healthymagination at ge
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“To invent, you need a good
imagination
and a pile of junk”
- Thomas Edison
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GE ranked
#3
Forbes Global 2000
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2005 GOALS Double R&D to $1.5B on “green
products” Work with customers to increase
revenues from $5B in 2005 to $20B by 2010
Reduce GE carbon footprint by 1% Be transparent and involved
2009 STATUS $1.5B on R&D for 75 “eco products $18B of revenue in 2009; 17%
growth rate Global engagement Reduction of 8%; save $100
MM/year Founding member of USCAP.
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Sustainable Competitive Advantages??
“Simultaneous Innovation”
simultaneously sway investors and
managers?
Are we there yet??
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Corporate Level Strategy
What is GE?
• Conglomerate• Unrelated Diversification• Powerhouse
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OperationsZHUHAI
SINGAPOREGE Capital
Industrial Manufacturing Energy
Healthcare
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Acquisitions• Most subsidiaries and
businesses.• Acquired a series of
healthcare businesses in order to play “catch up” in the healthcare industry.
Joint Venture• Most notable – GE and
Comcast for NBC Universal (2009).
• GE and Synthesis Energy Systems, Inc. for Small Scale Power Generation Solution (2013) **(Joint Market)**
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Business Level Strategies
Product Differentiation• Product Features• Product Complexity• Timing of Introduction• Location• Product Customization• Reputation
Cost Leadership• Vertical Integration• Learning Curve• Scale Economies• Scope Economies• Process Innovation
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Functional Strategies
• Focus on improving production goals through Six Sigma and Total Quality Management Systems
• Emphasis on accountability• Blue Ocean Strategy – GE makes the
competition irrelevant
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Healthymagination
• Combination of a cost leadership strategy and product differentiation strategy– 15% lower costs, – 15% greater access– 15% higher quality
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General environment
• Technological change:• GE is a leader in technological change• 2004: Spent $700 million on clean technology• 2005: Launched Ecomagination
• Cultural trends: The difference between Chinese and American cultures.
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General environment• Legal and political
conditions: President Obama signed the Affordable Care Act into law on March 23, 2010. Its objectives were strikingly similar to those stated by GE’s healthymagination program.
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Industry environment and competition
• The threat of Entry: small due to the vast size of the company.
• The threat of Rivalry: low, but only temporarily.• The threat of Substitutes: The threat of
substitutes in the healthcare industry, like products from Siemens and Phillips, is high.
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Industry environment and competition
• The threat of Powerful Suppliers: The bargaining power of suppliers is relatively low for GE’s many industries.
• The threat of powerful buyers: Buyer switching costs are high, so the threat of buyers is low.
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Resources
• Financials reflect solid Stability• Operational and Financial diversity• Some of the best managers in the
country • Intangible Resources
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Strengths• Visionary Projects• Financial expertise• Strong management• International business know-how• Proven product lines
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Weaknesses
• Weak stock price• Plateau of sales• Falling profits • Unhappy investors• Unfocused “vision”
2005 2006 2007 2008 2009 20105.00%
7.00%
9.00%
11.00%
13.00%
15.00%
Profit Margin
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Competitive advantage
• Product differentiation– Innovative new products– First mover in new technology– High quality products
• Cost leadership– Innovative processes– Vertical integration
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Sustainability of competitive advantage
• GE’s proven competitive advantage is sustainable.
• GE’s particular strategy of Healthymagination may not be sustainable because of changing political environment. GE should be careful not to overcommit to Healthyimagination.
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Financial Trends
• 10% decrease in stockholders• Decrease in stock price– Low: $6.66– Average: $31.37– High: $59.88
• Substantial increase in cash
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Ratios
Profitability Liquidity Leverage
Net Profit Margin Current Ratio Debt-to-Equity11.52% 1.11 3.31
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GE
Bank of AmericaUnited TechnologiesBoeing
General Dynamics
Market Capitalization
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GE
Bank of America
United TechnologiesBoeing
General Dynamics
Dividend Yield
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Reverse Course
Do Nothing
Stay the Course
Pursue Innovation and solve global problems through the –magination initiatives
Divest non-manufacturing industries
Return to its historical focus
Go from unrelated diversification to related
And Avoid the risks of: Tying strategy to
legislation Gambling with share
prices Being too diverse
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Update Management
Training ProgramsDivest
Declining Businesses
Seek Stakeholder Buy-In
Aggressively acquire and create new
businesses
Coordinate with IT firms to create
“smarter” technologies
Focus on International
Growth
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Amanda SellersDavid FisherJodie Vance
Josh KeckMengying Cao
Michael Dannals