REESTABLISHMENT OF CONSUMER AND INDUSTRY CONFIDENCE BY MEANS OF MARKET AWARENESS AND DISASTER RELIEF EFFORTS IN JAPAN for GENERAL ELECTRIC ENERGY

REESTABLISHMENT OF CONSUMER AND INDUSTRY CONFIDENCE
BY MEANS OF MARKET AWARENESS AND DISASTER RELIEF EFFORTS IN JAPAN
for
GENERAL ELECTRIC
ENERGY (GE)

Presented to

Heidi Diamond
Business Instructor
West Valley College

Prepared by

April Winchester
Atiq Rehman
Christine Ho
Martin Szczepaniak
Mohamed Salem

May 16, 2011

MEMORANDUM

The attached report discusses in depth the plan of action GE Energy anticipates to take in regards to increasing market awareness and effectively dealing with the Fukushima nuclear reactor incident. Our primary research was a survey conducted by the  GE higher management team, sent to friends, colleagues, coworkers, and faculty around the world.

The study was designed to answer key questions in the areas of market awareness and contingency planning, areas in which  GE needed input from its consumer market. The study sought to gain information in order to solve these key problems:

1. Worldwide perception of  GE and Nuclear energy after the Fukushima incident.
2. Potential and current future liability to GE
3. Potential for cancelled sales and services
4. Possibility of a negative impact to the bottom line
5. Lack of market awareness

EXECUTIVE SUMMARY

Purpose of the Report

This study was conducted in order to help GE function at its full potential. The study cornered certain weaknesses that GE had attained, analyzed them, and then created a host of solutions to circumvent any negative impacts to our company as a whole. Specifically, the study sought to answer how GE would deal with the Fukushima nuclear reactor incident, as well as how GE would maintain revenues, increase market awareness, and develop new, alternative energy solutions.

RECOMMENDATIONS FOR INCREASING MARKET AWARENESS, CONSUMER CONFIDENCE, AND DEALING WITH THE FUKUSHIMA INCIDENT

• Create a marketing blitz that will draw awareness to the GE Brand. Do this by partnering with high-profile companies, social networking, and pumping funds into the Marketing Development team.
• Reduce liability by using the Fukushima incident as an opportunity for more growth, awareness, and development.
• Solve the existing problem at Fukushima by providing alternative energy sources, consulting and engineering teams, disaster relief aid, and retrofitting all newer GE nuclear power plant models with the designs requested by survey participants.
• Continue to place corporate citizenship at the forefront of GE priorities.
• Work with nations wishing to transition to an alternative energy source by providing consult/engineering teams to assess the country’s current feasible alternative energy plans.
• Continue to invest in start-up companies with promising new ideas, thus fostering growth and innovation within its respective industries.
• Continue to be ethically minded, environmentally conscious, and personally aware of the wants and needs of all of GE’s customers.

GE ENERGY REESTABLISHMENT OF MARKET AWARENESS
AND CONSUMER CONFIDENCE

INTRODUCTION

Background

General Electric (GE) was founded in 1878 by Thomas Edison and is the only company on the Dow Jones Index to have survived through the ages from the original Dow Jones Industrial Average, established in 1896. Incorporated in Schenectedy, New York, and headquartered in Fairfield, Connecticut, General Electric is an American company, with branches and subsidiaries operating world-wide. GE operates in over 100 countries globally and has over 287,000 direct employees. GE operates through seven segments: Global Growth and Operations, Capital, Energy, Healthcare, Transportation, Home and Business solutions, and Aviation. Jeffrey Immelt currently heads General Electric as its CEO and as its current chairman of the board. Immelt replaced previous CEO, Jack Welch, in 2000. GE has had several slogans throughout the year, but its current one is, “Imagination at work.” GE intends to continue fostering growth, innovation, and change by leading its industry in top products and services to help solve some of the world’s toughest problems.

GE ISSUE INTRODUCTION

General Electric has recently been under fire following the nuclear reactor meltdown at Fukushima, following the devastation of the Japanese tsunami. GE stock is undervalued, consumer and industry confidence have fallen, and there is little to no market awareness of GE’s alternative energy solutions. The overarching end goal of the research and planning conducted is to turn a potential liability into an opportunity. GE plans to address all these problems throughout its entire company in areas such as Marketing, Human Resources, Operations, R&D, and Finance.

GE PROBLEM DEFINITION

The largest unexpected problem stems from the nuclear issues arising from the Japanese earthquake, tsunami, and subsequent nuclear reactor failure at the Fukushima plant. This chain of events affected GE in the following ways

1. Worldwide perception of GE and Nuclear Energy
2. Potential for current and future liability to GE
3. Potential cancelled sales and services
4. Strong possibility for a negative impact on the bottom line

GE has also had problems due to a lack of market awareness when it comes to its host of other energy and product solutions. We, as the head management of GE, have attempted to analyze and solve the problems listed above by conducting a survey.

SURVEY PURPOSE

The purpose of conducting our survey was to gauge our customer’s understanding of nuclear energy – including the recent failure of the Japanese reactors at Fukushima, usage in the United States, and future contingency/disaster plans that would make consumers feel safest. Other purposes included assessing consumer knowledge of current GE energy businesses and gathering critical statistics and opinions on viable energy solutions.

After gathering the data, we redefined our purpose to be: reducing liability, determining marketing and PR strategies to deal with the current crisis, assessing opportunities and advantages, and reviewing strategic investments.

Attached to this paper are the results and analyses of the survey performed. Below are key points that have been summarized to convey to the reader our evaluation of the survey results:

• The majority of survey participants in Northern California did not know that their homes were being powered by nuclear energy.
• The top three most well-known GE energy sources were Solar, Nuclear, and Wind. There were six other categories.
• Solar and Wind are considered the cleanest energy sources. Nuclear is ranked 4^th.
• Solar and Wind turbines are the top choices to replace existing power sources. Nuclear is ranked 4^th.
• Over 75% of survey respondents believed that the earthquake was the primary cause of the nuclear power plant failure in Fukushima.
• Survey participants believed contingency plans for new and upcoming reactors should include earthquake withstanding designs, backup generators, and a radiation protective shell.
• 26% of survey participants believed it took between 10 and 20 years before a plant no longer provides nuclear output.
• When asked which energy source is safest, survey participants ranked Solar and Wind to be the top contenders, while nuclear, coal power, and gas engines were ranked lowest.
• When asked about which energy source is most efficient, survey respondents stated that nuclear energy, solar power, and wind turbines were the most efficient. Coal, gas, and steam were ranked last.
  
  

With these results in mind, as well as the extensive research our team has done in conjunction with the survey, each department has come up with a basic host of solutions to combat the issues presented in this paper.

DISCUSSION: MARKETING AND SALES SOLUTION

Since the Fukushima incident, GE has experienced a large amount of negative press. Shareholders have become increasingly concerned about the negative impact this event has had on the company’s bottom line. The marketing and sales department have evaluated the situation and concluded that countries are now looking to move away from nuclear energy – though the new energy source they wish to replace nuclear with is unclear. Through our research, we have found that about 30% of Japan’s electricity comes from nuclear, and a rise to 50% was projected for the year 2030. Since the Fukushima incident, however, there has been talk of change, and the marketing and sales department will attempt to infiltrate Japan’s energy market and introduce its suite of products. Prior to this, however, a marketing blitz will ensue, and we will tap into the world’s increasing demand for solar, wind, and clean energy by broadcasting and advertising our green and clean energy solutions to them. It became clear from our survey. We anticipate that our target market will be countries looking to switch from nuclear to a safer alternative. A tentative launch of operations is scheduled for September of 2011.

DISCUSSION: RESEARCH AND DEVELOPMENT/OPERATIONS

GE is one of the largest third party providers of utility and power plant operation and maintenance services. Today we manage more than 22,000 megawatts at 62 sites in 24 countries. There are 36,000 experts working across our businesses worldwide at the intersection of technology and industry to solve some of the world’s most challenging problems. The fact that we have more than 2,300 patents outstanding clearly indicates that GE is invested in technological advancement for the future. In regards to the Fukushima nuclear power plant, it is important to know that GE has been in Japan with our partner, Hitachi, since the earthquake happened. We are mitigating damages by providing engineering and consulting teams in conjunction with our partner, TEPCO, in order to provide the Japanese with the energy assistance they need. We have also provided gas turbines and water generators to provide electricity for those who have lost power within the Fukushima area. GE is delivering its solutions today by modifying existing plants in accordance to our survey participants’ wishes – by installing an earthquake withstanding design on all GE power plants. All power plants will be equipped with shock absorbers able to withstand earthquakes with a magnitude up to 10.00. GE will also equip nuclear power plants with outer shells – which provide an extra measure of radiation safety in case of an accident. Backup power sources and extra cooling ponds will also be employed. Gas, oil, and coal turbines will act as redundant energy sources, able to pump energy back into the plant if need be. These redundant energy sources will be located away from the power plant, in case of a nuclear reactor failure. Safety teams will also be designated to every plant, to ensure that top of the line engineers are working swiftly and effectively at dealing with any emergency situations.

GE is also dedicated to alternative energy solutions for countries looking to move away from nuclear energy. It takes about 5-10 years to transition to a new energy source, and decades to completely shut down and disassemble a nuclear power plant. Our solutions today include providing countries with consulting teams that can assess the feasibility of switching from nuclear power plants to alternative energy plants. GE also has a host of other products and solutions that it has spent the last decade perfection, such as cleaner and higher efficiency coal power plants, gas power plants, water turbines with less environmental damage to fish and wildlife, and higher output solar, wind, and wave technologies. At this time, solar, wind, and energy alone are not enough to replace our existing energy sources, but our team of elite scientists and researchers are working around the clock to come up with a viable solution by 2012.

GE is constantly thinking of new ways to advance our energy technology. We hope that within the near future, the current projects we are undertaking will be made readily available to the general public. Some of these highly anticipated projects include:

• Investing in coal and oil power plants with lowered emissions.
• Upgrading solar farm and panel technologies
• Transferring electricity over land/water – creating a ‘smart grid’ where electricity is transferred digitally. How do we harvest the sun’s energy from an environment that receives lots of sunlight and transfer it to a place that does not?
• Investing in research that revolves around the reuse of spent nuclear rods, so that there is no longer a storage issue. The technology does exist where spent nuclear rods can be reused to produce more energy, but at this time it is not financially feasible nor advanced enough to equip on all nuclear reactors.
• Investing in wind and water technologies to increase their energy output for general consumption by the masses.
• Battery technology that stores and lasts longer, and that are also earth friendly and economical.
• Clean and safe nuclear power by means of nuclear fusion.
• Invest in the future image of GE by partnering with companies such as Google, Eli Lilly, Hitachi, and others.

DISCUSSION: HUMAN RESOURCES

There is no doubt that the Fukushima nuclear power plant failure has created low morale within GE and towards GE. Therefore, to bolster our spirit and combat against this negative press, GE has decided to invest even more money into a program it calls “Corporate Citizenship.” Corporate citizenship is a term used to describe a company’s role in, or responsibilities towards society and the environment. At the heart of GE’s approach lies a simple framework: make money, make it ethically, and make a difference. The actions that a company takes are significant, but its principles are what truly sets it apart from the rest. GE’s commitment to human rights extends to employees, suppliers, and the communities in which we conduct business. We hope that by investing in corporate citizenship, American and the rest of the world will see how much we strive to make the communities that we live in a better place. Our philanthropy extends from volunteerism all the way to disaster relief efforts.

HR will work with marketing, R&D, and operations to hire the appropriate experts to support the products and services that we are currently working on. Money is being invested to ensure that our workplaces are up to code and are safe, reliable, and ergonomic.

DISCUSSION: FINANCE

General Electric has continued to dominate its competition ever since being admitted into the Forbes’ Fortune 500 list. It consistently ranks in the upper tier of the both the Fortune 500 and Fortune 1000 list. GE Finance and Capital is the largest profit generator out of all of the GE segments. GE Capital experienced a setback in 2007, following the housing bubble burst. That led to uncertainty about the future of GE, the subsequent plummet of GE stock, and a net loss for GE. The market has been on an upturn, however, and GE capital is slowly starting to gain the momentum it needs to be back on top. GE foresees the best profit growth it has seen within the last decade to occur within the next few years. In 2010, the revenue for GE’s energy infrastructure was $37,514,000,000. Total revenues from all segments was $147,963,000,000.

After Fukushima, the outlook on nuclear seemed unclear, but as our sales have shown, the sheer volume for demand in energy alternatives such as solar, wind, and gas have increased explosively, bumping up GE’s revenue. In order to bolster morale, GE finance decided to invest over $225 million dollars into its communities and through various philanthropic organizations by way of its “Corporate Citizenship” program. In the last quarter alone, GE earned higher than expected profits, increasing dividends to 15 cents a share, and subsequently raising stock prices. Because we value technological advancement and desire to aid countries wishing to move away from nuclear, we have committed to increasing R&D’s budget by 20% within the next year. Current R&D budget sits at approximately 4.3 billion US dollars.

GE intends to increase the price of its undervalued stock by raising more awareness on its green energy solutions. A large part of GE’s plummet in stock prices was due to the general public not being aware of all the measures that GE has striven to take in producing a more sustainable future. GE Finance wants the world to know that it is at the forefront of energy, capital, medical, and aviation technologies. Sales are expected to increase tenfold within the next five years due to our PR and Marketing blitz. We also intend to increase brand awareness by tapping into social networking sites and interacting on a day to day basis with the everyday person. GE finance is largely in charge of cutting away inefficiencies and parts of its businesses that have been underperforming. Earlier this year, NBC Universal was sold to Comcast for a cool 13.8 billion dollars in cash.

GE finance is well known around the industry to be “the best tax-law firm in the world.” GE hires and invests in lobbyists and lawyers to ensure that it receives tax breaks. In 2010, GE paid 0 taxes to the US government, devoting that money that it would’ve paid to R&D, citizenship, and venture capitalism. GE is one of the largest financiers and angel investors for start-up companies in the energy, aviation, and medical fields. The reason for this is that GE would like to control a share of the new and upcoming technologies that could potentially be a major breakthrough in how the world operates. GE is an incubator for new services and solutions and intends to continue its practice of being an “angel investor.”

CONCLUSION AND RECOMMENDATIONS

GE management concludes with the following recommendations for bolstering consumer confidence and raising market awareness:

• Create a marketing blitz that will draw awareness to the GE Brand. Do this by partnering with high-profile companies, social networking, and pumping funds into the Marketing Development team.
• Reduce liability by using the Fukushima incident as an opportunity for more growth, awareness, and development.
• Solve the existing problem at Fukushima by providing alternative energy sources, consulting and engineering teams, disaster relief aid, and retrofitting all newer GE nuclear power plant models with the designs requested by survey participants.
• Continue to place corporate citizenship at the forefront of GE priorities.
• Work with nations wishing to transition to an alternative energy source by providing consult/engineering teams to assess the country’s current feasible alternative energy plans.
• Continue to invest in start-up companies with promising new ideas, thus fostering growth and innovation within its respective industries.
• Continue to be ethically minded, environmentally conscious, and personally aware of the wants and needs of all of GE’s customers.

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