General Electric is by far one of the most diversified companies in the delivery of technological, financial, and media services. This can be evidenced from the wide range of their products and services that include power generation, household appliances, aircraft engines, water processing, consumer financing, media content, medical imaging, business and consumer financing among other industrial products (Datamonitor Report, 2011). Primarily, General Electric operates in six operating regions that include Australia, Asia, Europe, North America, Africa, and South America. It is headquartered in Fairfield, Connecticut, and it has approximately 439 manufacturing plants, 219 of these plants being located in 38 states in the US and Puerto Rico, with the remaining 230 manufacturing plants being located in 40 other countries (Datamonitor Report, 2011).
Speaking of the business aspect, General Electric operates in five business segments that comprise of NBC Universal, GE Capital Finance, Energy Infrastructure, technology infrastructure, and business and home solutions (Datamonitor Report, 2011). Revenues for the company are calculated depending on the operating segments with GE capital generating the highest volume, followed by technology infrastructure, energy infrastructure, NBC universal and lastly, business and home solutions. Revenues are also ranked according to their geographical locations with the US accounting for the highest percentage of total revenues. As earlier mentioned, GE is a diversified company with major products and services in leading industries. However, major GE brands include GE, GE Profile, GE Monogram, Hotpoint, USA Networks, CNBC, UniHD, SYFY, mun2, MSNBC, Bravo, and Chiller (Datamonitor Report, 2011). On competition, GE is a strong and established company with major products in participating industries. This factor enables it to have a strengthened brand image thereby enabling it to have an enhanced competitive advantage. GE’s competitors include Siemens AG, Mitsubishi Corporation United Technologies Corporation, Honeywell International Inc., Hitachi Ltd., Textron Inc., and 3M among others within the diverse industries. Simply put, GE values its shareholders, invests on a large scale, and its value exceeds the sum of its parts (Gregory, 2007, Datamonitor Report, 2011).
Current Market Structure and Conditions
General Electric is a conglomerate due to the industries it has diversified over the past years (Embracing learning at GE, 2004). This strategy has enabled it to diversify its operational activities into five operating segments that include NBC Universal, GE Capital Finance, Energy Infrastructure, technology infrastructure, and business and home solutions. Their market structure within their chosen industries, such as energy, appliance, and finances, are marketed as an oligopoly. This is because General Electric shares control of the market with a small number of other companies. In an oligopoly market structure, there is a minimal amount of players and each player takes into consideration that their action will be followed by the other player. For example if a company chooses to lower their prices to gain a higher percentage of profits the remaining companies will follow suit as to not lose their share of the market. Oligopolies are interdependent upon the companies within their market structure and have barriers of entry that include capital, technology, and licensing that restricts entry.
General Electric is a high profile company that operates under an infrastructure geared to build the energy, health, transportation, and technology infrastructure of the new century. Innovations such as technology and large profits have enabled GE to stay at the top and continue to grow to a company that generates a quarter of the electricity consumed on a daily basis.
General Electric has increased its market strength by introducing their products and services on a global scale. GE has branched out into 100 countries outside of the United States and generates more than half of their revenue from globalization. Another reason for General Electric’s success in the oligopoly market structure is the ability to limit their competition by mergers and acquisitions. They have acquired such companies as Dresser, which makes which makes gas engines used in oil production and mining along with part of Converteam, French wind turbine company. These companies have been acquired since the financial downfall in 2008 and these companies have enabled General Electric to increase their profit margins and stay on top as an oligopoly.
General Electric strategically aligns themselves with emerging markets to produce technologically advanced products that satisfy the needs and solutions in the marketplace. GE is committed to new product innovation and development, and its goal is to become the highest valued company in the world. In order to ensure value, high quality, and high performing products, GE uses a flexible pricing strategy that is designed to suit particular business segments in addition to enabling it to minimize risks. For this reason, its pricing strategy varies depending on the level of market entry. For instance, it adopts the skim pricing strategy when it enters a price sensitive market and makes transitions as the business progresses. Technology innovation is a fundamental element of their strategic pricing model. GE’s pricing model suggests value to consumers and increased market share. GE is a visionary company with a long-term strategic focus. GE functions on the premise of product differentiation. Their pricing strategy relies on the ability to create unique products and services. GE is a dominant firm and sets the price for others to follow.
Competitive intelligence is relative to the amount of sellers in the market. Barriers to enter or exit the market influence the price. The contestable market model where the number of firms and the probable output determine the price is consistent with GE’s brand. The higher the barriers the more the price exceeds cost. “ An industry that structurally looks like an oligopoly could set competitive prices and output levels” (Colander, 2010). GE aligns themselves with markets whose competitive environment is conceivable. For example in 2008 GE exited some markets such as television, automation, and engineered plastics (Hoffman, 2008). GE’s pricing strategy requires them to sell off divisions that experience aggressive price competition and move into high margin business. GE is known for their acquisitions. They purchase competitors to dominate the market. The GE Capital segment offers commercial loans and leases, financial programs, fleet management, home loans, credit cards and other financial services. Their inclusion into the financial sector has expanded their output and consolidated the market.
The financial sector of GE is volatile. GE entered into the transportation finance division through a multi-million dollar acquisition in 2006. When the recession was upon us in 2008, they exited the market temporarily to analyze their portfolio and allow for recovery. When GE returned to the market, they pursued other vulnerable finance companies to limit the competition and increase market share. The financial sector is a price competitive industry. GE is strategically conscience of the competition and market demands. Price in this market is dependent on the economy as a whole and GE’s ability borrow funds. GE’s borrowing costs are compared to the market price and a rate of return is concluded. Profit margins in this market are high, but the cyclicality of the industry does not allow for long-term economic growth. GE typically gets in when the market is low, maximizes profit, and then sells the division.
GE’s pricing is strategic and varies based on the product or service they provide. This is symbolic of an oligopolistic market structure. GE is highly competitive and competes on more than the price. GE strives to be a technology leader, which limits competition and creates an authoritative price environment. Interdependence between firms contributes to pricing and output strategies. Long-term economic profit is achievable under this environment. General Electric is a future focused organization. They coined the phrase, “ why predict the future when you can create it.”
GE operates highly diversified business model and therefore, majority of products and services in its portfolio are subject to intense competition from several companies in diverse industries. Competition is dependent on several factors that include technological competence and innovation, quality of services, excellence in design, competitive pricing, and performance capabilities of these products (Datamonitor Report, 2011). For instance, competition can be divided into healthcare businesses, media, industrial, finance, and commercial and leasing businesses. These markets are highly dynamic and competitive thereby contributing to the negative impact on the company’s operational activities and market share.
GE is known around the world, and it competes with established competitors in various industries. The top ten competitors for General Electric are United Technologies Corporation, 3M Company, ABB, Ltd., Danaher Corporation, Air Liquide SA, Emerson Electric Company, Fanuc Corporation, Illinois Tool Works Incorporated, Atlas Copco AB, and Cummins Incorporated. Last year General Electric’s market cap was 196 million dollars, and the closest major competitor had a market cap of 65 million (” GE: General Electric,” 2012). GE’s net income last year was 13 million dollars. The best competitor to GE, Fanuc Corporation, had a net income of 139 million dollars, but most of the competitors were either right around General Electric’s level, or much lower(” GE: General Electric,” 2012). General Electric also has some other competitors that have quite a bit of name recognition. For instance, Nikon, Mitsubishi, Cooper Industries, and Cummins Incorporated are all competitors of GE (” GE: General Electric,” 2012). These companies do not all offer all the different products that GE does, but they are strong competitors in certain markets. GE also has successful healthcare division, and in this division Hitachi Medical Systems, Philips Healthcare, Siemens Healthcare, and Toshiba Medical Systems are major competitors.
GE is an extremely large conglomerate, so almost all of GE’s competitors will focus on one specific industry. Since this is the case, in order to judge the success of General Electric versus the competitors, it is important to look at the market share GE has in each specific industry compared to the major competitors. For instance, GE’s capital division has hurt the company a bit over the past few years, and competitors have gained market share in this industry. On the other hand, GE leads the gas turbine market with a market share of over 40 percent (Franco, 2010). GE will continue to succeed against competitors in some industries and fall a bit behind in others.
There is no doubt that General Electric depends on technology to deliver products and services to the different operating segments. In fact, one of the operating segments for General Electric is the Technology Infrastructure segment that is dedicated to the provision of essential technologies to developing, emerging, and other industries across the globe. These technological products and services aids in the development of transport systems, healthcare, technology industries, and aviation. General Electric manufactures nearly all aircrafts and jet engines (Datamonitor Report, 2011). General Electric’s subsidiary, CFM International is responsible for manufacturing and marketing aircraft engines and engages in joint ventures with Honda Aero and Rolls-Royce Group in the design and marketing of aircraft engines. Other technological products that assist the growth and development of the aviation industry and global aerospace equipment include airborne computing systems, mechanical actuation products, power generation, and other engine components in the aviation industry (Datamonitor Report, 2011).
Technological contribution in the Healthcare industry entails the development of information technologies and medical imaging systems, patient monitoring systems, and medical diagnostics, diagnostic cardiology, ultrasound, anesthesiology, bone densitometry, neonatal, and oxygen therapy (Datamonitor Report, 2011). Technological services in the industry include drug discovery, drug research, remote diagnostic and repair services to medical equipment. GE also offers customer productivity services and computerized data management to institutions within the medical arena.
Speaking of technology in transportation, GE supplies maintenance services and various products to the transportation industry. These include diesel electric locomotives, motorized wheels for off-highway vehicles, transit propulsion equipment, gearing technology, drill motors, railway systems, and office systems (Datamonitor Report, 2011). Industries that benefit from using these products include power generation, mining, marine industry, railroad, and oil and gas industry.
Technological capabilities enable GE to exhibit extensive research and development (R&D) through its Global Research Unit. This unit is undeniably the hub for developing all GE businesses. Additionally, GE has 10 laboratories across the world, and these labs are organized depending on different scientific disciplines, a factor that enables GE to leverage the company’s technology in all business segments. The GE global research focuses on the development of breakthrough innovations in all operating regions. Other than the research unit, GE employs nearly 36, 000 technologists in different global research centers and businesses and they help GE to provide solutions to some of its problems. Development of future or next generation technologies is also the responsibility of such technologists.
Undoubtedly, GE is a leading diversified company in the supply of delivery of technological, financial, and media services. The company has survived the depths of the economic crisis by emerging to be a leading company. Judging by GEs market structure, technological capabilities, operating segments, technological, and research capabilities, there is no doubt that GE will continue extending its competitive advantage in all operating market segments. It is as well capable of delivering positive returns to its investors. GEs innovativeness, advanced technological infrastructures and financial structures gives it the ability to produce in large scale, and enhances its capabilities in providing solutions to a myriad of problems across the globe. The pricing strategy enables the company to deliver value to the customers. Undoubtedly, GE is well positioned to capitalize on leading external but emerging opportunities that will enable it to enhance its market growth and other growth expansion strategies.
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