General Electric (or GE), founded in 1892, is one of the leading industrial conglomerates from the United States. It is operating in multiple industries, namely, aviation, renewable energy, healthcare, digital industry, power, additive manufacturing, and venture capital and finance. The 2011 Fortune 20 list ranked GE as the 14th most profitable company, but its profitability in the market has subsided immensely since then. Still, GE is one of the biggest names in the United States, but is the company still influential today? To evaluate these facets of the business, we have carried out a General Electric SWOT Analysis.
The strengths that General Electric can benefit from
Innovation is a massive plus point for any business. A brand that can consistently innovate keeps itself up-to-date and manages to avoid being obsolete. This stands true for General Electric. The company has been innovating ever since its inception.
Part of this can be credited to the foundation established by Thomas Edison’s visions, one of the world’s best inventors and a founder of GE. The base that he set up is being used by successors to strengthen the company.
GE has established a reputation as one of the most innovative companies in the world. Their work in different industries is proof of that. Two of GE’s employees (Irving Langmuir and Ivar Giaever) have also earned the Nobel Peace Prize in the past.
Research & Development (R&D)
R&D is an essential aspect of running any business. It allows a business to understand its market and consumer base. Companies get valuable insights through this process, insights that they can then apply for improvements in the efficiency of their business. R&D also helps a business innovate new products and techniques.
GE invests a tremendous amount of money in this department. Their spending on R&D in 2020 was almost 3.8 billion US dollars, according to Statista. GE has been a part of the market for well over a century now; their experience makes them aware of the benefits they can accrue from investing a due amount in R&D.
They use their R&D data to develop new products constantly. For example, GE is always using this information to develop new and advanced equipment for its healthcare segment.
Diversification of Business
GE has diversified its brand in two main dimensions. Firstly, they do not rely on the US market entirely. They have spread their business all across the globe. An estimate says that almost 50% of the business of GE comes from outside of the US. This is beneficial because relying on one market can have severe drawbacks.
They have also expanded into various industries, which gives them an edge over many other competitors in the market. GE stands as a giant in many of the sectors it works in. Having several sources of revenue gives you safety nets in case one industry goes through a sudden collapse.
Because their product portfolio is so vast, GE manages to attract a huge number of customers from all across the board. Many people trust the brand’s name, and it is popular because it is present in so many different industries.
GE’s products and solutions are used by more than four million healthcare installations, 45,000 offshore wind turbines, 7700 gas tribunes, and at least 64,000 airplanes.
General Electric has a global presence which greatly enhances the dynamics of the brand. They are currently present in 160 countries worldwide, and the number of employees working under the GE umbrella was 205,000 in 2020.
The immensity of the company influences the share of the market that it holds, its customer base, popularity, power, as well as its strategic position in the industry.
GE has managed to keep a stable revenue over the past few years. This provides stability for a company in terms of its operations and costs. Each year, they have managed to generate an income of more than 95 billion US dollars.
Benefits over Competition
The company has more than 40,000 experts (engineers and scientists) worldwide, and they prove to be a big asset for the brand. They also have many other benefits over their competitors, such as economies of scale, successful strategic plans, good customer service, and supply chain management. It also offers a good price point for its products. Their strong R&D also serves as an advantage over competitors. Their firm brand name attracts and retains customers in the long run.
The weaknesses concerning General Electric
Even though GE was keeping a pretty stable direction with its revenue, the 2020 pandemic and subsequent lockdown came as a shock to businesses worldwide. GE was one of the countless brands that took a sudden hit and saw its profits drop immediately and excessively. The loss that was sustained during this time will take quite some time to recover from.
GE currently is under a debt of about 104 million US dollars. The company has been facing other issues lately as well. For example, GE generates almost one-fifth of its revenue from the power arm, which underperformed recently and did not get enough income.
Financial constraints are issues bothering even the biggest of conglomerates worldwide, and GE is no exception. This is a weakness that they have to tackle as soon as possible, or else it can severely impact the company in many ways.
Questions on Management
Whenever you’re running such a big public company, all the managerial decisions tend to be under constant scrutiny by the masses, the media, and analysts. Many analysts have stated that the company is being mismanaged and that this has been happening for many years now. Certain controversies also affected the public brand image of the company. Analysts also claim that GE is in troubled waters because of administrative mishaps like complexity, accounting issues (breaching certain accounting principles), and bad deals.
It can often be hard to determine the weight behind such claims because they are internal company matters. However, they come from experienced individuals, and there are reasons behind their existence, so one should always look into them.
One problem that a lot of highly diversified brands face is a certain lack of efficient decision-making. Big brands can often struggle in making timely, efficient, and responsive decisions, especially when so many stakeholders are involved. This is not a big problem because it can be dealt with open communication and transparent channels. However, if disregarded, it can lead to many internal rifts within the company that they might start reflecting on the operations.
Lawsuits and Legal Repercussions
GE’s big name often acts as an attractor for legal cases. They have had many lawsuits in the past, and although many of them have been dealt with, going through constant lawsuits can often dent a big company’s reputation. It is sometimes hard to deal with the aftermath of a case, even after it has been dismissed or paid off.
Dependence on 3rd Party Suppliers
GE outsources its raw materials from other suppliers. Complete reliance on 3rd parties can often be detrimental to the sustenance of operations; this way, the company is often at risk of price changes and variations in raw materials, all things which can affect operations. Many of their industry segments are vulnerable to such shifting dynamics. Hence, the company should prepare contingency plans beforehand for situations like this.
The opportunities for General Electric
GE is a big company currently producing in many different segments of the market, which provides a lot of growth opportunities to the brand. Many industries are growing at an accelerating speed that GE has excellent potential in, such as Artificial Intelligence and robotics. They can quickly enter into other sectors because they already have such a diversified portfolio.
GE also benefits directly from the growth of other brands in the industry; for example, as Airbus increases its production of aircraft, GE’s aviation segment (which produces engines for these aircraft) has the potential to increase production as well.
Mergers and Acquisitions
Big brands like GE always benefit from mergers and from acquiring other smaller brands in the market, many of which they are often competing with. This is an opportunity for GE as well, one that they can massively gain from.
They have already made a lot of such deals over the years. Some notable examples are the merger with Baker Hughes and the acquisition of Smith Aerospace. They should continue down this same path; this will help them strengthen their position in the market.
International markets for GE are growing and have a lot of potential. GE can use this as an opportunity to expand its sales and emerge as a strong leader in other countries as well. This will add to their revenue streams and enable them to become a global industry leader.
GE has worked on many prominent and influential contractual projects in the past. They have the resources and workforce to keep doing so, and this is an opportunity that they can keep benefitting from for a long time if they focus on it.
The threats General Electric needs to be mindful of
Despite having some advantages over other firms, competition is still a concern for even a big name like General Electric. Many other big brands like Siemens, Hitachi, Phillips, etc., are a threat to GE. A brand needs to have strategic plans to maintain its position against all this competition.
Currency fluctuations worldwide can become an issue for a global brand like GE; because they retail their products worldwide, changes in the exchange rate can affect their revenue. These are often unpredictable shifts that any company needs to keep a margin for.
The COVID-19 pandemic caused a global recession that has impacted almost all businesses worldwide. A global recession took place that resulted in many companies losing a significant amount of income. The lockdown situation is still uncertain in many areas because new COVID variants and strains are coming in every little while. This makes it a little hard to predict when things might be able to go back to normal. In situations like these, it is up to the company to start coming up with alternative plans to resolve revenue generation because we cannot yet say when things will be returning to normal or if that will be happening at all.
Personal security is a precious asset to any individual. We have all witnessed the chaos of any social media website under allegations of a privacy breach. A similar thing happened with GE when some employees claimed that their personal data had been leaked on the company server. The company did accept these allegations by stating that certain hackers had managed to gain access to the internal system. Incidents like these can damage the trust people place in these brands. It also leads people to be very conscious of their data.
General Electric SWOT Analysis: Conclusion
This General Electric SWOT Analysis has shown that the brand has considerable strengths like R&D and its position in the industry. However, GE also has specific encroaching weaknesses and threats that need to be dealt with immediately. It is sufficient to say that GE is not disappearing into an abyss of irrelevance any time soon, but it is strongly recommended for the brand to work on its weaknesses to gain an even bigger chunk of the market.
A SWOT Analysis is a valuable tool in understanding the internal and external strategic factors that influence any business. Conducting a SWOT Analysis is an easy yet rigorous task that requires a lot of specific technicalities. For this purpose, we have a SWOT Analysis template, some examples, and a guide to aid you through this process. You can also draw a SWOT table to present information in a concise yet comprehensive manner.