SWOT Analysis

SWOT Analysis of General Electric

by Tabassum Nusrat Soti

Short for General Electric, GE is an international conglomerate that has been significant for over a century. The business had expanded into many other areas since its founding in 1892 when it was known primarily as an electrical equipment maker. General Electric (GE) may learn more about its current status, identify potential development areas, and develop strategies to achieve its objectives by doing a SWOT analysis. This SWOT analysis aims to forecast General Electric’s potential future performance in light of the company’s strengths, weaknesses, opportunities, and threats. The results of this study should help us assess the company’s viability and prospects.

Brief Company History

In 1892, Edison General Electric and Thomson-Houston Electric amalgamated to form General Electric (GE). Since then, GE has undergone several fundamental changes, becoming an international powerhouse. GE invented the electric toaster, the radio, and television in the early 1900s. With its breakthrough jet engines, GE became a leading commercial and military aircraft provider. GE has developed MRI, CT, ultrasound, and patient monitoring systems. GE Capital’s financial services division developed substantially in the 1990s and early 2000s, boosting the company’s bottom line.

After huge losses in the 2008 financial crisis, GE Capital had to reorganize and sell some of its holdings. Restructuring and cost-cutting have helped GE improve its finances. Lighting, transportation, and healthcare IT were sold to focus on aviation and power generation.GE operates globally in aviation, power, renewable energy, and digital solutions. Despite recent setbacks, the company has made significant progress adapting to the new market climate.

About General Electric
Company:General Electric
Industry:Conglomerate
Subsidiaries:GE Additive, GE Aviation, GE Capital, GE Digital, GE Power, GE Renewable Energy, and GE Research.
CEO:H. Lawrence Culp Jr.
Founders:Charles A. Coffin, Thomas Edison, J. P. Morgan.
Year founded:April 15, 1892
Headquarters:Boston, Massachusetts, U.S.
Type:Public
Employees:172,000
Ticker Symbol:NYSE: GE
Annual Revenue (FY 2022):US$76.555Billion
Annual profit (FY 2022):US$292 million
Products:Aircraft engines, Electrical distribution, Energy, Finance, Software, Wind turbines.
Competitors:Healthcare: Philips Siemens Healthineers Medtronic  Digital Solutions: IBM Microsoft Google  Renewable Energy: Vestas Wind Systems Siemens Gamesa Renewable Energy OrstedPower: Siemens ABB Mitsubishi ElectricAviation: Rolls-Royce Pratt & Whitney Airbus  

Recent Performance

  • Financial Performance: GE’s revenue has declined in recent years, primarily due to the divestitures of its businesses and the impact of the COVID-19 pandemic. In 2020, GE’s revenue was $79.6 billion, down from $121.6 billion in 2016. GE has struggled with profitability recently, posting losses in some quarters. However, the company has tried to improve profitability through cost-cutting measures and divestitures. In 2020, GE reported a net loss of $5.5 billion, an improvement from the net loss of $24.8 billion in 2018.
  • Stock Performance: GE’s stock price has fluctuated in recent years, reflecting investor sentiment about the company’s performance and prospects. In the past year, GE’s stock has performed well, with a 52-week high of $14.42 and a low of $5.48. According to the 7 march 2023 stock market database, GE’s exchange rate stands at $86.60 USD. which is 0.25% higher than the previous ratings.
  • Market Performance: GE’s 2020 revenues fell from $95.2 billion to $79.6 billion. COVID-19 reduced demand for the firm’s products and services, particularly in aviation and power. The pandemic increased demand for GE’s healthcare products. The renewable energy division’s orders rose 15% for the coming year. Despite the pandemic and changing market conditions, GE has adjusted and reorganized its operations to position itself for growth.

Strengths

  • Intense Research And Development Capabilities: GE invests heavily in research and development, developing new technologies and solutions to drive business growth. This focus on innovation and R&D has enabled GE to stay ahead of its competitors in several industries. Their use of proper technology is commendable.
  • Global Reach: GE has a solid international presence, with operations in over 100 countries. This global reach allows the company to access diverse markets and customer bases and provides opportunities for cost savings and efficiency gains through global supply chains.
  • Diversified Product Range: GE’s businesses span multiple industries, which helps the company to mitigate risks associated with economic downturns and changing market conditions. This also allows GE to leverage its expertise across different sectors and develop new products and services that can benefit multiple industries.
  • Emphatic Brand Image: Throughout its history, GE has been an industry leader in technological innovation and reliability. The company’s stellar reputation helps it win the hearts and minds of potential clients and workers alike. It helps them win over the confidence and trust of customers in the target market.
  • Substantial Conglomerates And Affiliations: GE has formed strong alliances and collaborations with other companies and organizations to develop and market new products and services. These partnerships have helped GE expand its reach and capabilities and leverage other companies’ strengths to develop new solutions.

Weakness

  • Declining Revenues: GE’s revenue has been dropping, from $122.1 billion in 2016 to an expected $79.6 billion in 2020. The impact of the COVID-19 epidemic on the aviation and power industries and reduced demand in some of GE’s core markets have been significant factors in this reduction.
  • Dependence On A Few Key Businesses: Although GE has a diversified portfolio, the company is heavily reliant on its aviation and healthcare businesses for the majority of its revenues. This dependence could leave the company vulnerable to any disruptions in these markets. It narrows down the prospects.
  • Legal Obligations And Restrictions: GE has faced several legal and regulatory challenges in recent years, including investigations into its accounting practices and alleged violations of environmental regulations. These challenges could impact the company’s reputation and financial performance.
  • High Debt Levels: GE has a significant amount of debt, with total debt at $71.4 billion as of 2020. This high debt level could limit the company’s ability to invest in growth initiatives or weather any economic downturns. The liability it creates weighs down the company’s credibility.
  • Underperforming Power Business: GE’s power business has struggled in recent years, with declining revenues and profitability. It has been driven by weaker demand for traditional power generation equipment and increased competition from renewable energy sources. The underperformance affects the overall performance of the company.

Opportunities

  • Digital: GE has been significantly pushing digital technologies in recent years, developing software and analytics tools to help customers optimize their operations. For those with experience in areas such as data science, software engineering, or cybersecurity, there may be opportunities to work on cutting-edge technologies and help drive the digital transformation of the industry.
  • Aviation: GE is one of the world’s largest aircraft engine suppliers, providing commercial and military engines. For those with experience in aviation or engineering, there may be opportunities to work on cutting-edge technologies and help shape the future of flight.
  • Power Generation: GE is a leader in power generation technologies, providing equipment and services for everything from coal-fired power plants to wind turbines. With a growing focus on renewable energy, there are potential opportunities for those with experience in solar, wind, or hydroelectric power areas.
  • Global Operations: With operations in more than 100 countries, GE offers opportunities for those interested in working in diverse cultures and environments. For those with language skills or experience working in different parts of the world, there may be opportunities to work on global projects or lead teams in other regions.
  • Healthcare: GE is also a significant player in the healthcare industry, providing medical equipment and services to hospitals and clinics worldwide. For those with experience in healthcare or medical technology, there may be opportunities to work on developing new products or improving existing ones.

Threats

  • Fierce Competition: GE faces intense competition from other global conglomerates and specialized companies in its operating segments. Competitors with robust brand recognition, more efficient operations, or better products may capture market share and erode GE’s profitability.
  • Regulatory Environment: GE operates in heavily regulated industries, particularly in areas such as energy and healthcare. Regulation changes, particularly those related to environmental protection or safety standards, could require significant investment and impact GE’s bottom line.
  • Economic Downturn: GE operates in several industries sensitive to economic cycles, such as aviation and power generation. A global economic downturn could reduce demand for GE’s products and services, negatively impacting its revenue and profitability. Uncertainty of the economy makes it really hard.
  • Technological Disruption: GE has invested heavily in digital technologies and data analytics to drive innovation and efficiency. However, technological change in its operating segments is accelerating, and GE may need help keeping up with more agile or innovative competitors.
  • Reputation Damage: GE has faced some high-profile scandals in recent years, including an accounting fraud investigation and concerns about the safety of its aviation engines. These incidents have damaged the company’s reputation and could impact its ability to win new business or retain customers.

SWOT Comparison Chart

 General ElectricSchneider ElectricABBOracle
StrengthsIntense research and development capabilities. Global reach. Diversified Product Range. Emphatic brand image. Substantial conglomerates and affiliations.Focus on Sustainability. Broad Product Portfolio. Strong Brand Recognition. Global Presence100+ nations worldwide Well-known brand Various items and services Innovation and research Solid financesTop tech brand awareness. Best Software for businesses. Income and stability. ERP and database management. Competent workers.
WeaknessesDeclining revenues. Dependence on a few key companies. Legal Obligations And Restrictions. High debt levels. Underperforming power business.Limited Presence in Emerging Markets. Reliance on Traditional Energy Markets. High Debt Levels.Few markets and industries. Expensive. Complex organizations. Slow decision-making.Customer dependence. High-priced. Neglected Cloud-based software. Poor vision. Company structure.
OpportunitiesGlobal Operations. Digital. Healthcare. Power Generation. Aviation:Energy Storage. Acquisitions. Digital Transformation. Growing Demand for Renewable Energy.Rising Renewable Energy demands. Digitalization. Manufacturing automation. High-growth .sectors. Cooperation for product growthRising Cloud-based software and AI demand. Growing Data security. Emerging markets Potential. Consolidation. Increasing sustainability.
ThreatsReputation Damage. Technological Disruption. Regulatory Environment. Intense Competition. Economic Downturn.Economic Instability. Technological Disruption. Regulatory Environment. Extreme CompetitionPressure from old and new adversaries. Regional economic and political uncertainties. Technology and industry swiftly change. Global supply chain disruptions. Legality.Rivals. Geopolitical and economic turmoil. Fast-changing technology. Globalization Risks Regulating risks.

Recommendations For the Company

Companies like GE can predict outcomes by assessing their strengths, weaknesses, opportunities, and threats. Recommendations for GE are portrayed below:

  • Streamline operations: General Electric should evaluate its operations and identify areas where it can simplify processes and eliminate redundancies to improve efficiency. This can include consolidating business units, reducing layers of management, and optimizing supply chain operations.
  • Embrace digital transformation: General Electric should use digital technologies such as artificial intelligence, automation, and data analytics to enhance productivity, simplify processes, and save costs. Supply chain management, predictive maintenance, and customer service can benefit from digital technology.
  • Focus on core businesses: General Electric should focus on its core businesses with a competitive advantage and divest non-core and underperforming businesses. This can help the company focus its resources and improve its efficiency.
  • Invest in employee training and development: If General Electric wants its staff to be productive and efficient, it must invest in its people via training and development. New technology training, management education, and courses designed to foster department cooperation are examples.
  • Emphasize sustainability: General Electric should prioritize sustainability in its operations by implementing environmentally-friendly practices and technologies that can reduce costs and improve efficiency. This can include reducing waste and energy consumption, implementing green supply chain practices, and investing in renewable energy solutions.

References