This is exactly what the professor ask for
Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out 3 years and analysis Each year must have 2 columns: 1 with your strategy and 1 without your strategy.
Include Pro-Forma ratios for the first year out with deltas contrasting from the most current year?s ratios
I am attaching the case study this applies to
Running head: GENERAL ELECTRIC
1 General Electric
May 5, 2016 The General Electric is an American multinational company. The company operates in
many fields. As of 2015, It have business in following sectors: Appliances, Power and Water, Oil
and Gas, Energy Management, Aviation, Healthcare, Transportation and Capital which cater to General Electric 2 the needs of Home Appliances, Financial services, Medical devices, Life Sciences,
Pharmaceutical, Automotive, Software Development and Engineering industries. (CNN, 2016).
There are three classes of alternatives strategy:
1. Stability Strategy
2. Expansion Strategy
3. Retrenchment Strategy
The stability strategy took place while a firm doesn?t change its existing activities
in long time. The stable firms don?t look for changes in their strategy too frequent. The
firm who are not changing any strategy but doing well are using stability strategy.
Prerequisite for stability strategy:
o Company will exist in the same market and will deal in the same product and
o The strategy focuses on incremental improvement of functional performance.
Stability strategy does not mean ?Do nothing Strategy?. It involves the process of
keeping track of new development to ensure that strategy continues to make sense by
making the business stable. This strategy is typical for nature business organization. The features of stable strategy are as follows:
Safeguard of existing interest.
Safeguard of existing strength.
It focuses on self-objective.
Return on resources.
Advantages of Stability Strategy:
All decisions making through top management
It provides clear directions to all employees
It allows large organization to use economics of scale.
Disadvantages of Stability Strategy:
This lead to poor communication between departments.
Customers also affected due to lack of cooperation. Benefits to GE:
General electric is an established company. The stability strategy fits better for this
organization as they can go through a process that doesn?t require it to make any major changes. General Electric 3 It saves time and money and provide a better platform for employees that results in more
productivity. It provide safeguard to existing strategies that results in better outcome.
Sort of enhancement under which firm creates or procures new items that are
unique from the main business or innovation, however which may appealing to its present
In an expansion technique, the center point is improvement of current business.
This activity can be likened with dynamism, force, guarantee and accomplishment of
current existing business. An organization progressing is more dynamic and ambitious as
opposed to an enterprise on hold and stand. Since, on the off chance that you remain on
the ideal spot, you will be keep running over by another person on the off chance that you
don't move. Expansion concentrates on renewal of objective and headings, it quantifies
activities, and it gauges venture, investigation and enthusiasm for new item.
The reasons for Expansion are: For acquiring better market share. Optimum utilization of available resources.
Ways of Expansion Expansion through diversifications. Expansion through acquisition of and merger with other companies.
Advantages of Expansion Strategy: Economics of scale New customers
Disadvantages of Expansion Strategy: Capital requirements Spread too thin
Benefits of Expansion
Expansion takes the company to new path where there are lots of promises and
pitfalls. It provides different new sources to the organization that earns money and enable
its financial goal. The General Electric followed the same method. They increased the
size of their business. They have expanded it in many sectors that earned great financial General Electric 4 benefit for the company indeed. The income statement clearly reflects the changes on
which this company is moving on a same pace in the market while many companies are
facing loss in every steps.
It empowers the business to go into new products, new product line, new services
and new market. It involves substantially different kinds of skills, different kinds of
knowledge, and different kinds of technology. It helps the company to introduce new and
varieties of product to the customer that increase the sales as well as provide a better
platform. The general electric also follow the same rules and they have a diverse range of
products in the market.
A procedure utilized by organizations to decrease the differing qualities or the
general size of the operations of the organization. This system is frequently utilized as a
part of request to cut costs with the objective of turning into a more money related stable
business. The procedure includes pulling back from certain business sectors or the
cessation of offering certain items or administration so as to make an advantageous
Types of retrenchment: Turnaround
Liquidation Advantages of retrenchment strategy: Poor performance of firm Better opportunities in the environment
Disadvantages of retrenchment strategy:
Competition from government subsidized industries. General Electric 5 Benefits of Retrenchment
The general electric successfully applied that strategy to cut costs and earn different
benefits in the market. The financial statements indicates the expenses are being decreased
for General electric over the timeframe. It provided them more efficient way of increasing the
profit by removing unnecessary costs.
In an industry, company does want to gain a competitive advantage that will work against
rivalry and achieve profitability. Porter?s suggests three generic strategies for creating
defendable position in the long run and out forming competitors:
1) Cost Leadership
3) Focus or Niche Strategy
Cost Leadership In Cost Leadership Strategy, company has lowest per unit cost in the industry. Lowest per unit cost among rivals is highly competitive and return or profits will be low. Lowest cost among rivals where each firm enjoys pricing power and high profits. Cost leadership is independent of market structure. Cost leadership is a defendable strategy because: It defends the firm against powerful buyers. Buyers can down the price. General Electric 6 If defends the firm against powerful suppliers. It provides flexibility to increase in input
costs. Cost leadership strategy also provides entry barriers. Differentiation A firm is offering unique product. A firm is creating its own market. There are different approaches of differentiation which are as follows:
o Different design
o Brand image
o Number of features
o New Technology Differentiation is a defendable strategy because: It reduces competitive rivalry by creating brand loyalty. Uniqueness creates barriers and reduces substitutes. Higher margins provide deal with powerful suppliers. Differentiation also mitigates buyer power. Focus or Niche Strategy In this strategy, firms focus on a particular buyer group, product segment or geographical
markets. General Electric 7 When firms focus on low cost and differentiation at achieving their objectives industry
wide, the focus or niche strategy is built. Focus strategy is to achieve either a low cost advantage or differentiation. Benefits of Competitive Strategy:
It is the most useful strategy used by an organization to achieve good position in the
market. It enables the company to keep them step ahead. The observance of financial
documentation provide the success ratio for this company. It had enough growth over the time. It
indicates that competitors were unable to challenge them because of their competitive strategies
applied in the market. Income Statement Period Ending Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 General Electric Total Revenue
Cost of Revenue
Selling General and Administrative
Total Operating Expenses 8 117,386,000 117,184,000
- Operating Income or Loss
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Income Before Tax
Income Tax Expense
Net Income From Continuing Ops
Effect Of Accounting Changes
Other Items 11,649,000 12,987,000 11,970,000 11,649,000
- Net Income
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares (6,126,000) 15,233,000
(6,145,000) 15,233,000 13,057,000
13,057,000 Balance Sheet
Period Ending Assets
Cash And Cash Equivalents
Short Term Investments
Inventory Dec 31, 2015 Dec 31, 2014 70,483,000
17,689,000 Dec 31, 2013 88,555,000
17,325,000 General Electric Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Deferred Long Term Asset Charges
Short/Current Long Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Deferred Long Term Liability Charges
Misc Stocks Options Warrants
Redeemable Preferred Stock
Other Stockholder Equity
Total Stockholder Equity
Net Tangible Assets
Cash Flow 9 170,827,000
38,608,000 General Electric
Period Ending 10 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 General Electric Net Income
Operating Activities, Cash Flows Provided By or Used In
Adjustments To Net Income
Changes In Accounts Receivables
Changes In Liabilities
Changes In Inventories
Changes In Other Operating Activities
Total Cash Flow From Operating Activities
Investing Activities, Cash Flows Provided By or Used In
Other Cash flows from Investing Activities
Total Cash Flows From Investing Activities
Financing Activities, Cash Flows Provided By or Used In
Sale Purchase of Stock
Other Cash Flows from Financing Activities
Total Cash Flows From Financing Activities
Effect Of Exchange Rate Changes
Change In Cash and Cash Equivalents
(138,000) 11 15,233,000 13,057,000 4,953,000
11,258,000 General Electric 12 References
Financial Statements. (2016). Ge.com. Retrieved 5 May 2016, from http://www.ge.com/investorrelations/investor-services/personal-investing/financial-statements
GE - General Electric Company Profile - CNNMoney.com. (2016). Money.cnn.com. Retrieved 5
May 2016, from http://money.cnn.com/quote/profile/profile.html?symb=GE
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