over others in the same industry. A substantial amount of resources are committed in the company's relentless efforts to ensure the production of innovative products which meet current customer demands (Hurbert, 2007).

THREATS
Competition: Operating in an environment where stiff competition is present is a threat in itself. Just like any other company, GE risks losing its customers to competitors. Competition could be intensified by better production techniques and technology among competitors such that the company's goods may be outdone in the market.

Information security: When it comes to information security, every company faces a threat of losing important information through hackers, natural disasters and employee dishonesty. Loss of information could greatly affect the company's activities and cause a slow-down in production.

Financial crisis: The global financial crisis has had an effect on most companies in the world today. The rises in prices and shrinking bank lending rates have deprived businesses of the much needed profits and capital respectively.

Media depictions: Depictions put forth by the media on certain occurrences about a company could ruin its operations. 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. The documentary named 'deadly deception' aired in 1991 displayed GE as a threat to human life for participating in testing and building of nuclear weapons (Chasnoff, 1991). Such depictions could be used by competitors to tarnish the company's name.

Evaluation and Analysis
It is notable that GE has a number of strengths that work to its advantage by enhancing profitability. Its global recognition, strengths and competitiveness put GE at a favorable position as compared to other companies in the same sector. The use of business units for management presents an effective way to manage the expansive company. This not only reduces the possibility of overwhelming senior management with work but also promotes productivity based on accountability expected from the business unit managers. The company undertakes numerous activities which highly contribute to profitability. This is enhanced by the mergers and acquisitions that have diversified the company's product range and in turn leading to improvement on profits incurred.

The strengths and opportunities however have not come without constraints. Various threats and weaknesses threaten the performance of the company by presenting constraints on the company's management. High levels of competition, financial crises and threat of information loss are a threat to the company’s survival. Weaknesses within the company including the poor productivity of the energy sector and flexibility threat could impact negatively on the company.

In order to reduce the impact of threats and weaknesses, the company could use the strengths and opportunities to mitigate them. For example, the company's established research and development could be used to curb competition by coming up with innovative products from time to time. The efficient management can also be used to prevent loss of data through implementing proper control measures and to avoid losses which could exemplify the situation caused by the financial crisis.

References
Chasnoff, D. (1991). Deadly deception: General electric, nuclear weapons and our environment. Newday.
General Electrical. (2009). Our company. Retrieved from www.ge.com
Hurbert, P. (2007). General electric company profile. United States: Market Research.
Makower, J. (2005). Ecoimagination: Inside GE’s power play. World Changing.

America’s Invasion of Iraq

2010-08-26T06:58:00.000-07:00

The invasion of Iraq by United States (US) and its allies was aimed at justifying possession of weapons of mass of destruction by the Iraqi state and to break its alleged ties with Al-Qaeda terrorist group. Saddam Hussein regime was marred by bad leadership which brought about immense suffering and pain to the Iraqi population and also the country provided base for terrorist groups to plan and conduct their training. However, as a motivator to US invasion of Iraq, these reasons are discredited by a plurality of political analysts since they are not sufficient.

A factor that led US to invade Iraq leans towards America maintaining its position as the global economic giant rather than bringing democracy in Iraq through elimination of bad leadership. Embracing a simplistic notion that US invasion is associated with high profits to be incurred by American oil companies to a significant extent ignores the fact that early projections of financial costs regarding invasion and occupation exceeded by far additional profits to be reaped in future.

Moreover, Saddam was willing to sell oil at a reasonable price which was satisfactory to the Western buyers. In addition to that his standing with respect to OPEC members was considerably low to such a point that wielding sufficient influence on oil cartels to adopt policies detrimental to American interest was impossible (Zunes, 2004). However, this does not imply that economic factors never played a critical role in US invasion; they were the key elements which prompted US into invading Iraq.

The vast majority of governments which were victims of US intervention were nationalists and superpower rivalry was just an excuse not reason. With neo liberal model enforced through international financial institutions such as International Monetary fund (IMF) being the dominant force in the global economy, crude forms associated with hegemonic domination were no longer required (Hinnebusch, 2007). The hegemony of US capitalism and that of its allies reached unprecedented heights without use of military force.

Consequently, it resulted in the collapse of nationalism which was dominant in the Arab world as Arab countries transformed their policies by adopting free market reforms. Such changes were accompanied by significant reduction in support provided to terrorist and insurgent groups, and a subsequent decline in anti-Western rhetoric. To America such transformations enabled it to maintain its position in the global economy while nations which resisted adopting free market reforms were considered a threat to US economic position.

In the Arab world, Iraq was the only state which resisted change from nationalism and comprised of a significant portion of well educated population, sufficient water supplies and enormous oil reserves. Such qualities enabled Iraq to maintain independent foreign and domestic policies in spite of America imposing sanctions on Iraq for more than twelve years as way of overthrowing the Iraqi government (Zunes, 2004). Such efforts by the American government were in vain as the Iraqi government was still stable thus could not cooperate with America’s strategic and economic agendas. As a consequence, US felt deeply obliged to revert to cruder forms of interventions to eliminate the threat to its economic power.

America depends primarily on fossil fuel as source of energy. Despite US not depending entirely on Persian Gulf oil as East Asian and European nations, controlling Iraq which comprised of the world’s second largest oil reserves would have provided America huge economic leverage (Klare, 2003). In the case of trade wars with European Union or military rivalry with China, having an effective control over oil in the Persian Gulf would provide US with an upper hand. From such perspective, America’s invasion of Iraq is reflective of the return of nineteenth century power politics which entailed controlling major economic resources.

US dollar has been the de facto international trading currency for decades. Regarding OPEC agreement since 1971, US dollar has been the flat currency for trading oil (Heard, 2003). If countries had to hoard dollars in order to buy oil, they would want to utilize the same hoard for other trading also. This therefore gave America an enormous trading advantage thus the dominant economy in the world. Iraq was a threat to the US dollar monopoly on oil trading as it initiated the change from the US dollar to the euro.

Initially, the idea was viewed a mistake but after two years euro begun rising against the dollar giving Iraq a huge economic advantage. This led other oil-rich countries such as Iran and Venezuela to consider switching to euro in order to reap the benefits associated with. Losing grip on oil trading and on world trade could have led to the collapse of US economy and its world trade dominance thus America had to stamp on this threat immediately before it got out of hand.

In conclusion, bad leadership and weapons of mass destruction were just a mere excuse to invade Iraq and gain control over its resources. America’s monopoly on the oil trade was under threat and US economy would have suffered immensely as a result of Iraq and other nations breaking ranks and commencing to trade oil in euro’s rather than dollars. Invading and conquering Iraq therefore enabled America to hurl back European Union and its euro into the sea thus making America’s position as the world’s dominant economic power impregnable.

References
Heard, G. (2003). It’s not about oil or Iraq: it's about the US and Europe going head-to-head on world economic dominance. Energy Bulletin.
Hinnebusch, R. (2007). The US invasion of Iraq: explanations and implications.
Critique: Critical Middle Eastern Studies, 16(3), pp. 209–228.
Klare, M. T. (2003). For oil and empire? rethinking the war with Iraq. Current History 102(662),
pp. 129–135.
Zunes, S. (2004). The US invasion of Iraq: the military side of globalization? Common Dreams.

Additional Resources

SWOT Definition and Analysis

2010-08-26T06:55:00.001-07:00

SWOT analysis is a management tool used for analyzing the internal and external business environment. The term SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. While strengths and weaknesses are used to analyze the internal environment of the business, opportunities and threats are utilized for the external environment analysis. SWOT analysis provides crucial information that plays part in matching organizational resources and capabilities to the competitive environment in which the company operates.

Strengths refer to internal characteristics that provide the company a competitive edge over its rivals. Some of examples of strengths include:
• Patents
• Strong brand names
• Management skills and resources
• Good reputation among customers
• Exclusive access to high grade natural resources
• Favorable distribution channels
• Production quality
• Technological skills

Weaknesses are internal characteristics that could affect adversely the performance of the company and impact on its level of productivity. In some cases absence of certain strengths can be considered as a weakness. Examples of weaknesses include:
• Absence of critical skills
• Weak brands
• Lack of patent protection
• Poor access to distribution channels
• Low customer retention
• Unreliable products and services
• Sub-scale

Opportunities are used to denote factors within the economy that present prospects for increased production, competitiveness and overall profitability. Examples of opportunities include:
• Unfulfilled customer needs
• Change in population age-structure
• Liberalization of geographical markets
• Technology advancement
• Lower personal taxes
• Loosening of government regulations
• New distribution channels
• Removal of international trade barriers

Threats refer to factors in the external environment of a business that could affect production and consequently influence survival and profitability. Some examples of threats include:
• Changes in consumer tastes away from the firm's products
• Increase in taxes
• Closing of geographical markets
• Emergence of substitute products
• New government regulations and policies
• Increased trade barriers

PEST Analysis of General Electric Company

2010-08-19T02:54:00.000-07:00

a) Political
As a multinational company, General Electric has to deal with political systems of different nations. In spite of some of the countries presenting favorable environment for business survival and growth, others present difficult conditions. Tax systems and regulations also differ across countries and so does the level of government intervention in business activity. For example, in United States, the Internal Revenue Authority requires companies to submit tax returns annually on April 15 (Dibb & Lyndon, 2004). Government intervention is minimal and the business environment is much favorable. Political stability can also be said to be reasonable so that business survival is highly probable. These conditions may not apply in other countries such as China and Singapore where government control over businesses is high.

b) Economic
Fluctuations in interest rates, exchange rates and money value greatly affect activities and operations of General Electric. Factors such as deflation and inflation as well as government spending in different countries in which General Electric has ventured often influence business productivity and profitability. The economic impacts caused by the current economic crisis are being felt all over the world. General Electric has recorded decreased sales mostly due to lower lending rates by banks. In addition to that, prices of inputs have also risen considerably.

c) Social-Cultural
Norms, culture, religion and social set-ups often determine how a business should conduct itself in a particular country or environment. In the different countries which General Electric has ventured into, the company is faced by different social-cultural challenges which influence its corporate culture to a very large extent. The culture in a particular country determines the working hours, employment policies, procedures for appointing managers and the type of goods to be produced. Similar to other multinational companies, General Electric has to contend with such issues and deal with them effectively.

d) Technological
Technology in the modern world is advancing at an enormous pace. Innovative products are always being introduced using more advanced technology each day. Older technology is therefore getting outdated at a very high rate across all sectors in the economy. Aimed at outdoing competitors, many companies have turned to innovation, research and development which have brought about improved levels of technology. The rate of technology advancement globally varies with each country that General Electric has invested in as they vary in terms of resources available. Among the countries with the highest rate of technology advancement are United States and Japan which General Electric has ventured into (General Electric, 2009).

Conclusion
As a result of multinational companies having to deal with different sets of political, economic, social-cultural and technological aspects, designing a PEST analysis exclusive to General Electric was almost impractical. It is however notable that there are some factors that are universal among countries. Technology constitutes one of these factors and a closer look at the PEST analysis reveals that technology is advancing at a very high pace globally. Multinational companies like General Electric must therefore be on the lookout to ensure that their technology is up-to-date when new forms are introduced in the market. Some economic factors such as global crises which lead to increase in interest rates and decrease in bank lending capacity are also universal. Conducting a PEST analysis aids a company in understanding the business environment better so as to facilitate the better planning and resource allocation to maintain high productivity and profitability.

References
Dibb, S. & Lyndon, S. (2004). Marketing briefs: A revision and study guide. Oxford: Butterworth-Heinemann.
General Electric. (2009). Our company. Retrieved July 6, 2009 from http://www.ge.com

Additional Resources
PEST Analysis Pharmaceuticals Sector in Japan
Carrying out a PEST analysis.(understanding the business environment): An article from: Chartered Management Institute: Checklists: Small Business
Carrying out a PEST analysis.(Checklist 196)(political, economical, social and technological): An article from: Chartered Management Institute: Checklists: Marketing Strategy

PEST Definition and Analysis

2010-08-16T09:51:00.000-07:00

This is an environmental audit tool that analyzes the external environment of a business. The term, PEST (sometimes rearranged as STEP) is an acronym for Political, Economic, Social and Technological business environment. It forms part of the external macro-environment analysis when a company is conducting market research.

Political factors entail government policies, regulations and legal issues in the country of operation. These factors define formal and informal rules which the company must adhere to. Examples include:
• Employment laws
• Taxation policy
• Monopolies legislation
• Environmental regulations
• Government stability
• Trade restrictions and tariffs

Economic factors influence the state of the trading economy in the country. They greatly affect the purchasing power of potential customers and the cost of capital of the company. Examples of factors to consider include:
• Interest rates
• Inflation rate
• Income levels
• Exchange rates
• Long-term growth prospects of a country
• Economic growth
• Unemployment
• Business cycles
• GNP trends
• Energy availability and cost

Social-cultural factors encompass beliefs, attitudes, language, gender roles and religion. These factors influence customer needs and the size of the potential market. Examples social-cultural factors include:
• Income distribution
• Population demographics
• Social mobility
• Age distribution
• Health consciousness
• Career attitudes
• Consumerism
• Levels of education

Technological factors consider the advancement in technology and the potential within the market. These factors have the potential to lower barriers to market entry, reduce efficient production levels, and influence outsourcing decisions. Examples of technological factors include:
• Government spending on research
• New discoveries and developments
• Government and industry focus on technological endeavor
• Automation
• Technology incentives
• Rate of technological change

Additional Resources
PEST Analysis - Financial Services Sector in United Kingdom
PEST ANALYSIS - Nuclear Power Sector in China
Recruitment Industry in Canada - PEST Framework Analysis
Media & Entertainment Industry in India - PEST Framework Analysis