General Electric Company (GE) is an industrial corporation with operations in diversified segments. It offers a wide range of services including GE Capital, aviation, power and water, oil and gas, healthcare, appliances and lighting, energy management and transportation. GE is headquartered in Connecticut, US and generated revenues of about $150000 million in FY 2015.
Strengths in the SWOT Analysis of General Electric :
Diversified Product Portfolio: General Electric has a diversified portfolio being present in 8 different business segments: GE Capital, aviation, power and water, oil and gas, healthcare, appliances and lighting, energy management and transportation. The Company has a diverse portfolio and serves different markets with all its business verticals.
Balanced Revenue Stream: GE’s diverse portfolio is maintained with balanced revenue streams from all of its businesses which reduce business risk of becoming over-dependent on a single business segment. GE Capital is the largest contributor to revenue accounts for about 25% of revenue and water, aviation, healthcare, oil and gas account 10-20% of revenue each.
Strong R&D: GE has a strong research and development arm known as GE Global Research (GGR) which has a diverse set of technology which covers the range of fields such as electronics, metallurgy, and fluid mechanics etc. The strong R&D enables GE to bring in innovative products and maintain thought as well as technological leadership in its fields.
Weaknesses in the SWOT Analysis of General Electric :
Legal Proceedings: GE has been subject to various legal proceedings and increases legal compliance costs for the company. The company has various legal cases pending in many countries which can affect the company’s position and financial conditions in those countries.
A high amount of borrowed funds: GE has a significant amount of debt level which affects the company’s operations. The company has over $200 billion of long-term borrowings. Also, a significant amount of money is spent on payment of interest on the borrowings.
Dependence for raw materials supply: GE is highly dependent on multiple third parties, contract manufacturers and commodity markets for the supply of raw materials. Any disruption in deliveries or discord in the agreement can put GE’s operations to a halt and affect the revenues.
Opportunities in the SWOT Analysis of General Electric :
Strong outlook for GE Capital in the US: With US business improving and credit cards market growing, GE Capital has a positive outlook in the US. The demand for GE capital products can grow and can strengthen the top-line.
Growing Demand in the airline business: Air transport industry throughout the world is growing and with it demand for new aircraft is to increase. The growth in the aviation industry benefits the company’s aviation segment which designs and manufactures commercial aircraft.
Growth in the global renewable energy market: The outlook for renewable energy is on the high globally and is expected to grow furthermore. GE is well positioned in the creation of renewable energy to enhance its revenues and market share.
Threat in the SWOT Analysis of General Electric :
Government Regulations: GE has to comply with various environmental and governmental regulations as it is subject to various federal, states, local and foreign laws for all its businesses. This increases its compliance costs and also acts as a deterrent to growth.
Intense Competition: GE faces strong competition in all of its businesses most of which are aggressive in terms of businesses. For instance, GE capital faces intense competition from various investment banks and financial institutions etc.
Exchange rate fluctuations: For a company like GE which has globalised operations in various parts of the world, fluctuation in currency becomes an important issue as currencies strengthen or weaken against the US dollars.