General Electric Company (doing business as GE Aerospace) applies strategies that respond to the external factors identified in this PESTLE/PESTEL analysis. The PESTEL/PESTLE analysis model is an external analysis tool that evaluates the opportunities and threats in the company’s remote or macro-environment. In this case of General Electric, the remote or macro-environment involves the aerospace/aviation industry. Thus, GE’s strategic management considers the macro-environmental factors relevant to this industry. Managers address these factors’ effects on General Electric’s business, while taking account of the factors’ industry-specific influences examined in this PESTLE analysis. Addressing these external factors requires consideration for General Electric’s generic competitive strategies and intensive growth strategies to ensure strategic alignment to maintain the company’s position as a major industry influencer.
This PESTEL analysis of General Electric Company enumerates the external factors significant in the industry environment. These macro-environmental factors impact the competitiveness and growth of GE’s business. This external analysis provides information on General Electric’s current needs and the challenges it faces. For example, the external factors present managerial issues linked to the aviation industry. This PESTLE analysis shows that suitable shifts in management approaches based on these factors buttress General Electric’s industry position against competitors.
Political Factors Affecting General Electric’s Business
Political influences are macro-environmental factors based on governmental activity. Political decisions are considered in this external analysis of General Electric. This component of the PESTEL analysis determines the external factors that reflect governments’ impact on GE’s business and its remote or macro-environment. General Electric Company’s management must address the following political factors:
- Continuing governmental support for digitalization of industries
- Continuing governmental support for the shift to renewable energy
- Governmental openness to global trade
- Increasing international governmental support for intellectual property protection
Governmental support for the digitalization of industries is an opportunity for General Electric to improve its business. In the PESTEL analysis, this political factor increases the demand for digital technologies, including some of the digital industrial technologies available from GE. This factor links to General Electric’s mission statement and vision statement, which push for the company’s goal of becoming the world’s premier digital industrial company.
Governmental support for the shift to renewable energy is a macro-environmental factor that affects GE’s operations as an aircraft engine manufacturer. This external factor is a threat because it facilitates the market to shift to transportation options involving renewable energy. General Electric depends on the growth of the aviation industry, which largely relies on non-renewable energy. However, in this PESTLE analysis case, the same political factor creates opportunities for GE’s strategic growth through innovation that integrates renewable energy.
Governmental openness to global trade threatens to increase competition in the company’s remote or macro-environment. Competitive rivalry is a major managerial issue in GE’s industry environment, as determined in the Five Forces analysis of General Electric Company. Nonetheless, this PESTEL analysis considers the same external factor as an opportunity for GE to expand its operations globally.
International governmental support for intellectual property protection is an opportunity for the company to grow with minimal business challenges pertaining to intellectual property rights. Overall, the political factors identified in this PESTLE analysis of General Electric Company show opportunities for growth and expansion of operations.
Economic Factors Important to GE
Economic conditions are external factors that influence General Electric Company’s revenues, business growth, and industry environment. This PESTLE analysis identifies the macro-environmental factors that represent how trends in economies affect the company. For example, the impact of global market changes on GE is considered. The following economic factors are pertinent to General Electric:
- Commercial aviation growth based on the economic growth of developing countries
- Increasing disposable incomes
- Increasing global trade
This PESTEL analysis considers the economic growth of developing countries as a macro-environmental factor that creates opportunities for General Electric to increase its revenues. For example, the company can improve its performance based on increasing demand for commercial aviation in Asian markets. On the other hand, this PESTEL analysis identifies increasing disposable incomes as an economic factor that promotes growth in General Electric’s business. This external factor relates to the increased capacity of customers to pay for aviation services involving GE products. In contrast, this PESTLE analysis of General Electric points to the adverse effects of increasing global trade. Such an external factor is a strategic management concern because it increases competitive rivalry in the company’s industry environments. This PESTLE analysis shows that economic factors in General Electric Company’s remote or macro-environment present opportunities for business development.
Social Factors Influencing GE’s Business Environment
Social factors reflect changes in people’s behaviors that affect General Electric Company’s business performance. For example, sociocultural trends influence customers’ support for technological products in the transportation industry pertinent to GE. This component of the PESTLE analysis identifies such external factors. General Electric must account for the following social factors:
- Increasing popularity of green lifestyles
- Increasing adoption of mobile technologies
- Increasing popular support for renewable energy use
The increasing popularity of green lifestyles brings opportunities in the remote or macro-environment considered in this PESTEL analysis of General Electric Company. For example, the company can improve its aircraft engines through innovation for higher fuel efficiency that supports this external factor. This PESTEL analysis also identifies the increasing adoption of mobile technologies as a macro-environmental factor that presents business opportunities for GE in technological innovation. This external factor increases demand for mobile-accessible online industrial services from General Electric for its clients and partners. Moreover, the increasing popular support for renewable energy threatens the company’s market in the aviation industry but creates opportunities for innovating products, such as GE jet engines. General Electric’s organizational culture (work culture) is partly a reflection of the influences of these sociocultural factors on employees’ decisions for achieving corporate goals. The social factors in this PESTLE analysis of General Electric Company indicate that the industry environment has opportunities for technological innovation and growth through appropriate strategic management.
Technological Factors in General Electric’s Business
Technological factors affect General Electric Company’s technological resources and the suitability of products in the industry environment. This PESTEL analysis considers the effects of technological trends on the remote or macro-environment of the business. For example, this external analysis evaluates factors that demonstrate technological issues in GE’s strategies in the aerospace industry. General Electric’s management must consider the following technological factors:
- Increasing digital technology adoption in industries
- Increasing adoption of online mobile services
- Increasing availability of renewable energy technology
Increasing digital technology adoption in all industries is an opportunity in General Electric’s industry environment. In the PESTLE analysis model, this technological factor makes industries more likely to pay for GE’s products. For example, digitalization in aviation organizations facilitates the company’s penetration of the market for digital aviation equipment and services. This factor relates to the business strengths in research and development identified in the SWOT analysis of General Electric Company. Also, the increasing adoption of online mobile services promotes mobile-accessible services in the market where GE operates. This macro-environmental factor creates an opportunity to provide mobile-accessible online industrial support services for General Electric’s target customers. The company can enhance its services to make them more mobile-accessible. In addition, the increasing availability of renewable energy technology is considered in this external analysis of General Electric. In the PESTEL analysis model, this external factor supports demand for renewable energy in the remote or macro-environment. Thus, GE can expect demand for innovative products that partially or fully integrate renewable energy solutions. Corresponding management approaches and strategies are needed to ensure that the business benefits from this external factor. Overall, this component of the PESTLE analysis shows opportunities for General Electric’s growth and expansion.
Ecological/Environmental Factors influencing GE
Ecological factors affect General Electric Company and its industry environment in terms of natural resources and conditions. This PESTEL analysis covers the external factors that show how the natural environment is a determinant of General Electric and the remote or macro-environment. For example, this external analysis considers the impact of resource scarcity on the company’s management and strategies in aircraft engine innovation. General Electric must develop strategies based on the following ecological factors:
- Limited oil reserves
- Increasing availability of recyclable materials
- Growing global energy consumption
Limited oil reserves are identified in this PESTEL analysis as a macro-environmental factor that can limit the long-term business performance of General Electric Company’s aircraft engine manufacturing. This threat pushes economies to search for alternatives and opens business opportunities for the long-term strategic innovation of GE aircraft engines. Also, this PESTLE analysis shows that the increasing availability of recyclable materials creates an ecological opportunity in the company’s remote or macro-environment. For example, aligning General Electric’s corporate social responsibility (CSR) and ESG strategy to this external factor can improve the brand image and the company’s business leadership in the industry environment. On the other hand, growing global energy consumption presents growth opportunities for GE’s business in terms of high fuel-efficiency that meets market conditions in the long term. The external factors in this component of the PESTEL analysis of General Electric Company push managers to implement strategies for business growth based on ecological opportunities.
Legal Factors in General Electric’s Industry Environment
This PESTLE analysis of General Electric evaluates how legal systems and factors affect the remote or macro-environment of the business. For example, the external analysis assesses laws that shape General Electric’s strategic direction in the aerospace industry. Such external factors impose limits and requirements on the company. The following legal factors are significant to General Electric:
- Widening reach of intellectual property protection laws
- Increasing complexity of waste disposal laws
- Increasing complexity of online product regulation
In this PESTLE analysis case, the widening reach of intellectual property laws is an external factor that increases legal protection for General Electric against intellectual property theft. This opportunity is significant because the company has one of the world’s largest patent portfolios. On the other hand, the increasing complexity of waste disposal laws is considered a threat and an opportunity in this PESTLE analysis of GE. This macro-environmental factor threatens General Electric by requiring costly changes in business operations. However, the same factor creates opportunities to improve the company’s sustainability. Furthermore, the PESTEL analysis model considers the increasing complexity of online product regulation as a threat and an opportunity relevant to GE and its remote or macro-environment. This external factor challenges General Electric’s use of online technologies for its industrial support services and communications. Nonetheless, GE’s strategic management can focus on operational enhancement to improve business competitiveness based on the same external factor. This PESTLE analysis indicates General Electric’s opportunities for strategic improvement by exploiting legal opportunities.
Summary & Recommendations – PESTLE/PESTEL Analysis of General Electric Company
The external factors in this PESTEL analysis create opportunities that General Electric can take to grow its business operations. GE has the opportunity to increase its international market penetration. Also, this external analysis points to the opportunity for technological innovation in the remote or macro-environment. General Electric’s innovation ensures business growth alongside the factor of the digitalization of industries. This PESTLE analysis shows that General Electric’s management must account for these opportunities in the industry environment.
This PESTEL analysis shows threats to General Electric Company’s business success. Increasing global trade intensifies competitive rivalry in GE’s industry environment. However, this PESTEL analysis also considers external factors presenting opportunities for innovating the company’s aircraft engines. These macro-environmental factors are threats and opportunities that General Electric’s strategic management can address. Based on this PESTLE analysis, recommendations for General Electric are as follows:
- GE can grow through business diversification based on the digitalization trend affecting industries. This recommendation exploits General Electric’s new growth opportunities based on industries’ technological advancement assessed in this PESTEL analysis.
- Increase GE’s level of penetration in the global market.
- Enhance General Electric’s competitive advantages and products through technological innovation that considers mobile support services and ecological trends.
References
- Bhatia, V., Sidharth, S., Khare, S. K., Ghorpade, S. C., Kumar, P., Kumar, A., & Agarwal, A. (2024). Intelligent manufacturing in aerospace: Integrating Industry 4.0 technologies for operational excellence and digital transformation. In Industry 4.0 Driven Manufacturing Technologies (pp. 389-434). Cham: Springer Nature Switzerland.
- Ezekari, M., Lhassan, I. A., Bazarouj, R., & Ouhnine, I. (2024). The impact of collaboration on supply chain performance in the aerospace industry: Exploring the mediating role of knowledge sharing. Multidisciplinary Science Journal, 6(12), 2024276-2024276.
- GE Aerospace History.
- GE Aerospace Safety and Quality.
- GE Aerospace Sustainability.
- General Electric Company Form 10-K.
- U.S. Department of Commerce – International Trade Administration – Aerospace Industry.