REESTABLISHMENT OF
CONSUMER AND INDUSTRY CONFIDENCE
BY MEANS OF MARKET AWARENESS AND
DISASTER RELIEF EFFORTS IN JAPAN
for
GENERAL ELECTRIC
ENERGY (GE)
Presented to
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:
- Worldwide
perception
of GE and
Nuclear
energy
after
the
Fukushima
incident.
- Potential
and
current
future
liability
to GE
- Potential
for
cancelled
sales
and
services
- Possibility
of
a
negative
impact
to
the
bottom
line
- 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
Worldwide perception of GE and
Nuclear Energy
Potential for current and future
liability to GE
Potential cancelled sales and
services
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 4th.
Solar and Wind turbines are the
top choices to replace existing power sources. Nuclear is ranked
4th.
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.
REFERENCES
Imagination
at
work.
(2011,
May
15).
Retrieved
from
www.ge.com
Ge
energy.
(2011, May 15). Retrieved from www.ge-energy.com
Ge
financial services.
(2011, May 15). Retrieved from
http://www.utcfssecurityproducts.eu/references/telecom/ge-energy.htm
Moody's
investors service.
(2011, March 29). Retrieved from
http://moodys.alacra.com/research/moodys-global-credit-research-Moody_s_says_GE_s_acquisition_of_90_of_Converteam_for_3_2_billion_has_no_impact_on_the_Aa2_rating-PR_216603_313000