General Electric Business Model

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GE is one of the oldest and biggest corporations in the world. In this article, we will look at 1) introduction to GE, 2) history, 3) business model, and 4) business segments, and its products and services.

INTRODUCTION TO GE

General Electric or GE is a multinational conglomeration organization that originated in the United States. It is incorporated in New York and the headquarters are based in Fairfield, Connecticut. The company operates in several areas including Energy, Technology Infrastructure, Capital Finance and products in the Consumer and Industrial category.

The company was created by Thomas Edison, the inventor of the light bulb. The company is often considered the most successful conglomerate in the world. The basis for this is that it reached its conglomerate status before this became a common practice for companies. Since its inception, the company has continued to grow, expand and innovate in a variety of industries and fields including things that range from electric fans to airplanes.

The company was ranked the 26th largest company and the 14th most profitable one in America in 2011. This was based on gross revenue but another list ranked the company 4th among the Forbes Global 2000 by considering more detailed metrics. It has also been listed as the 7th best company for leaders and 15th most admired company by Fortune in 2011/2012, number 5 for best global brand by Interbrand, and by Fast Company as the 19th most innovative company.

HISTORY

The GE founder Thomas Edison is considered a genius both as a businessman and as an inventor. He began his legacy from a workshop that set the groundwork for GE. This workshop was set up in 1876 when he set out to explore the potential for various inventions that he had seen at the Centennial Exposition in Philadelphia the same year. Eventually this workshop was where he created his most important invention, the electric light. Over the years that followed, his early inventions became the basis for different lines of products through the 19th and 20th centuries to present day.

A timeline of General Electric is given below

1878 – 1904

General Electric Automatic iron

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Thomas Edison created the Edison Electric Light Company in 1878. The following year he finalized the first commercially viable incandescent lamp that survived a 40 hour duration test. By 1979, Edison and his team had managed to create dynamos, devices that were used to turn mechanical energy into electrical energy. The application was these would allow entire neighborhood lighting systems to be powered. Edison patented his lamp in 1880 and continued to improve his design by using different materials and ideas. By 1882, he set up the Edison Electric Illuminating Company and began construction on New York City’s first power station. He set up a lamp factory in New Jersey in 1890 and in 1892, GE was formed by the merger of Edison’s company and another prominent manufacturer of dynamos and electric lights. Thomson-Houston. By 1895 the company had begun producing items such as large electric locomotives and transformers and with the discovery of the X-ray, electrical equipment to produce these Xrays. By 1900, the company’s distinct logo was registered and the establishment of the brand began. In the same year, the company set up a 3 person laboratory to conduct scientific research, a first of its kind. By 1902, the company patented the electric fan.

1905 – 1934

In 1932, the company created the GE Credit Corporation to help sell appliances to American families during the great depression.

In the same period, GE contributed to the electricity operated controls for the Panama Canal, as well as advancements to cathode ray tubes and the electric stove. The company also began producing precursors to modern refrigerators. The company also developed the technology that was used both in WW2 radars and microwave ovens. The company continued to improve its technologies and find applications in real world products such as airplane altitude controls, electronic controls and safety switches, panel board and switchboards used in the construction of the Empire State Building. The washing machine was also introduced.

In 1905, GE’s first contribution to the kitchen, the electric toaster, appeared. This was followed by efforts in the direction of business capitalization and cash flow by the setup of the Electric Bond and Share Co. The aim of this was to finance small utilities, setting the basis for GE’s Commercial Finance division. A GE engineer worked for two years to help the world’s first voice radio broadcast become successful in 1906 by designing and creating a high frequency alternator. Advancements in technology continued and the GE research lab created ductile tungsten filament, making the lamp more efficient. This material is still used in light bulbs. In 1910 the company created the first electric cooking range and in 1912 improvements were made to the vacuum tube. This is what made modern electronics possible. In the same year, the company also finished work on the first electricity propelled US Navy vessel as well as on the molding of plastic parts for use as an insulation material.

1935 – 1970  

Continuing with both home appliances and major scientific inventions, the company opened a space center in 1961 to increase its stake in putting a man on the moon. A year later the solid state laser was invented by a GE scientist as well as a superconductor magnet in 1962. These technologies led to inventions such as the CD player, laser printer, fiber optic communication and advances in modern medical imaging and diagnostics. Xray technology also evolved allowing reduced exposure to xrays as well as clearer pictures. In 1969, the first man on the moon took his first steps in boots developed from GE silicone rubber. Other GE involvement included overall quality control, systems engineering support, launch vehicle testing and ship to satellite systems that allowed live color TV images of the splashdown and recovery.

In 1935 the company’s Novalux lamps led to the first major league baseball night game. Other contributions included the GE supercharger in the the plane that set the air flight record in 1937. In 1939, the first woman scientist to join the GE lab invented glass that is used in all camera lenses and optical devices till today.in 1940 the company made advancements with new silicone chemistry which has widespread applications. In 1942 the company built the first jet engine in the US as well as demonstrating the first turboprop and in 1943 the autopilot was invented. By 1945, the company had developed the first commercial radar and in 1946 a GE scientist developed cloud seeding technology. Military work during this time included the jet engine J79 which was a ground breaking technology. In 1953, GE scientists discovered Lexan polycarbonate resin which is a transparent plastic with extensive uses to this day. Other discoveries and inventions during this time included industrial diamonds, an engine for the fastest jet transport, further work on plastics, a jet engine that operated at three times the speed of sound, a licensed nuclear power plant, the electric can opener, the oven toaster, the halogen lamp, the first manmade object to orbit the earth, the Lucalox lamp, and powerful and compact motor and rechargeable batteries which led to devices such as the electric toothbrush, hair dryers and slicing knives

The company continued developments in all sectors. In the home improvement category, the company launched a food waste disposal system in 1935. The following year the company launched a series of smaller kitchen appliances including a juicer, a table cooker, a portable mixer, an automatic roaster and a coffee machine. In 1947 the company made advancements to its refrigerator by creating a two door freezer-refrigerator combination. The same year, cooking equipment was developed for fast food operations. In 1954, a fully automatic dishwasher was introduced.

1971 – 2000

Through the 1970s, the company continued its advancement in technology by producing the first portable room air conditioner. Other innovations included a computed tomography scanner, innovations in kitchen appliances and consumer electronics as well as fused quartz ingots that can be used to make long fiber optic strands. In 1983 the company created the MRI system making it possible to image soft tissues within the human body. In 1989, the company diversified further and launched a news and business news channel. In 1992, the company continued its foray into space by building the Mar Observer for NASA. In 1993, clinical investigations began in the company’s MRT system to help physicians view internal organs real time. In 1994, GE became the first fortune 500 company to go online and in 1996 the comprehensive portal GE.com was launched. In three years the site was also selling items online. Other major events in this period included development of the world’s most powerful commercial jet engine for Boeing, functional anatomical mapping, a cardiovascular mapping system and the world’s first diagnostic agent to identify Parkinson’s disease.

2001 – 2014

In this period, the company made advancements in cancer diagnostics, lighting technology, new generation ultrasound imaging, involvement with the international space station, medical information systems, fuel efficient rail systems, transportation tracking systems, smart home solutions, portable narcotics and explosives identification systems, miniature cardiovascular ultrasound system, TV technology, organic LED technology, HD medical imaging systems, advanced PET/CT scanning systems, high power white LED, a hybrid locomotive prototype, a compact ECG machine, an HD CT scanner, super hyrdrophobic nano coatings which have implications for industry, biofuel, printed OLEDs, remote assembly from a kit, hybrid haulers, biomarker technology to map proteins in tumors, a genome project, airborne toxin detection, holographic data storage, energy smart LED and energy management. In this period the company sold of its media arm as well as its appliances business.

 

BUSINESS MODEL

GE has a successful business model that can help other companies learn and grow. The key is to not forget organizational culture, history and context and consider how specific techniques were used in key features of the company. The main features of the GE business model include:

The Culture

  • A focus on individual achievement
  • A consideration of a rebel as a hero (Jack Welch rebelled against much of the management practices before he became CEO)
  • An encouragement of circumventing the hierarchy
  • The importance of competitiveness both within the company and externally
  • Performance as a determining factor of loyalty
  • Direct and confrontational communication
  • Leaders who are individuals and not groups or teams.
  • The culture is a background which drives a company’s success. The GE culture specifically is extremely American.

Core Competencies

  • GE’s core competencies are much more than just a set of management techniques or a business model. Instead, the following make the company a success:
    • The company selects best practices that are most relevant to its immediate future
    • The company adapts and implements these practices perfectly
    • The company continues to evolve and change its management practices as the need emerges. This is done by adopting new practices and discarding older methods that may have led to success at some point but are no longer relevant.

BUSINESS SEGMENTS AND ITS PRODUCTS AND SERVICES

Basic segments for the company are vast and diversified. Some of these include:

GE Capital

This is the financial services arm of the company. The services offered include commercial lending, leasing and financial services for healthcare, media, communications, entertainment, consumers, real estate and aviation.

The company underwrites loans and leases to hold on its own balance sheet and the focus is not on generating revenue from the same. The company targets small and medium companies and is not restricted to a particular industry or geography. The loans are secured by tangible assets.

GE Energy Management

This are took over some of the activities of GE Energy in 2013. Products and services include automation and process control, drives, critical power, geospatial systems, electrical distribution, high voltage equipment, industrial communication, monitoring and diagnostics, power conversion, motors and generators, protection and control and smart metering among others. These products are divided into three main categories and further subcategories.

1. Industrial Solutions

  • GE Power Electronics
  • GE Power Components
  • GE Critical Power
  • GE Intelligent Platforms

2. Power Conversion

3. Digital Energy

GE Oil and Gas

The Oil and Gas segments offers products and services that include condition monitoring and diagnostics, EOR solutions, fuel dispensers, LNG solutions, gas storage, industrial power generation, land drilling, measurement and sensing, offshore drilling, plant and unit controls, pipeline integration services, refinery and petrochemicals and subsea solutions.

GE Power and Water

This segment offers power generation products, power generation services, distributed power, Hitachi nuclear energy, renewable energy and water and process technologies.

GE Home & Business Solutions

This division of the company was created in 2007. The unit included appliances, lighting and intelligent platforms. The last was later moved to energy management. In September 2014, the company sold this unit to Electrolux. Lighting was moved to the Growth and Innovation division within the company.

GE Aviation

This division is based in Ohio and is one of the world’s leading suppliers of aircraft engines for commercial aircraft. Main competitors include Rolls-Royce and Pratt & Whitney. Main products include turbojets, high bypass turbofans, light and low bypass turbofans, turboshafts, turboprops and fans, industrial aero derivatives, vehicle propulsion, and marine propulsion.

GE Transportation

Formerly called GE Rail, this division provides equipment for railroad, marine, mining, drilling and energy generation industries. Rail products include freight and passenger diesel-electric locomotives and related items such as railroad signaling equipment and locomotive parts and repairs. Propulsion products include electric motors and systems for mining, oil drilling and wind turbine industries. Battery products are made for rail, marine, telecommunications and energy industries.

GE Healthcare

This is the largest division of GE that is based outside the US and provides transformational medical technologies and services. Products include medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery and biopharmaceutical manufacturing technologies. Key competitors for this division include Hitachi Medical, Carestream Health, Philips Healthcare, Siemens Healthcare and Toshiba Medical Systems.

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