General Electric Company (GE) applies strategies that respond to the external factors relevant to the business, like the 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 is composed of various industry environments. The conglomerate has business operations in the energy, oil and gas, and aerospace/aviation industries. Thus, GE’s strategic management considers the macro-environmental factors relevant to these various industries. 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. Managers use these macro-environmental factors in implementing strategies to ensure the competitiveness and growth of GE’s business. The external analysis provides information that reflects General Electric’s current needs and the challenges it faces in the remote or macro-environment. For example, the external factors present managerial issues for the conglomerate in 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, like 3M and Siemens.
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, which includes the aviation industry environment. General Electric Company’s management must address the following political factors in strategic decision-making processes:
- Continuing governmental support for digitization of industries (opportunity)
- Continuing governmental support for the shift to renewable energy (threat and opportunity)
- Governmental openness to global trade (threat and opportunity)
- Increasing governmental support for intellectual property protection (opportunity)
Governmental support for digitization 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. On the other hand, governmental support for the shift to renewable energy is a macro-environmental factor that affects GE’s Renewable Energy and Oil & Gas operating segments. This external factor threatens General Electric’s Oil & Gas segment, which relies on the growth of the oil market. However, in this PESTLE analysis case, the same political factor creates opportunities for GE’s strategic growth in the renewable energy industry. Also, 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. Furthermore, governmental support for intellectual property protection is an opportunity for the conglomerate to grow with minimal business challenges pertaining to intellectual property rights. Thus, the political factors identified in this component of the 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 component of the PESTLE analysis identifies the macro-environmental factors that represent how trends in economies affect the company and its remote or macro-environment. For example, the impact of global market changes on GE is relevant in this external analysis. The following economic factors are pertinent to the strategic management of General Electric:
- Economic growth of developing countries (opportunity)
- Increasing disposable incomes (opportunity)
- Increasing global trade (threat)
This PESTEL analysis considers the economic growth of developing countries as a macro-environmental factor that creates an opportunity for General Electric to increase its revenues. For example, the company can improve its performance by increasing its operations 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 conglomerate’s industry environments. This component of the PESTLE analysis shows that economic factors in General Electric Company’s remote or macro-environment present opportunities for business development.
Social/Sociocultural Factors Influencing GE’s Business Environment
Social factors reflect changes in people’s behaviors that affect General Electric Company’s business performance. For example, the influence of sociocultural trends on customers’ support for technological products in the transportation industry is pertinent to this external analysis of GE. This component of the PESTLE analysis identifies such external factors in the company’s industry environment. Strategic formulation must respond accordingly. Managers at General Electric must account for the following sociocultural factors:
- Increasing popularity of green lifestyles (opportunity)
- Increasing adoption of mobile technologies (opportunity)
- Increasing popular support for renewable energy use (threat and opportunity)
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’s Renewable Energy operating segment benefits from the increased demand associated with 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. Moreover, the increasing popular support for renewable energy threatens the company’s oil and gas business but creates opportunities for the GE Renewable Energy operating segment. 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 component of the 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 component of the PESTEL analysis considers the effects of technological trends on the remote or macro-environment of businesses. For example, this external analysis evaluates external factors that demonstrate technological issues in GE’s strategies in the aerospace industry. General Electric’s managerial approaches must incorporate the following technological factors:
- Increasing digital technology adoption in industries (opportunity)
- Increasing adoption of online mobile services (opportunity)
- Increasing availability of renewable energy technology (opportunity)
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 industries where GE operates. This macro-environmental factor creates an opportunity to provide mobile-accessible online industrial 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 higher demand for its products in the renewable energy market. 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 macro-environmental factors affect General Electric Company and its industry environment in terms of natural resources. This component of the 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 the oil and gas industry. General Electric must develop strategies based on the following ecological factors:
- Limited oil reserves (threat and opportunity)
- Increasing availability of recyclable materials (opportunity)
- Growing global energy consumption (opportunity)
Limited oil reserves are identified in this PESTEL analysis as a macro-environmental factor that limits the business performance of General Electric Company’s Oil and Gas operating segment. This threat pushes economies to search for alternatives and opens business opportunities for the strategic expansion of GE’s Renewable Energy segment. 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 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 the renewable energy industry. 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
Legal factors influence the business performance of General Electric and relevant industry environments. This component of the PESTLE analysis evaluates how legal systems affect the remote or macro-environment of businesses. For example, the external analysis includes laws that shape General Electric’s strategic direction in the energy, transportation, and aviation industries. Such external factors impose limits and requirements on the company. The following legal factors are significant to General Electric’s management:
- Widening reach of intellectual property protection laws (opportunity)
- Increasing complexity of waste disposal laws (threat and opportunity)
- Increasing complexity of online product regulation (threat and opportunity)
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 an opportunity 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 consulting services. Nonetheless, GE’s strategic management can focus on operational enhancement to improve business competitiveness based on the same external factor. This component of the 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, General Electric has the opportunity to strategically expand its operations in the renewable energy market. Moreover, this external analysis points to the opportunity for technological innovation in the remote or macro-environment. Innovation ensures the conglomerate’s growth alongside the macro-environmental factor of the digitization 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 business success in General Electric Company’s remote or macro-environment. Increasing global trade intensifies competitive rivalry in the industry environment. In addition, the shift to renewable energy is a threat to GE’s oil and gas operations. However, this PESTEL analysis considers the same external factor as an opportunity for growing the company’s renewable energy operations. These macro-environmental factors are threats that General Electric’s strategic management can address while exploiting business opportunities. Based on the threats and opportunities identified in this PESTLE analysis, it is recommended that General Electric:
- Enhance and expand its operations in the renewable energy industry.
- Gradually diversify its operations based on the digitization trend affecting industries. This recommendation exploits General Electric’s new growth opportunities based on industries’ technological advancement.
- Increase its level of penetration in developing markets.
- Enhance competitive advantages and products through technological innovation that considers mobile technologies.
References
- GE Aerospace History.
- General Electric Company – Continuous Improvement.
- General Electric Company – Form 10-K.
- General Electric Company – Public Policy.
- Martinez-Contreras, R. M., Hernandez-Mora, N. C., Vargas-Leguizamon, Y. R., & Borja-Barrera, S. M. (2022). PESTEL Analysis and the Porter’s Five Forces: An Integrated Model of Strategic Sectors. In Handbook of Research on Organizational Sustainability in Turbulent Economies (pp. 292-314). IGI Global.
- U.S. Department of Commerce – International Trade Administration – Aerospace Industry.