General Electric (GE) [NYSE: GE] is a multinational conglomerate in everything from oil and gas to aviation and medical equipment. It is one of the largest companies in the world by market capitalization, at $110.18 billion as of September 15th, 2021. Thomas Edison, J.P Morgan, Edwin Huston, and Charles A. Coffin were the brains behind this company over 120 years ago in Schenectady, New York. The company currently has its headquarters in Boston, Massachusetts.
GE operates and competes in five segments; Power & Water, Renewable energy, Aviation, Healthcare, and venture capital. In 2021, GE ranked 38th on the fortune 500 lists. This ranking is based on assets, revenues, and capitalization, among others.
From its 2021 financial reports, GE achieved a revenue of $78.721 billion, a net income of $-2.809 billion, and total assets valued at $237.559 billion. Despite the tough financial year, its debt to equity ratio was 1.69, which shows a strong financial position. In a highly competitive global market, a company must have a strong positive balance sheet to ensure its longevity. GE’s sales breakdown shows that this is a well-diversified company with no one main line of business.
GE’s Business Strategy
GE incorporates a mix of demographic, geographic, and psychographic segmentation in its marketing strategies. Its segmentation strategy is tailored to focus on specific market segments. This strategy fosters higher sales volumes and increased market share. GE has developed segment profiles that prioritize consumer needs and behaviors.
The company has widespread brand recognition. This is partially due to its advertising efforts over the years, specifically in popular culture. The company’s business strategy has evolved to incorporate a broad range of products and services to fit different market niches. GE appears in many forms worldwide, from light bulbs at Home Depot, jet engines for commercial flights, generators powering stadiums, and MRI machines at hospitals. The company employs a massive number of employees, about 174,000 all over the world.
GE’s business model intends to create value by streamlining processes and optimizing value chains to lower costs. Its outsourcing strategy is a mix of insourcing. In which in-house employees provide services internally, and outsourcing, in which in-house employees acquire the services of an outside company. However, with the recent move to bring IT in-house, GE may retain more control over its services and increase efficiency.
GE’s marketing activities are driven by digital technology to create more efficient ways to reach customers and manage its sales processes. The company’s global sales structure is vertically and horizontally integrated. It has a worldwide presence and bases of operation in 130 countries and customers and partners spread across the globe.
Although GE slowed down its acquisition strategy, it remains a major acquirer of companies. GE’s acquisitions are strategically focused on businesses that strengthen its existing product portfolios and increase market share. In 2021 alone, GE healthcare made a record 21 acquisitions, including Zionexa, a molecular imaging company based in Paris, France. This acquisition will help GE healthcare expand its medical imaging market.
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GE SWOT Analysis
A SWOT analysis assesses the strengths, weaknesses, opportunities, and threats to a business. It is cost-effective and beneficial for generating business insights.
Strengths
Exceptional market experience:
GE has years of experience in marketing, research, development, operations management, finance, R&D, manufacturing process, etc. This deep understanding of all aspects of business allows GE to become more effective in its processes, resulting in better products.
Flexible structure/ Business lines:
GE has many divisions integrated across the globe. The organizational structure is not rigid but dynamic. This flexibility helps the company adjust to changes faster and make strategic decisions faster by drawing upon different sources of information.
Advertising/ marketing capabilities:
GE is well-known in many markets for its excellent marketing. Its ads are seen on TV, radio, billboards, etc. GE’s global brand recognition ensures that it is not constrained to a specific geographic location when seeking new business.
Multiple Subsidiaries:
GE has a solid subsidiary base, providing tax benefits and preventing other companies from integrating with its core business. Any competitor who wants to enter the market easily can do so only by going through GE’s subsidiaries first.
Weaknesses
Slow integration into the digital space:
GE has remained mostly unchanged in its organizational structure and operations. It has not invested much into information technology (IT) or digital technologies so far. With the market becoming highly digitized, GE may fall behind if it does not quickly respond to changing requirements.
Superiority complex:
Complacency and rigidness in strategy may cause GE to lose its competitive edge. The company must remain innovative and continue to develop new products and services for the market and ensure quality and reliability. Despite being so extensive and successful, GE should not let its size and success undermine its image of a company eager to learn and improve.
Opportunities
Expanding consumer base:
Digitalization has led to an increase in the number of consumers. These customers expect more from companies – better services, customer support, responsiveness, etc. It presents an excellent opportunity for GE to improve its customer service and gain more loyal customers.
Growing markets for Artificial intelligence (AI) and Robotics:
GE has the potential to grow in these two segments considerably, given its deep understanding of market dynamics, customer preferences, etc. The transformation from analog to digital technologies requires good knowledge of every business line. With its experience in multiple fields, GE can easily get into new segments powered by AI and robotics.
Threats
Vulnerable against major shocks:
In today’s ever-complex and changing business environment, even small changes can have a massive impact on large companies like GE. For instance, a small change could be a rise in oil prices, hugely impacting GE’s energy business. This shows that the company is only as strong as its weakest link, not enduring major changes, such as Brexit or Trump’s presidency.
Strong Competition:
GE is a strong competitor in its own right; however, it cannot ignore other strong competitors in the current dynamic business landscape. GE is constantly facing competition from companies like Siemens, Honeywell, etc., who are always looking to expand into similar markets.
GE Competitor Analysis
GE competes amidst a highly competitive business landscape. It has to deal with major competitors in almost every sector. This section analyzes GE’s competitors by looking at their strategies, core competencies, market presence, financials, and strengths & weaknesses.
1. Siemens AG (Germany)
Siemens [FWB: SIE] is a Germany-based multinational conglomerate corporation. It has a major presence in energy, transportation, healthcare, and media. Founded in 1847, Siemens is considered the pioneer of electrical engineering and was largely involved in laying out the nation’s electrical grid. The company has its presence in more than 200 countries worldwide, with headquarters in Munich, Germany.
Siemens competes with General electrics in almost every sector. The energy business offers a wide range of products and services for power generation, transmission & distribution, and industrial automation to smart cities. Siemens provides patient monitoring systems, medical imaging technologies, laboratory diagnostics tools, and other related products and solutions in the healthcare segment.
In 2017, Siemens controlled 23.2 percent of the global diagnostic imaging market, followed closely by General Electric with 22.2 percent. According to Statista, Siemens’ market share is expected to grow to 23.5 percent in 2024, while GE’s share might drop to 21.6 percent. If this metric holds, it also means that other segments in GE’s product line will have to bear the brunt.
Siemens revenues for the 3rd quarter2021 rose by 21 percent to 16.09 billion Euros from the previous year. Its total orders for the same period were 20.5 billion Euros with an all-in free cash flow of 2.3 billion euros.
2. Hitachi Ltd. (Japan)
Hitachi Ltd. [HTHIY] is a Japanese multinational conglomerate company headquartered in Tokyo, Japan. It was established in 1908 and, for the past 100 years, has grown into a global company with business interests across multiple spheres. Hitachi has a presence globally, with sites in 27 countries and a workforce of over 290,000.
The company’s product line entails industrial and power systems, information & telecommunication systems, construction machinery, high-speed trains, electrical systems, and equipment. It is also active in social infrastructure and offers smart city solutions. Its penetration into digital media and consumer products is also growing at a fast pace.
Hitachi has a strong presence in the medical sector as well. It manufactures MRI, CT, and X-ray machines for imaging and diagnosis. The company strives to enhance its portfolio by investing in digital technologies such as artificial intelligence and robotics.
Hitachi’s major competitor will always be GE since both operate in similar fields. However, GE’s competitive advantage lies in its strong and established a foothold in the US market; however, Hitachi’s digital technologies and smart city solutions will majorly bring it to the top.
In the diagnostic and imaging segment, Hitachi controls about 3 percent of the global market share as of 2017. As of September 15th, 2021, its market value equity stood at $58.693 billion. Hitachi’s revenue for March 31st, 2020, amounted to $78.85 billion.
3. Honeywell International Inc. (US.)
Honeywell International Inc. [NASDAQ: HON] is an American multinational conglomerate company that operates as a diversified technology and manufacturing firm. It operates in different segments including, aerospace, automation and control solutions, and performance materials & technologies. The company has its presence in more than 70 countries worldwide, with headquarters in Charlotte, North Carolina.
Honeywell’s product portfolio comprises turbochargers and aviation products for transport and general aviation; controls and system solutions for industrial applications; home comfort solutions like thermostats, air purifiers, dehumidifiers, etc.; sensing technologies for industrial, security, and safety applications.
The company competes with GE in aerospace, Automotive, and Control Solutions, Home Comfort, Turbocharger, and Aviation Management segments. However, its presence in the Medical Segment is limited to Thermostats and Air-purifiers. Honeywell’s greatest asset is its track record of earning customer confidence over several years; it has earned a reputation as a trustworthy player delivering high-quality goods.
While GE’s aviation segment slumped in the 2020 financials, Honeywell saw revenues in this segment at 11.5 billion despite the global economy taking a hit due to Covid-19. As of September 16th, 2021, Honeywell’s market value equity was $153.055 billion, with a revenue of $33.956 billion.
4. 3M Company (US.)
3M Company [NYSE: MMM] is a multinational company that provides a range of technological products and services, including industrial, healthcare, security & safety, etc. 3M’s product portfolio includes materials used in adhesives, sealants, electronics, and various maintenance operations; patient monitoring systems for surgery, imaging equipment for dentistry, and so on.
The company’s key competitor is GE, as it operates across a broad range of industries, including healthcare, aviation, power management, etc. 3M has been concentrating more on the multi-industrial sector, increasing its presence in the Asia-Pacific region.
Its most significant competitive advantage lies with its superior quality of products, whether they are protection, health, or home care products; this is something 3M built a reputation doing. With an increased focus on innovation, research & development (R & R&D), the company aims to expand its portfolio in emerging markets.
As of September 16th, 2021, GM had a market cap of $106.579 billion. Its revenue for the 12 months ending June 30th, 2021, amounted to $34.734 billion, representing an increase of 10.78 percent Y/Y.
5. Philips Electronics NV (Netherlands)
Philips Electronics [NYSE: PHG] is a Dutch multinational company specializing in healthcare and consumer lifestyle products, with its headquarters in Amsterdam. It conducts its operations through Philips Consumer Lifestyle, Philips Lighting, Royal Philips, and Philips Healthcare.
The company has a diversified product portfolio, including lighting products like lamps and lighting solutions for homes and offices, medical scanners such as Magnetic Resonance Imaging (MRI) machines, consumer electronics like headphones/earphones & microphones.
Philips competes with GE in the Healthcare segment. It is one of the top players in this sector, despite its limited presence outside Europe and North America. This can be attributed to Philips’ stronger foothold and greater brand recognition and awareness than other international rivals like GE. Its major strength lies in its brand appeal and image with customers, evident from revenues coming through despite the global economy taking a hit.
The company trades in the NYSE as Koninklijke Philips N.V. [PHG] and has a market cap of $42.622 billion as of September 16th, 2021. Its 2021 revenues totaled $19.800 billion, a decline of 18.38 percent Y/Y.
How GE Stands Out Against Its Competitors
GE has a diversified product portfolio, covering power system infrastructure, medical equipment, turbines/motors for aviation & aerospace, oil & gas production equipment. The company is known for its competitive pricing strategy and provides superior quality products across all segments.
GE’s major strength lies in its strong brand image with customers who trust the company to provide them with the most reliable/highest quality products in the industry. The company aims to expand its presence to emerging markets like Gulf Cooperation Council (GCC) countries, African nations, etc., through focused R & D for these regions.
Despite the Economic snarls of 2009, GE has managed to grow its revenues at a slower pace. The company has a strong focus on increasing its renewables and green technologies business, likely to accelerate soon.
GE Competitor Analysis (FAQs)
Question: Who are General Electric Main Competitors?
Answer: General electric main competitors include Siemens, Hitachi, Honeywell, 3M, and Phillips. However, it also competes with many smaller companies in the oil and gas, aviation, infrastructure, power sector.
Question: Who is the biggest competitor for GE in healthcare?
Answer: GE’s main competitor in the healthcare sector would be Siemens. GE competes with Siemens in areas such as medical equipment, imaging and diagnostic, and power generation. Other companies in the healthcare segment include Philips, Honeywell International, and Mitsubishi Electric.
Question: What is GE’s competitive advantage?
Answer: GE’s main competitive advantage is its diversified product portfolio and strong brand appeal. The company also has a vast supply chain, providing it with better pricing power and bargaining position in the market. Strong differentiation, strong customer relationships, and superior quality products are other advantages over its competitors.
Conclusion
In a world of technological advancement, companies are constantly looking for ways to stand out from the rest. GE is ahead of its competitors thanks to its diversified product portfolio and quality products for this very aspect. While it may not necessarily focus on fighting off competition at its current state, we can expect GE to adopt a strong R & D strategy in the coming years and emerge as a stronger player in the market
References
https://fortune.com/company/general-electric/fortune500/
https://www.macrotrends.net/stocks/charts/MMM/3m/revenue
https://finance.yahoo.com/quote/MMM/
https://www.statista.com/statistics/593428/net-sales-of-honeywell-by-segment/
https://www.macrotrends.net/stocks/charts/HON/honeywell/revenue
https://www.statista.com/statistics/331739/top-global-companies-by-diagnostic-imaging-market-share/
https://new.siemens.com/global/en/company/jobs/our-locations.html
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