Case Study GE Financial

Topics: General Electric, Companies based in Fairfield County, Connecticut, GE Capital Pages: 8 (1607 words) Published: October 9, 2014


Case Study Analysis on GE Capital
Virginia Intermont College
Case Study Analysis on GE Capital
Introduction
General Electric (GE) was formed in 1892 through a merger between Edison General Electric Company and Thomson-Houston Electric Company. GE started acquiring other companies within the area (Eckes, 2001). As a result, management saw this as a business opportunity leading to the formation of a company known as General Electric Contracts Corporation in 1932 (Eckes, 2001). The main purpose was to financially fund the company’s industrial business. The segment continued to grow introducing new products in the market and changing its name to General Electric Capital (GE Capital). GE Capital provides the following financial services: commercial Lending and leasing, and consumer financing. In the last few years, GE Capital has been experiencing difficulties due to the economic crisis. In order to evaluate the challenges, the use of strategic analysis is valuable. Therefore, this paper analyzes how economic crises has affected GE Capital and solutions to the challenges. Discussion

GE Capital started on a high note! At one point, the company was among the most successful companies in the world getting a triple AAA rating (Grubb and Lamb, 2001). However, in 2008, when there were financial crises, GE Capital began to fail. Stock prices were decreasing at an alarming rate and the company was having difficulties to finance its projects. Additionally, the company profits were decreasing at a worrying rate. The most alarming thing may be that despite being five years into the crisis, the company has yet to fully recover from the challenges (Grubb and Lamb, 2001). For this reason, many people are asking themselves what went wrong and why the company is taking too long to recover. In this case, the use of SWOT analysis and Porter’s five forces to evaluate what happened and find solutions. Strategic Analysis

SWOT Analysis
Strengths
GE Capital possesses significant name and global recognition. Since the organization was started, it has grown globally with a success rate for more than one hundred and seventeen years. As a result, the company has gained reputable recognition across the globe. This has made the company have global strength and competitiveness (Eckes, 2001). This is because it is extremely difficult for a new company to penetrate in the market. Additionally, GE Capital has excellent management and structure. The organization has been able to run smoothly despite the overwhelming number of employees and massive challenges in the market environment (Ferreira, Gamertsfelder, Hough, Rothenberg and Sherman, 2012).

Moreover, GE Capital has taken significance strides in improving the environment. The company is dedicated to conserving the environment by taking up environmental initiatives to protect the earth (Eckes, 2001). It is worth noting that the company has a diversified line of products and services. Therefore, they are able to satisfy the different needs of their diversified consumer across the globe (Eckes, 2001). For this reason, Weaknesses

GE Capital has a huge amount of debts in the organization. It is extremely difficult for an organization to run efficiently with such a large amount of debt. In addition, the new company policy of simplification has led to reduced total revenue. As a result of simplification, management has eliminated the marketing of many products in the company. Many people may argue it out as an excellent strategy but to others it is a sign of weakness. Many believe the products they deem to be unproductive are viable, it is only that GE Capital is afraid of taking risks and change (Ferreira, Gamertsfelder, Hough, Rothenberg and Sherman, 2012). Therefore, GE Capital has a potential threat due to not being flexible since they are not ready to take any risks and tackle the changes in the market. Opportunities

GE Capital has a significant amount of...

References: Eckes, G. (2001). The six sigma revolution: How General Electric and others turned process into profits. New York, NY: John Wiley.
Ferreira, S., Gamertsfelder, A., Hough, C., Rothenberg, S & Sherman, R., (2012). Corporate Analysis: General Electric. University of Pittsburgh. http://rebeccasherman.weebly.com/uploads/1/2/3/3/12338621/ge_corporate_analysis.pdf
Grubb, T. M. & Lamb, R. B. (2001). Capitalize on Merger Chaos: Six Ways to Profit from Your Competitors ' Consolidation and Your Own. New York, NY: Simon and Schuster.
Warner, A. G. (2010). Strategic analysis and choice: A structured approach. New York, NY: Business Expert Press.
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