General Electric Company (GE) continues to enhance its capabilities to improve business strengths and overcome organizational weaknesses, while addressing the opportunities and threats in the industry environment. A SWOT analysis of GE determines how the business stands in terms of its internal characteristics and external influences. The SWOT analysis model identifies and evaluates the internal strategic factors (strengths and weaknesses) and external strategic factors (opportunities and threats) relevant to managing the business in question. In this case of General Electric, such factors represent the various industries where the conglomerate operates. For example, the company considers the strategic factors in the electric lighting, energy, oil and gas, aviation/aerospace, transportation, and healthcare industries. Thus, the results of the SWOT analysis indicate a generalized perspective of GE and its diverse set of industry environments. As a major conglomerate in the global market, General Electric must continually evolve to ensure that its strengths are sufficient to address its weaknesses, as well as the threats and opportunities in the external business environment.
A SWOT analysis of General Electric Company provides managers with data on the strengths, weaknesses, opportunities, and threats that are significant in strategy formulation and implementation. For example, the analysis yields information on the degree of influence of these internal and external factors on GE. Thus, the company’s strategies must prioritize these factors according to their significance in the business. General Electric needs to apply strategies that suit the effects of such internal and external factors.
General Electric’s Strengths (Internal Strategic Factors)
Strengths are internal strategic factors that represent General Electric’s business capabilities. This component of the SWOT analysis assesses the company’s organizational abilities and potential. For example, GE’s research and development processes support its rapid development of products for the aviation market. General Electric’s managers use business strengths as basis for matching the organization’s capabilities with the requirements of strategies and tactics applied in various areas of operations. The aims are to have an accurate knowledge of what the firm can do, and to plan correspondingly. General Electric Company has the following strengths:
- Strong research and development processes
- Strong brand
- Diverse product portfolio
Strong research and development (R&D) processes are one of General Electric’s main competitive advantages. This strength enables the company to rapidly innovate and develop products that suit market demand. For example, GE’s Healthcare segment uses the company’s research and development processes to introduce technologically advanced equipment for healthcare professionals and organizations. On the other hand, General Electric’s strong brand contributes to the company’s ability to attract and retain customers. The GE brand is a success factor in the implementation of the differentiation generic competitive strategy, just as the brand is enhanced through research and development that integrates differentiation (Read: General Electric Company’s Generic Competitive Strategy and Intensive Growth Strategies). Another of the company’s main strengths is its diverse product portfolio. This internal strategic factor aligns with General Electric’s expansion of operations in various industries. Such diversification is a strength that strategically spreads risk and minimizes the conglomerate’s business vulnerability to industry-specific decline or stagnation. Moreover, diversification is a determinant of marketing management and General Electric’s marketing mix or 4Ps. The strengths identified in this component of the SWOT analysis of GE indicate business capabilities to continue growing and establishing new operations in other industries.
GE’s Weaknesses (Internal Strategic Factors)
Weaknesses are internal strategic factors that impose difficulties and limits based on the organizational characteristics of General Electric Company. This component of the SWOT analysis determines the most significant of such limits and difficulties to inform the company’s strategic management. For example, GE applies new strategies to reduce the impact of organizational weaknesses in penetrating the electric lighting market. The following weaknesses affect General Electric:
- Dependence on suppliers of raw materials
- Weak performance in Asian markets
- Weak performance of the GE Oil & Gas segment
Dependence on suppliers of raw materials imposes limits on General Electric’s performance. This internal strategic factor is a weakness that affects the company’s industrial operating segments in terms of business vulnerability to price and supply fluctuations of raw materials. For example, GE’s Aviation, Transportation, and Energy Connections & Lighting segments are vulnerable to such market dynamics. In addition, weak performance in Asian markets influences the conglomerate’s overall global performance. This weakness is partly due to General Electric’s management approach that traditionally focuses on the biggest markets, such as the United States. Furthermore, weak performance of the GE Oil & Gas segment is an internal strategic factor resulting from market conditions affecting the oil and gas industry. The company manages the negative effects of these changes through strategic emphasis on performance improvements in its other operating segments. The weaknesses shown in this component of the SWOT analysis of General Electric Company highlight the benefits of strategic changes in growing the business despite its limitations.
Opportunities for General Electric Company (External Strategic Factors)
Opportunities are external strategic factors that present potential growth and improvement in General Electric’s business. This component of the SWOT analysis identifies the most relevant opportunities in the company’s external business environment. These opportunities influence the success of strategies for sustaining General Electric’s growth. For example, the long-term success of GE’s Renewable Energy segment depends on strategies that exploit opportunities in the energy market. Management personnel must consider the following opportunities available to General Electric Company:
- Growth based on digital technology adoption in all industries
- Growth in the renewable energy market
- Growth in developing markets
The adoption of digital technologies in all industries presents opportunities for the further growth of General Electric. For example, the company can strategically grow by satisfying market demand for integrated digital technologies in the transportation industry. In addition, this external factor presents opportunities for GE to further diversify its businesses in other industries where digital industrial technologies are increasingly needed. These opportunities align with management aims to make the conglomerate the world’s “premier digital industrial company,” as highlighted in General Electric’s corporate vision and mission. On the other hand, the growth of the renewable energy market is an opportunity for the company to grow by expanding its Renewable Energy operating segment. Doing so can increase the segment’s financial significance relative to the other divisions or segments of the conglomerate (Read: General Electric’s Corporate Structure). Moreover, the growth of developing markets is an external strategic factor that corresponds to potential increases in the company’s revenues. For example, new strategies to penetrate Asian markets can grow GE’s overall revenues. The opportunities identified in this component of the SWOT Analysis indicates General Electric Company’s potential business growth through expansion and diversification of operations.
Threats Facing GE (External Strategic Factors)
Threats are external strategic factors that impose limits and challenges on General Electric’s business. This component of the SWOT analysis determines the kinds of threats that can decrease the company’s capacity. For example, the analysis shows growth barriers that GE’s managers must address through strategies that enhance business capabilities and competitiveness. The following threats are considered in the case of General Electric Company:
- Strong competition
- Disruption from online digital technologies
- Instability of the oil and gas industry
General Electric Company faces strong competition with a wide variety of companies, considering the diverse operations of the business. Strong competitive forces typically arise from the activities of aggressive, popular or highly innovative firms, such as 3M and Siemens (Read: Porter’s Five Forces Analysis of General Electric Company). General Electric’s management needs to continually develop strategies that effectively respond to the changing competitive landscape. Disruption from online digital technologies is another threat that affects GE. This threat involves new technological tools that alter market dynamics. For example, mobile apps enable patients’ access to health-related information, and influence the market for digital healthcare equipment. This threat can disrupt the industry and create opportunities for new competitors against General Electric. Moreover, the instability of the oil and gas industry threatens the company’s revenues, considering that the Oil and Gas segment is a major revenue generator for the business. Nonetheless, GE’s Renewable Energy segment benefits from this external strategic factor. The threats shown in this component of the SWOT analysis of General Electric Company require managers to develop strategies and solutions for business resilience.
Summary & Recommendations – SWOT Analysis of General Electric Company
Summary. The internal strategic factors identified in this SWOT analysis of General Electric reflect business capabilities that support long-term growth, given current industry conditions. For example, the company’s strong research and development processes are a time-tested strength that supports competitive advantage and leadership in various markets. However, GE’s weaknesses present barriers to achieving long-term dominance in the company’s industries of operations. For instance, the weak performance of the GE Oil and Gas segment is a barrier for which solutions are difficult to develop. Nonetheless, the company can address its weak performance in Asian markets. On the other hand, the external strategic factors identified in this SWOT analysis create conditions wherein General Electric can grow. For example, the company can grow through expanded operations in the renewable energy market, despite the instability of the oil and gas industry. Managers at General Electric must strategically take such opportunities in the external business environment to counteract the consequences of threats facing the conglomerate.
Recommendations. The strengths, weaknesses, opportunities, and threats (SWOT) in this case of General Electric emphasize the necessity of a strategic approach to grow and expand the business in the face of rapidly changing industry environments. Managers need to focus on growth and stability that capitalize on business strengths and opportunities, and develop solutions to protect GE from the effects of weaknesses and threats. Based on the internal and external strategic factors determined in this SWOT analysis, it is recommended that General Electric Company:
- Increase its degree of penetration in developing markets, especially Asian markets.
- Expand the operations of the GE Renewable Energy segment to take advantage of the growth the renewable energy market.
- Gradually diversify to include industries where digitization is significant.
References
- General Electric Company – Annual Report.
- General Electric Company – Form 10-K.
- General Electric Company – Our Strategy.
- Gupta, G., & Mishra, R. P. (2016). A SWOT analysis of reliability centered maintenance framework. Journal of Quality in Maintenance Engineering, 22(2), 130-145.
- Haile, M., & Krupka, J. (2016). Fuzzy Evaluation of SWOT Analysis. International Journal of Supply Chain Management, 5(3), 172-179.
- U.S. Department of Commerce – International Trade Administration – Energy Industry Spotlight – The Energy Industry in the United States.
- U.S. Department of Commerce – International Trade Administration – Aerospace Spotlight – The Aerospace Industry in the United States.