As the World Goes, So Will Go General Electric
Big, Diversified- The Epitome of "Smart ... Business ... Leadership"
Apr 12, 2009
Each of its 130 years are full of good reasons why General Electric is the oldest company on the Dow Jones Industrial Average, and why it's the only company of the first 12 listed in 1896 that is still in business.
Today, GE is a huge conglomerate that manufactures products and provides services from a wide spectrum of companies that include aircraft engines, power generation, water processing, security technology, medical imaging, business and consumer financing, media content and industrial products, among others.
In 2008, more than half of GE’s revenues of $183 billion and earning of $18 billion came from outside of the United States, a testament to its successful global diversification. The company has locations in 130 countries with 320,000 employees.
Warren Buffett's Choice
Unlike many companies trammeled by the world financial crisis, venerable General Electric at the end of 2008 enjoyed a cash position of $48 billion and an enviable backlog of $172 billion in orders for infrastructure projects and services.
Little wonder Warren Buffett made a $3 billion investment in GE in October 2008, despite a global financial meltdown that was heading south sharply. While his investment has suffered a drubbing in the months since, based on his remarkably successful history Mr. Buffett no doubt is confident GE stock prices will return from the mid-20s that his Berkshire Hathaway Inc. paid, to the peak price in 2007 of almost $40.
Defined ‘Blue Chip’
It is not clear whether Thomas A. Edison, the genius inventor who founded GE in 1876, understood he was building a company that would come to define the term “Blue Chip.” But the basis for it’s solid rise and direction had been well ingrained by the time Edison stepped down in 1906 as head of the company.
In those first 30 years of the company’s life, Edison had also instilled a commitment to research and development that continues to this day. R&D is arguably as much at the heart of the company’s remarkable success as are its diversification geographically and across industry sectors.
For example, in the past 10 years, GE has invested more than $50 billion in product technology. In 2008 alone, the company invested $4.3 billion in research and development, resulting in 2,537 U.S. patent applications for that year alone. By the end of 2008, General Electric had amassed more than 67,500 patents in the U.S., and won two Nobel prizes.
Company with Character
Big companies and their bureaucracies rarely earn allocates for their flexibility, innovativeness or employee friendliness. Not General Electric.
In just the past three years, GE has been ranked among the top 10 or higher annually by business magazines such as: Barron’s, top five most respected companies in the world (third year in a row); Business Week, number 4 two years in a row among “World’s Most Innovative Companies”, and Fortune magazine's Top 10 “Most Admired Companies in the World”.
It's all about leadership. And General Electric has a remarkable record of growing, searching out and employing strategically exceptional leadership and all levels.
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