The reason I picked the company General Electric for my research was I knew that the company was well diversified. General Electric makes products that I use everyday and I thought it would be interesting to research and find out how they got where they are in the global market. I will research how much of the sales come from foreign markets and how these markets influence the company. My research will include a basic overview of General Electric as well as more in depth research to help explain where General Electric is today.
Thomas Edison had brought together several of his business interests under one corporation to form Edison General Electric. At about the same time, Thomson-Houston Company, under the leadership of Charles A. Coffin, gained access to a number of key patents through the acquisition of a number of competitors. Subsequently, General Electric was formed by the 1892 merger of Edison General Electric and Thomson-Houston Company. Today, General Electric is a multinational conglomerate headquartered out of New Haven, Connecticut.
General Electric operates as a technology, media, and financial services company worldwide (yahoofinance. com). Many of General Electric’s subsidiaries would fair well as a standalone company in the Fortune 500. General Electric is constantly changing its business face through acquisitions, divestitures and reorganizations. Also, General Electric has reinvented itself in the global market through research and development. What has been General Electric’s history in the global market? General Electric has had a long life in the global market. The earliest foreign business endeavor took place over 100 years ago.
Although, it’s unclear when the first sales may have taken place in some foreign lands, research and development has been international for many years. General Electric breaks down their markets into 7 segements. The seven segements are: Northern Asia, Southeast Asia, Australia/NewZealand, Europe, Middle East/Africa, North America, and Latin America. (GE. com). General Electric also has 4 research and development sites located around the world to help the company better understand consumer needs. General Electric prides itself on its ability to meet consumer’s needs around the world.
Products must be altered to fit specific rules and regulations and these things have become second nature to General Electric. That is why the company is continually a Fortune 500 company and seems to not be leaving the list anytime soon. What percentage of their business is now derived from outside the United States and what are the percentage breakdowns of other countries in which they conduct business? Why did General Electric decide to go global? General Electric conducts business not only in the United States, but also throughtout the world. General Electric breaks down sales into 7 distinct regions.
These areas are crucial to the growth and development of General Electric. The countries that inhabit the Northern Asia section are: China, Japan, Pakistan, India, Korea, and Taiwan (GE. com). The expansion into Northern Asia is relativly new, but the company sees a great potential because of the population. The plan for General Electric is to localize the business to the region, while building on local capabilities and developing local resources. General Electric focuses on enabling the countries in which they operate the tools to advance their lifestyles.
General Electric supports the growth of these countries with the products they provide (GE. com). The countries that are part of the Southeast Asia segements are: Cambodia, Philippines, Indonesia, and Thailand. Again, there is a huge potential for sales and revenue. General Electric supplies hostipals with cutting edge technology in Malaysia; build infastructure in Indonesia; provide clean energy and water solutions to the Philippines; and building aircraft engines in Veitnam (GE. com). General Electric began its work in Australia in 1902 when they installed a motor for Sydney’s Pyrmont Bridge.
The sales continue to grow and General Electric focuses on consumer needs to reinvent themselves and create new products. General Electric moved into New Zealand in 1982, General Electric is involved in commercial property. In the two countries, General Electric employs more than 6,000 employees. Europe has proved to be General Electric’s largest market, growing at an astonishing 3 times the global rate (yahoofinance. com). There are over 24 countries in the region. General Electric provides products to help build the region. This is shown by the $52 million dollar research facility in Germany.
Russia has been one of General Electric’s biggest supporters. General Electric operates multiple businesses within the country, all from their unique product segments. The Middle East and Africa have been part of General Electric since 1898. General Electric has been working vigorously to provide Africa with the tools necessary to increase industry and commerce. Meanwhile, General Electric is expanding the growth of this region by providing investments, infrastructure, and aviation tools (msnmoney. com). North America is the headquarters’ for General Electric.
General Electric plans continue to provide services to this region, but they are aware of the outside world. General Electric plans to expand to become a leader of innovation and leadership to the world (yahoofinance. com). They realize that there are outside opportunities that are far more profitable than in North America. General Electric sees the United States as a constant consumer, but they realize they need to tap into segments that are not modernized. Latin America is a place that is held in high regards to General Electric.
This is because the region is decimated with poverty. Due to the recent developments in the trading of Latin America, General Electric plans to help grow transportation, healthcare, and infrastructure. The plan is to create cleaner water and education to underprivileged people (GE. com). General Electric believes they can impact the lives of every consumer with their products. General Electric also places a high value on research. General Electric built 4 research centers throughout the world in order to better understand the consumer and also to meet their consumer’s needs.
The four global research centers employ 3,000 people in four state of the art facilities. The facilities are located in New York, Bangalore, Shanghai, and Munich. These are designed to promote the research and investment in foreign markets (msnmoney. com). The reason General Electric decided to move into the international markets was to increase revenue and sales. These new markets are often viewed as having higher growth potential than the current markets they are involved in (yahoofinance. com). One example, cable and television programming industry can grow quickly.
General Electric operates 15 cable and satellite brands operating in over 100 countries. Management believes it can double its cable revenue in this next year (msnmoney. com). Also, with General Electrics diversified product line they are able to meet the needs of every individual country. The diversified segements provide protection against poor performance because one segement can support another. This enables General Electric to take the chance to move into a foreign market. The size of General Electric allows them to buy or sell segements that most companies would not be able to afford.
The diversification of not only the products offered, but the services offered allow General Electric to operate at their own pace. This is a strength of General Electric because they can offer multiple products in mulitple countries. General Electric has a year ending of December 31. This means that the financial information for 2009 will not be posted until Febuary 2010. Therefore, in the interest of accuaracy I will be providing General Electric’s 2008 numbers. General Electric breaks their worldwide sales into 6 areas when showing sales numbers.
These geographical areas are known as: U. S. , Europe, Pacific Basin, Americas, Middle East and Africa, and other. The United States currently holds top market share in sales among all General Elecric regions with 47% of the revenue. The United States is a crucial part of General Electric’s sales, but the focus has been shifting to foreign markets because the size of the markets is astronomical. Europe finishes second with 24% of General Electrics revenue. Again, these countries are all domesticated and have proven to be a reliable market, but the main focus of the company will be the Pacific Basin.
The Pacific Basin which includes Asia has the most potential of all the regions. This is due to the large number of people and the lack of industry within these countries. The Pacific Basin accounts for only 13% of the revenue, but General Electric expects that number to increase greatly within the next couple years. The America’s, Middle East and Africa, and other account for only 16% of the sales. While, the revene in these areas may be low, General Electric expects to expand sells in these regions. General Electric is marketable to these regions because of their differentiated products.
Not all products may work in a certain region, but with the differentiation General Electric can offer everyone something that is useful. About half or 47% of General Electrics sales are coming from the United States and the other half or 53% from the rest of the world (wikinvest. com). I would expect to see the numbers start to change. General Electric is focusing on the foreign markets that haven’t been accessed. This will increase their sales in the rest of the world. I would expect United States sells to stay steady, but the rest of the world will take a larger part of the sales in the upcoming years (msnmoney. com).