Profit and Shareholder Wealth: Ge and Tyco

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Today’s companies take many forms. One of the ways a company can ensure its success is to diversify its holdings. General Electric and Tyco International are two such companies that have done just that, although they have taken different approaches to achieve their growth. General Electric has taken a more conservative, methodical approach to the industries where its businesses are located. Tyco has taken a more aggressive approach by multiple acquisitions. These types of companies are called conglomerates. For the purpose of this paper the common shareholder’s equity, market capitalization and net profit margins for the last five years will be discussed.

General Electric has been contributing to our country and culture in one way or another since the beginning of the last century. The company was originally named the Edison General Electric Company, and when it merged with the Thomson-Houston Company in 1892 it was renamed the General Electric. What essentially began in a barn in 1900 with the first lab at GE has grown the company to a point where it is the stock to watch for 2008. Under Charles Steinmetz, GE’s chief engineer, it began years of innovation that still continues. Today, GE Global Research consists of 2,500 employees working in four state-of-the-art facilities: Niskayuna, New York (a few miles from the original barn), Bangalore, India (opened in September 2000), Shanghai, China (opened in October, 2003), and Munich, Germany (opened in June, 2004). (about GE, 2008)

GE's leaders through the years have built a diverse portfolio of leading businesses; a stream of powerful company-wide initiatives that drives growth and reduces cost; financial strength and Controllership that allow it to capitalize on opportunities through numerous cycles; and a set of common values that allows it to face any environment with confidence (about GE, 2008). GE’s growth strategy outlined in 2003 focuses on five key areas to create high-margin,...
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