GE PESTEL Analysis

General Electric Pestel/Pestle Analysis

GE is a global brand and a leader in the area of high technology. Its entire business is spread across eight main segments including power, aviation, energy, oil and gas and more. For GE, its quality and technology are important strengths that have enabled it to remain competitive in the global business world.  However, the business environment has  become highly challenging globally for apart from competition, bad regulatory and economic practices are making the environment challenging. Excellent technology, skilled human resources and an efficient organizational structure have enabled GE’s strong performance. Apart from its large business portfolio, the brand’s financial position, technology and smart business structure have helped it remain a leader. However, the number of challenges has kept growing and there are several in the global business industry. This is a PESTEL analysis of GE that evaluates the factors which are helping or hindering its business expansion and growth worldwide.

Political:

Political factors are now playing an increasingly important role in the global business environment. In several parts of the world and especially the Asian countries, government bodies and the legal framework are more aggressive about protecting the domestic companies. Moreover, the political environment of the various countries and markets affects the economic and business environment of the market. Political stability brings economic stability and also creates suitable conditions for business growth and innovation. Brands like GE have their supply and distribution chains located globally and political instability in any of the host countries has an adverse effect on the supply and distribution chain which in turn affects supply, production and sales. Political instability or a situation of political crisis has the potential to disrupt an entire market and several parts of the world are still ridden with internal strife and war like situation rendering them useless in terms of business or supply chain. Moreover, governments have become more aggressive with relation to oversight of international businesses. Severe fines imposed on various technological companies in EU, is a testimonial to the increased government intrusion. In the Asian markets too, governments are more aggressive about protecting local businesses. Local partnerships have become all the more important for the global businesses trying to enter these markets. However, due to the higher level of political stability these markets have proved profitable for the global advanced technology giants like GE.

 

Economic:  

Economic forces too have an important role to play in the business industry globally. The world has been through a recession followed by the rise of the gig economy. Now the world economy is back on track with the level of employment and income rising around the world. With employment and income rising, people are spending more. The changed economic scenario is good for global business brands like GE. Economy and economic conditions always affect people’s and business’ ability to buy. Good economic conditions lead to higher level to employment and higher disposable income. During the recession a very large number of people lost their jobs and not just people, but businesses were also forced to cut down costs of labor, raw materials etc. However, the scenario has changed and with it, people and businesses are now spending more on technology and technology products. In some of the areas like power and aviation, GE saw a sharp rise in performance which was because of better economic conditions. The performance of global economy is better and that has led to higher sales and revenue for the global brands. If the sales of the company have increased in the Asia-Pacific, then it is because they are some of the fastest growing economies of the world.

 

Social:

 

This century has seen some major social changes happening. After the wave of globalization which made more cultural exchange possible, the growth of the middle class and the  entry of millenials into the workforce have also affected businesses. While at first, the businesses have grown more culturally sensitive trying to cater to the needs of various cultures in different ways, sustainability and other similar trends have also affected them. The rise of the millenials, increased purchasing power of the middle class and the increased value of sustainability are three important social changes that have affected businesses globally. There are other factors too like growing use of social media, ecommerce and increased focus on customer convenience that have affected businesses. Social factors have acquired huge importance in the 21^st century. Businesses are focusing on these factors in their marketing and production strategies so as to connect better with the customers. Socio-cultural factors have taken a place of importance in terms of marketing too where brands have different strategies to suit different markets. Sustainability and CSR have also become important factors in this era since customers are willing to buy from the businesses that are investing in their social image and sustainability.  Such businesses enjoy higher popularity and customer loyalty. GE also invests heavily in innovation and R&D to make products that have low environmental impact. Apart from that, it has formulated policies to engage all the important stakeholders in sustainability.

Technological:

Technological factors are now invariably one of the most important factors affecting growth and expansion of the international businesses in this era. The rise of new technologies has established new channels for the marketing and growth of business brands. GE invests a huge amount annually in Research and development which is just for the sake of technological innovation so as to make better products and remain competitive. Technology has also added to the existing level of competition as brands have grown more aggressive about marketing, sales and investment in innovative products and technology.  Social media has  helped these technology brands market themselves better and strike deeper customer connections. GE is a brand dealing in advanced technology in areas like power and aviation and so it has to continuously invest in disruptive innovation to remain ahead of its competitors.

Environmental:

Environmental factors are now increasingly important in the context of business.  Not just businesses but their supply chains also have to focus on sustainability and environmental protection. In the past, several major brands of the world have come under fire because of their environmentally damaging supply chain practices. GE is investing in products and practices that are more environment friendly. It is also focusing on sustainability down its supply chain and has made strict rules for its suppliers to follow. Sustainability is not just a trend but is going to last because apart from the increased environmental consciousness of the customers, it has also several benefits for the businesses that enjoy increased recognition and popularity. Growing environmental consciousness around the world is not just limited to businesses and customers, but the governments are also making laws that are more environment friendly.  So, overall you can estimate the importance of environmental factors from this fact that international brands are making it one of their top priorities in every industry. Its community development programs are a part of its increased focus on sustainability. In its business operations too, the brand is using programs like Ecomagination and Healthymagination to improve resource productivity and to decrease its environmental impact.

Legal:

Growth of technology and increased globalization has made governments focus more on legal oversight and control of businesses. Governments have grown aggressive about legal control and the rise of the gig economy has also invited several legal complications. GE has also faced several legal complications in the global environment in the past. Legal issues also escalate the cost of operations for businesses. Apart from maintaining a compliance team, they also add to costs in other forms. From labor to environment and quality related laws, there are several laws to be adhered to and all these factors have made law an important force that can hinder the growth of any business especially in the international environment. Recently, GE’s legal challenges have grown. SEC is investigating its accounting tactics and its insurance losses. This legal challenge could very well cost the international technology giant billions of dollars in fines.

Sources:

https://www.ge.com/in/ge-td-india-limited/CSR

https://money.cnn.com/2018/02/26/investing/ge-legal-problems/index.html