General Electric Corporation 2009: Jeffrey Immelt’s Challenge
Nov 11, 2014
General Electric Corporation
2009: Jeffrey Immelt’s Challenge
2009 GE StrategyAgenda
1) Immelt’s Core Strategies for GE (2001-2009)2) Analysis• Ashridge Frontier• BCG Matrix
3) Financial Performance4) Recommendations and Score5) Questions
Immelt’s Core StrategiesGROWTH•Six-Part Growth Process•Portfolio Management
INTEGRATION•Building cross-functional competencies•Bundling products and services
VALUE CREATION•GE synergies•Customer focus
Organic Growth• Portfolio Management• Exit slow-growth businesses• Reallocate resources to strong growth prospects• Enter new businesses
• Intensive M&A• Selected companies with linkages to existing portfolio
• Post-M&A Integration• Incorporated into GE’s controlled-process culture
Pre-Immelt Structure
Restructure, Refocus
IntegrationDIVISIONS Broad-based Sectors•Cross-business integration•Pros: Promote HQ & divisional cooperation and improve GE’s competitive culture•Cons: Further intricacies of organization, expertise, and incentives
Bundling Products and Services•Beyond cross-selling to “enterprise selling”•Encountered a talent gap in technical areas
Value CreationSynergies•Strategic fit among businesses to create “one empire culture”•Strengthen Marketing capability and visibility
Customer Focus•“At the Customer, For the Customer”•Vertical Integration for Enterprise systems selling•Increase buyer’s switching costs and GE’s competitiveness
2008 Revenue
2008 Profit
USD
Net ProfitMillions USD
Net Profit: Core Millions USD
AAA-
Millions USD
2008 Assets
Millions USD
Score
8/10Rationale:•Portfolio management 8/10•Management Structure 8/10•Employee motivation 8/10•Financial Performance 7/10 •Influence 9/10•Stock Market Performance 5/10
Recommendations• Reduce reliance on GE Capital • Increase investment in renewable energy• Sell NBC Universal• Re-evaluate its Consumer and Industrial• Continue geographical diversification• Control internal competition• Pursue emerging markets
Thank You
Appendix Section
5-ForcesCore Sectors
Energy Infrastructure
MediumWeak
Strong
Medium
Weak
Technology Infrastructure
WeakMedium
Strong
Medium
Weak
SWOT
Macro Trends
Global Trends
Image Courtesy: GE Energy Website
Energy Infrastructure
Image Courtesy: GE Energy Infrastructure Website
Energy Infrastructure
Image Courtesy: GE Energy Infrastructure Website
Energy Infrastructure
Image Courtesy: GE Energy Infrastructure Website
Energy Diversification
Image Courtesy: GE Energy Website
Energy Diversification
Image Courtesy: GE Energy Website
GE Industrial
Video Courtesy: GE Industrial (2008)
GE Capital
Data Courtesy: GE Capital (2008)
GE Capital
Data Courtesy: GE Capital (2008)
Aviation Engines
Video Courtesy: MIT Technology Review
Appendix SectionFinancials
2006 Revenue
2007 Revenue
GE PE and US GDP Growth
GE Debt:Equity Ratio
GE Net Profit vs. Unemployment
GE Free Cash Flow vs. Brent Crude $
GE LT Debt vs. Brent Crude $
GE Profit Margin (Net) vs. Median Home Price
General Electric
IBM
GE ROA vs. Median Home Price
References
• http://www.wired.com/cars/futuretransport/news/2008/06/ecoaviation23
• http://www.ge.com/pdf/investors/events/06042008/ge_webcast_presentation_06042008.pdf
• http://www.ge.com/files/usa/stories/en/Growth_The_HBR_Interview.pdf
• http://ycharts.com/