April 10, 2012 Business 100, AB2 Investors University of the Fraser Valley 33844 King Road Abbotsford,

BC V2S 7M8

Dear Business 100 - AB2 Investors, We have replied to your request in regards to the General Electric report. We have looked over their latest activity, and have provided an analysis. Benchmark Investments has recorded what we have found in the following report, and are confident that it will provide you with a firm understanding of how you should invest with GE. What has been included in the report is in depths look into a few major areas. We have looked at how the company is situated now, and where they are going in the future. We have also looked at some critical issues that GE is facing, as well as how they will impact the present and future GE stocks. We also have their vision statement assessed, along with their values. We have looked at their marketing strategies, as well as some of their products, and how they pertain to GE. A look into their financial performance has also been completed, which covers their last 3 years. We have taken a look at their strategic direction, and how they plan to move forward, as well as how the company is organized. Finally, we provided our recommendation, which should give you a clear understanding on your investment strategy. It is our desire that this report assists you in making your decision on whether General Electric is a company worthy of your investment. If you need any more information, we will provide it for you.

Sincerely, Benchmark Consulting

Benchmark Consulting | General Electric

2012 INVESTOR ANALYSIS of the General Electric Company

Compiled and Written by Benchmark Consulting Kim Milnes BUS 100 AB2 University of the Fraser Valley Praneet Batwar Alex Chila Sneha Nambiar

Benchmark Consulting | General Electric

Executive Summary This report was created to cater to your need, for an indepth and detailed analysis of the General Electric Company. Using our collective knowledge and expertise, we here at Benchmark Investments have generated this report using accurate information amassed from reliable sources from the Internet and the research databases of the University of the Fraser Valley. Based in Connecticut, G.E is a diverse conglomerate running its operations in over 100 countries and employing over 300,000 employees. G.E operates its business through 4 major segments namely, GE Energy, GE Technology and Infrastructure, GE Capital and GE Home and Business Solutions. In the recent years G.E has also bought a 49% stake with NBC, thus making G.E a major player in the media sector. G.E is ranked as the 6th largest firm in the U.S along with the 14th most profitable firm. As a multi-billion dollar company with a rich history G.E has a strong global presence. It is also known for their innovation and R and D. Adding to its strengths are the wide range of products and services that G.E has to offer. Contrasting to the positive points of G.E, they have an immense amount of debt, and their image is constantly hurt by legal and internal problems. They also have to rely on third parties for their raw materials, which makes them dependent on external parties. Economic growth of countries like India and China are major opportunities rising on G.Es horizon. The growth in Indias natural gas production can widen the scope for G.Es development in India. The rising health care demand in the US and increasing demand for commercial airplanes will prove to be great opportunities. Due to the ever increasing environmental concern, G.E will have to make major changes to the way they run their business. This can cost a lot of capital and in some cases make it almost impossible to do business in certain areas. Constant and aggressive competition from industry leaders such as Phillips and Rolls-Royce threaten G.Es current market share. Electronic security compromise is also a major threat to G.Es business. Jobs which were previously outsourced to Mexico and China will now have to be brought back to the US as per the government regulations. This can cost a lot of money to G.E as labour is relatively expensive in the US. G.E lost its AAA rating in 2009, thus reducing its reputation in the market. Some of their major goals include creating a valuable portfolio of businesses, sustaining operating excellence and financial discipline, build an excellent investor base. Healthymagination and Ecomagination is one of their primary strategies. Apart from these G.E is now focusing on the ever developing markets such as India and China. They now are also focusing more on crude oil as the demand for oil is ever increasing. G.E operates using a functional structure. This can be seen as the company is divided into 7 major divisions, Global Growth & Operations, Energy, Capital, Home & Business Solutions, Healthcare, Aviation, and Transportation. There are some very influential people on the board of G.E. Andrea Jung, CEO of Avon Beauty products and Dr. Susan Hockfield, president of MIT are some of the independent directors. The board has 6 different committees which have their own key roles: Audit Committee, Nominating and Corporate Governance Committee, Management Development and Compensation Committee, Public Responsibilities Committee, and Risk Committee. Jeffrey Immelt is the CEO of G.E.

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Under Immelts leadership GE did considerably well during the recession and is now setting its sights on global markets. Adapting the Lateral or Conglomerate Strategy has proved to be a great move in GEs marketing strategy. Before this, GE had no solid marketing strategy; they relied on the companys legacy to sell their products and services. GE boasts an expansive range of products under its multiple segments. By observing their financial statements it is clear that G.E is doing well financially. Their net profit was relatively higher in comparison to the past two years. Their stock price is stable and their current ratio is 2.503 which is way above the recommended current ratio of 2:1. In contrast to United Technologies, G.Es stock is much more steady, G.Es current ratio is higher. The only negative aspect is the EPS, which is very low as compared to United Technologies. G.E has its revenues pouring in from all its seven major sectors, of which Energy and Oil is the major share. In 2010, they received 40 billion dollars long term debt. General Electric is a strong and stable company with a bright future. We at Benchmark Consulting have come this conclusion using factors such as G.Es expansion into China, strong leadership skills shown by Jeffrey Immelt, Steady and stable stock value and the positive current ratio. Apart from our own expertise, we have researched and studied other stock analysts to support our verdict. Globe and Mail, Yahoo! Finance and CNN Money recommend buying the stock which is priced at $19.20 and listen on the NYSE. Our recommendation is to buy the GE stock, if you are looking at a low risk long term investment only, looking at the steady and stable growth of GE. If you are looking at a short term high risk investment then GE isnt the right choice.

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INDEX
1. Introduction ................ 7 2. Company Overview .... 8 3. Company Situation
3.1 SWOT Analysis ................................ 9 3.2 Critical Issues ... 11 3.3 Major Implications ... 11

4. Strategic Direction
4.1 Mission, Vision, Value Statement . 12 4.2 Long Term Objectives ............................... 13 4.3 Company Strategy ... 13 4.4 Strategy Assessment .. 14

5. Organizational Structure
5.1 Organizational Chart ...... 15 5.2 Board of Directors .. 15 5.3 CEO Profile..... 16 5.4 Compensation Comparison ... . 17

6. Marketing Strategy
6.1 Overall Marketing Strategy 18 6.2 List of Products .. 18 6.2 Product Analysis . 18

7. Financial Performance
7.1 Three Year Trend Analysis 21 7.2 Comparative Financial Analysis in 2011 21 7.3 Sources of Capital ......... 22

8. Company Outlook
8.1 Our Forecast ........... 23 8.2 Analysts Forecast .......... 23 9. Recommendation .. 25

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APPENDIX AND FIGURES Appendices

Appendix A Organizational Chart .. 26 Appendix B Board of Directors ...... 26 Appendix C Product Lines.. 27 Appendix D GE and UTX Five Year Stock Trend..... 27

Figures
Figure 1: The GE Company Structure 8 Figure 2: SWOT Analysis .. 9 Figure 3: CEO Compensation Comparison ... 17 Figure 4: Three Year Financial Comparison for GE 21 Figure 6: GE and UTX Financial Comparison............................................................................... 21 Figure 7: CNN Money GE Stock Forecast .... 24 References .. 28

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1. Introduction
The following report answers to the need of the investors to have an understanding of the General Electric Company. This report has been prepared to provide a thorough analysis of the General Electric Company, which will help in deciding whether or not GE is a company worth investing in.

The valuable information that is provided in this report has been collected from General Electric's corporate website, along with other reliable sources from the internet and databases, combined with our collective knowledge.

You will find that our report covers the company situation, which is an assessment of the current situation of General Electric, along with a SWOT analysis and report. The strategic direction of GE is discussed next, which analyzes the strategies that GE employs, along with long term objectives, their mission statement, and vision. The organizational structure will cover the board of governors, and how the company is organized, including information on the CEO. GE's marketing strategy will analyze some of their products and how they are marketed, along with product lines. There is a financial performance analysis, which will give an understanding of how General Electric is doing financially over the last 3 years, and some comparisons to other companies. Finally, there is the company outlook, which gives an idea of what is to come with GE, and is then followed by our recommendation.

We here at the Benchmark Consulting understand the value and the importance of the investors need. Therefore keeping in mind the hard earned money of the investors we have made an unbiased suggestion which is reflected in the recommendation.

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2. Company Overview
The General Electric Company or G.E as it is famously known is an American multinational conglomerate based in Connecticut, USA. Holding the third rank on Forbes Global 2000 list, this industrial giant has branched out in energy, financial, infrastructure and the consumer sectors (Forbes.com 2012, Better-Trades.com 2011).

G.E is a diversified company operating in more than 100 countries and employing over 300,000 employees. It is headquartered at Fairfield Connecticut and has over 160 global locations. The General Electric Company is divided into four main divisions namely GE Energy, GE Technology Infrastructure, GE Capital and GE Home and Business Solutions (GE.com 2012).

General Electric

GE Energy

Technology Infrastructure

GE Capital

Home and Business Solutions Appliances Intelligent Platforms

Energy Services Oil & Gas Power & Water

Aviation Healthcare Transportation

GE Capital Aviation Services GE Capital Real Estate GE Money.

Figure 1: The G.E Company Structure (Source: General Electric Corporate Website, 2012) G.E has a very consumer and environment oriented business plans. Their HEALTHYMAGINATION and ECOMAGINATION are a result of that. HEALTHYMAGINATION if put in simple terms is just better health for more people. ECOMAGINATION is G.Es commitment to the world to find better solutions for environmental problems of tomorrow (GE.com 2012). Thomas Edison founded the Edison General Electric company in 1890 by merging all of his businesses together. Later in 1892 they merged with the Thomas-Houston Company to form the General Electric Company (GE.com). Over the years the General Electric Company become a household name serving consumers with small

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appliances and electrical lighting. The company grew rapidly as they kept exploring and innovating. Apart from serving in the four major divisions above G.E have a 49% holding in NBC Universal (Yahoofinance.com). That means that G.E also has a strong holding in the media sector too. Jeffrey Immelt is the current chairman and CEO of the General Electric Company. A Harvard graduate, Immelt was elected as the CEO by the board of directors in the year 2001. Immelt was named CEO of the Year three times since he was appointed as CEO. In his tenure the company was named "America's Most Admired Company" in a poll conducted by Forbes and one of "The World's Most Respected Companies" in a poll by Financial Times (Time.com 2010). G.E is ranked as the 6th largest firm in the US along with being the 14th most profitable firm. In 2010 G.E saw revenue of 150.21 Billion US Dollars with a net profit of 12.163 Billion US Dollars. G.E managed to get a hefty profit even in tough financial times (Yahoo-finance.com 2012). The stock ticker for General Electric is GE. Its current price is $19.20 and is listed on the NYSE.

3. Company Situation
3.1 SWOT Analysis: Strengths Vast capabilities in research and development Recognized industry wide Growth market presence is strong Wide variety of products and services Opportunities India's natural gas supply Commercial airplane demand is rising Outlook of US healthcare is bright Russian energy and healthcare Threats IT security risks are increasing Fierce competition Political/Economical risks Government regulations Weaknesses Large amount of debt Corporate image hurt by legal problems Raw materials comes from third parties

Figure 2: SWOT Analysis for G.E (Source: General Electric Corporate Website, 2012, Data Monitor 2011)

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Strengths

General Electric is a company that is known throughout the industry to provide a wide variety of quality products, from jet engines to home appliances. GE is regarded as an industry standard for a large amount of products. They have many patents resulting from new innovations by GE, which include some aspects of their wind turbines. GE also has a strong presence in markets that are experiencing growth, namely wind turbines. Many countries around the world have started to harness wind power, and GE is a front runner for providing those turbines.

Weaknesses

GE has to depend on other companies for the raw materials to make their products. This can be a problem, because if the company that is supplying their metal for making jet engines, they wont be able to produce at the same rate they are used to. GE also is being hindered by legal proceedings. For example, they were fined $50 million by the SEC(Securities and Exchange Commission) for breaking accounting laws in 2 different cases. (David Henry, 2009). GE also has a high debt burden, which is at $453.44 Billion (Yahoo Finance, 2012). This is a significant debt, considering Canadas debt is $580 Billion. This could make for problems down the road, but they do have a wide variety of products, and a considerable income.

Opportunities

With the US having such a high demand for healthcare, there will be a high market for newer technology in hospitals and clinics, which can be provided by GE. GE has a large share of the medical equipment market and could take advantage of the situation in the US. There is a growing demand for commercial airplanes around the world, for which GE makes the jet engines. GE engines are very popular, and with the growing market for them, this could make them a considerable amount of money. With the growth in India of its natural gas supply, GE could set up factories that use natural gas to run equipment, or make equipment for other factories in India that run off natural gas. This could be a very big opportunity, especially if the market in India trends more towards using natural gas over other conventional methods.

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Threats

With everyone concerned about environmental impact, GE may have to make modifications to factories and equipment in some countries in order to follow certain regulations. This could cost money, or even make business impossible in some places. There is a lot of competition in the industry, from jet engines to appliances, GE has to compete with companies like Rolls-Royce and Phillips, respectively, which hold a large part of the industry. If other companies can improve their product or make them cheaper, GE will have to adapt or they will surrender market shares. With the growth of the internet over the last few years, it is much easier for someone to hack into a system and steal information or cause havoc. A large amount of money must be spent in order to make networks secure, in order to avoid security threats.

3.2 Critical Issues

Economic instability could become a large concern for GE in the coming years. General Electric's CEO stated that "We have entered a new economic era," (Malone, S. 2012) which is referring to the current economic instability. In the past, they had outsourced a lot of their work to other companies in order to save on labour cost and capitalize on cheap materials, but with this new economic era, they are shifting towards reducing outsourcing in order to save money and speed up the manufacturing process.

One issue that could become a very big problem for the CEO is his move to bring hundreds of jobs back to the US, from where it was previously outsourced to Mexico and China. (Crooks, Ed. 2012). Jeff Immelt put $1 billion into the groups domestic appliances business is as risk an investment as we have ever made. (Crooks, Ed. 2012). If this is the wrong decision and ends up failing, the blame will land on Immelt, and it could cost the CEO his job. GE lost its AAA credit rating in 2009, which is coveted in the financial industry, on its long term debt. (Economist, 2009). It was recently proved in court that a GE engine was at fault for a helicopter crash that claimed the lives of 9 people. The helicopter was taking forest firefighters from one area to another when the engine had a malfunction and crashed. (Duara, Nigel. 2012).

3.3 Major Implications

The decision to move jobs back to the US could have a large impact on the future of GE. By taking jobs

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out of Mexico and China, labour will cost more, which could drive up the price of some of their products. Also, if Immelts plan backfires and costs him his job, there could be a leadership problem, and there is no telling how the replacement CEO would be, or how it would affect their stocks. With its credit rating no longer an AAA, GE may no longer get the industry recognition it was used to. It may also have a harder time repaying its debts, as the AAA standard was applied to their long term debt. This GE engine that was at fault for the helicopter crash could have some negative backlash on the reputation of GEs engines. The crash was back in 2008, but the court proceedings are still going on in 2012. The recent court ruling that it was the fault of a GE engine for the crash may affect future sales of their engines. GE is arguing that the helicopter was overweight, but if that does not get accepted by the courts, GE may have a very serious problem on their hands.

4. Strategic Direction
4.1 Vision Statement Since GE is a conglomerate of six different divisions, it does not have a specific vision statement. But the amalgamated form of the vision statement isGE works on the things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. (ge.com, 2012) The GE Companys vision statement clearly states that the main objective of the organization is to discover answers to provide energy, health, transport and finance morally thus increasing the companys profits. It believes in striving hard and moving forward by solving challenges. The companys goal is to dynamically make a difference and succeed by creating, empowering, progressing and finding solutions. GE certainly is confident and faithful about action. From the above statements, GE does seem to be living up to their principles. Mission Statement We have a relentless drive to invent things that matter: innovations that build, power, move and help cure the world. We make things that very few in the world can, but that everyone needs. This is a source of pride. To our employees and customers, it denes GE. (ge.com, 2012) Value Statement These values have been acquired from the General Electric corporate website, portrays the values which

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makes the GE Company stand out and unique from other multinational giants. Healthymagination o Healthymagination is our commitment to making sustainable health a reality through innovative technology and services focused on addressing three critical needs: lowering costs, touching more lives and improving quality. Ecomagination o Ecomagination puts into practice GE's belief that financial and environmental performance can work together to drive company growth while taking on some of the world's toughest challenges. (Source: General Electric Company, 2012)

4.2 Long term objectives GE has many long term objectives. The goals under the CEO are as follows: Sustain operating excellence and financial discipline Create a more valuable portfolio of businesses Drive organic revenue growth at 2 to 3 times gross domestic product Retain an excellent team with a strong culture Manage the companys risk and reputation Build an excellent investor base Lead the Board activities

(Source: ge.com, 2008) 4.3 Company Strategies In order to expand its products and services on an international level, GE has signed an international strategy alliance with Russian Technologies (Rostekhnologii) and Inter RAO UES to get attractive deals and upgrades to the countrys healthcare and energy systems. In China, GE is expanding healthcare facilities with dedicated products in the market. (ge.com, 2008). GEs growth strategy, they continue, is based on five pillars: technological leadership, services acceleration, enduring customer relationships, resource allocation and globalization.(MITSloan, 2012). GE began targeting technology skills as a key development

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requirement during its annual organizational and individual review process, which GE calls Session C. This is how GE ensures that their growth is always accelerating. GE's industrial divisions posted double-digit revenue gains in India, China and Russia, as well as in the regions of Southeast Asia, Africa and Latin America, the company said. Australia and Canada -- developed economies with strong currencies and lots of commodities to export -also bought plenty of GE's industrial wares.(cbsnews, 2011) Inculcating Healthymagination and Ecomagination values in their business is one of the prime strategies. In order to focus and gain more in the energy sector, the company has also started to invest in the lucrative crude oil business. With the prices of the crude oil at record highs and the demand for the crude oil growing steadily, it is surely a best strategy taken up by the General Electric Company, to make profits under the current situations. Committing and fulfilling new projects and gearing up for the future have made the staff and employees of the company more optimistic. Thus GE has to reorganize its strategies after the financial crisis. (Investmentsand-acquisitions.com, 2012). 4.4 Strategy Assessment General Electrics strategies, as listed above were all created in order to help achieve the goal of being the worlds biggest and the leading providers of technology and innovation. GE strategy is a set of actions developed to gain long-term goals. Goals focus on vital changes. These strategies mostly depend on technical leadership, services, customer focus, globalization and growth. The result of these strategies is to create high-margin, capital efficient growth and high returns. This will also help achieve organic growth rate at twice the GDP. Technical leadership provides high-level margin products, help win competitive battles and create new markets. GEs alliance with international markets will increase its value in the market as well as its profits and revenues. Despite economic crisis, GEs revamped strategies, the effect on GE will be modest as the Chinese economy will continue to grow at a healthy pace. (Forbes, 2012). Also the Russian alliance will help influence the growth of GE steadily. Demand for commercial aviation and energy will increase, thus helping GEs technological infrastructure businesses. GEs strategic planning objective is to increase its economies and at the same time to apply its advantages concerning company's clients. Inculcating values of Healthymagination and Ecomagination will vastly help the company where economy and environment is concerned. This strategic planning is necessary as it helps to create good decisions and affect the future of GE Company. It becomes obvious that effective strategic planning is a constant environmental analysis

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for applying the changes in the environment and turning them into the opportunities. It allows GE Company to manage or avoid undesirable environment effects. These strategies and goals will definitely help GE be a world-wide technological and multinational conglomerate.

5. Organizational Structure
5.1 Organizational Chart GE is organized in a functional structure. Refer to Appendix A for the organizational chart. This structure works best for GE because they have so many different businesses. They have 7 separate divisions in the company, which are: Global Growth & Operations, Energy, Capital, Home & Business Solutions, Healthcare, Aviation, and Transportation. The functional structure is more suitable than geographic, because with a functional structure, each major area of business they are involved with has their own director.

Some incentives that are offered are competitive benefits packages for the employees that help them with their health and dental care. A worker can feel more at ease knowing that medical bills and dental work won't come all out of pocket. They even offered an incentive program to stop smoking, and now those who smoke must pay an extra $650 for their health insurance. They provide opportunities to enhance their skills and to move up in the company. 5.2 Board of Directors There are 16 members on the board of directors (Appendix B). The board appears to have a very good mix of skills and background. Many of the board members have doctorates, while others have been successful in business. More than two-thirds of the board members are independent. There are some very influential people on the board of G.E. Some of them are Douglas A. Warner III (Former Chairman of the Board, J.P. Morgan Chase & Co), Andrea Jung (CEO, Avon Beauty Products) and Dr. Susan Hockfield (President, MIT)(GE.com 2012).

The board has 5 committees: Audit Committee, Nominating and Corporate Governance Committee, Management Development and Compensation Committee, Public Responsibilities Committee, and Risk Committee. The Audit Committee contributes financial oversight to make sure that the company's financial records are in order, and that they are complying with all the legal and regulatory obligations. The Management Development and Compensation Committee review and approve the CEO and other

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senior executive benefits and compensations. The Nominating and Corporate Governance Committee decides and elects the Directors. This committee is also responsible for the benefits and the compensation of the directors. The Public Responsibilities Committee as the name suggests looks over the corporate social responsibilities of the company. The newest committee that was formed was the Risk Committee. This committee specializes in overseeing the material risks of the company including strategic, operational and reputational risks. It is also responsible for overseeing and reducing these risks. 5.3 CEO Profile The Chief Executive Officer of General Electric Company is Jeffrey R. Immelt. He is the ninth chairman of GE, a post he has held since September 7, 2001. Mr. Immelt earned a B.A. degree in applied mathematics from Dartmouth College in 1978 and an M.B.A. degree from Harvard University in 1982. He has been with GE since 1982 and is on board of two non-profit organizations one of which is the Robin Hood Foundation. His tenure as a chairman and CEO started off on September 7th, 2001. Jeffrey has been the CEO of GE for 10 years with the company of 29 years, where he stands a number 145 on Forbes CEO compensation list.(Forbes 2012). Immelt was also named as the Time Magazines 100 most influential people in the world in 2008. (Time, 2008). President Obama chose Immelt as the head of the Economic Recovery Advisory Board and the Jobs Council, he felt that Immelts administration would assist fixing Americas economic slump. (LA times, 2009). Mr. Immelt has maintained numerous global leadership importances since joining GE in 1982, comprising of roles in GEs Appliance, Healthcare and Plastic businesses. In 1989, he was appointed as the officer of GE and joined the GE Capital Board in 1997. Later in 2000, Immelt was appointed as the chief executive officer and president. Since he began serving under GE, conducted by a poll, Fortune magazine has named GE as one of Worlds Most Admired Companies. (Fortune, 2012). In order to raise GEs profits and revenues Mr. Immelt has pared down General Electric to rely less on fi nancial engineering and more on making physical products and services which he insisted will be necessary for America as a whole (NY Times, 2010). Amidst all the merits of GE under Mr. Immelt, there has been an economic tailspin for which he was criticized. He was named as one of the five worst Non-Financial Crisis-Related CEOs since under him GEs stock dropped nearly 60% during the Great Recession , and GE had to close more than 31 plants along with that, he let go more than 19,000 employees. (Reuters, 2009). Mr. Immelt was severely criticized for business transactions done between GE and Iran, the country which has been allegedly attacking U.S.Forces in Iraq. (Blogspot.ca, 2008). In contrast to all these controversies, Mr. Immelt is still

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considered as one of the best CEOs. His three main objectives of success for GE are Innovation, Transformation and Winning. Immelt has prioritized improving GEs manufacturing operations particularly the companys energy, transportation and research & development units a task that spans leading-edge technologies in medical and alternative energy niches, such as wind and solar. He also recognizes the vital importance of global markets: 60% of the companys revenue is now generated outside the U.S. Even after the financial crisis, Mr. Immelt is a visionary and is striving hard to prioritize GE and bring it up to its maximum potential.(Investor Place, 2012). Mr. Immelts strategy for GEs extraordinary success is based on an aggressive strategy that blends fierce lobbying tax breaks and ground-breaking accounting that allows it to concentrate its profit offshore. (New York Times, 2011). This leadership style, depicts that Jeffrey Immelt, the CEO of General Electric cherishes about the optimism of the company and makes it one of the respectable companies to work for in the world. 5.4 CEO Compensation Comparison Jeffrey R. Immelt General Electric $3,300,000.00 $4,000,000.00 $0.00 $389,809.00 $7,400,000.00 $0.00 $6,338,956.00 Rupert Murdoch News Corporation $8,100,000.00 $0.00 $4,050,000.00 $296,475.00 $0.00 $4,368,800.00 $5,910,000.00 Louis R Chenevert United Technologies $1,681,250 $4,500,000 $7,932,325 $547,400 $0.00 -

Salary Bonus Restricted stock awards All other compensation Option awards $ Non-equity incentive plan compensation

Change in pension value and nonqualified deferred compensation earnings

Total Compensation Net Income Fiscal 2010

$21,428,765.00 $11,644,000,000.00

$22,725,275.00 $2,644,000,000.00

$15,330,000.00 $4,711,000,000.00

Figure 3: CEO Compensation Comparison (Sources: Forbes 2010, BusinessWeek 2012, Bloomberg 2012) Making a comparison between the annual compensation of Jeffrey Immelt to the CEOs of other media and industrial conglomerates, we see that their compensation received is within 6 million dollars of each other. While comparing to the 2010 net incomes of the companies they lead, Jeffrey Immelts total compensation is lesser than that of Rupert Murdoch, even though GE made more than 4 times the net income of News Corp. Given the vast expanse of General Electric, the wide array of products and services which span 6

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different industry segments and having such a big global presence, we feel that it is justified that Jeffrey Immelt receives such a generous compensation. GE being an American conglomerate, Immelt led the company successfully through the recession. Looking at the three year trend of the company (Fig Three year trend), it is clearly seen that the company is doing progressively well.

6. Marketing Strategy
6.1 Overall Marketing Strategy Not too long ago, General Electric had no solid marketing strategy. For many years the company just relied on its innovations and technologies and believed that the products could market themselves (Harvard Business Review, 2010). But now since 2006, it has adopted a new marketing strategy. It currently uses the Lateral or Conglomerate Strategy (Alphamarketing.com, 2010). This means that GE only markets those new products and technologies which have no synergy with the products that are already released. 6.2 List of Products GE boasts a very strong and diverse product line. This industry giant carries out its business through 6 major segments namely Energy Infrastructure, Aviation, Healthcare, Transportation, GE Capital, and Home & Business Solutions. The expansive reach of GE is shown in the vast line of products and services than span many industries and customers all over the world. See Appendix C for product list. 6.3 Product Analysis Innova X-ray Machines Digital Cameras Model #J1456W (Smart Series) GE Profile Energy Star Refrigerator (PSDS5YGXSS)

Target Market

Hospitals, Clinics, Sports Teams, and Professions that require medical imaging

People of all ages, and from any demographic

Homeowners, Small food shops, Families

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Value-Package

Promotional Mix

"Minimizing radiation Rechargeable battery, 720p video, 14 MP exposure while maintaining state-of-the-art camera. This is designed to be easy to image use quality in interventional and take high quality imaging photos and video. promotes the quality of (GE, 2012) Their image stabilization patient care" feature (GE, 2012). The 'Innova allows you to take clear radiation dose pictures even when personalization' is an the camera is moving. exclusive system to GE machines, and it is always adjusting to suit the patient and make sure the right doses are being administered. The Innova X-ray They have machines are not really advertisement on advertised, except Facebook, along possibly in clinics. GE with promotional relies on the reputation videos on their website of the equipment and the and brand name, as well as YouTube as well. This by word of type of promotion is mouth. They have more for the teens and information about the young adults. They machine on the don't promote as much company website, and on T.V as competitors that's like Olympus or about all of the promotion Cannon. it gets online.

Exterior is stainless steel, a popular choice for people looking for new fridges. It also uses LED lighting inside, which uses less energy, and is clearer and lasts longer. 24.6 Cubic feet of storage. It has the Energy Star rating, so it is efficient when it comes to energy usage.

GE has TV commercials for the appliances, not specifically for just refrigerators. They have a wide range of refrigerators to choose from. They don't use Facebook or Youtube to promote their appliances, they simply go off reputation, like most things do that are made by GE. They have a very good reputation for their appliances.

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Pricing Objectives and Strategies

The price is not online anywhere, as this is something that sells between $400,000 and $800,000. There isn't much of a strategy when it comes to expensive equipment like this, at least none that would be known by outsiders.

The price for the camera is $89.99 on the company website. This price is your mid to low price for a digital camera, which is to attract your average joe, someone who just wants a good camera to take pictures at parties and with friends. It's not for a professional photographer.

This particular refridgerator is priced at $3999 on their website. This is in the mid to high price range for your average home refrigerator, but it does have a fair amount of features, and a large amount of space. This fridge is priced more for homeowners or families looking for an efficient and reliable unit at a reasonable price.

Distribution Channels

Product Position

Distribution for this type of equipment goes through agents, who go around to hospitals and clinics and try and sell them. Most of their sales would come direct to GE, with people or companies asking for it. When it comes to hospital equipment, their product position really comes down to their reputation. GE has built a very solid reputation in the healthcare industry, and you can find their machines in lots of facilities.

Their distribution channels are through major retail stores, like Wal-Mart or Best Buy, and also online on their company website, as well as sites like Amazon.

Distribution comes through major appliance retailers, like The Brick and Sears, and from other smaller retailers. They also sell on their company website, as well as on sites like Amazon. GE has "some of the best refrigerators in America". (Refrigerator Pro, 2012). They are behind companies like Samsung, Whirlpool, and Frigidaire, but are still considered a good quality unit.

They would rank behind Sony, Olympus, and Cannon in terms of brand recognition for cameras, but are just as good as similarly priced cameras from different brands.

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7. Financial Performance
7.1 Three Year Trend $US Revenue Net Profit Stock Price Earnings per Share Return on Equity % Current Ratio Debt Equity Ratio Profit Margin Ratio Dec 31, 2011 Dec 31, 2010 Dec 31, 2009

147,300,000,000.00 149,593,000,000.00 154,438,000,000.00 14,151,000, 000.00 17.91 0.35 10.49 2.503 3.226 9.85 % 11,644,000,000.00 18.29 0.43 9.24 2.958 3.312 10.85% 11,025,000,000.00 15.13 0.27 9.02 2.746 3.724 7.52 %

Figure 4: Three Year Financial Comparison for GE (Source: General Electric Corporate Website 2012, Yahoo Finance 2012, Y-Charts 2012) The stock price of G.E has been relatively stable throughout the recession and the years preceding. Even though the Net profit of the company has effectively increased from the past couple of years, the stock price remains the same. This shows that G.E is a very stable company, through the economic ups and downs of the past three years, the G.E stock remains strong. 7.2 Comparative Financial Analysis in 2011 $US Revenue Net Profit Stock Price Earnings per Share Return on Equity % Current Ratio Debt Equity Ratio Profit Margin Ratio General Electric Company 147,300,000,000.00 14,151,000,000,00 17.91 0.35 10.49 2.503 3.226 9.85 % United Technologies 58,190,000,000.00 4,979,000,000.00 80.23 1.46 21.53% 1.384 0.4496 8.85%

Figure 5: Comparison with United Technologies (Source: General Electric Corporate Website 2012, Yahoo Finance 2012, Y-Charts 2012)

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United Technologies, is an American industrial conglomerate based in Hartford, Connecticut (UTC, 2012). They are well known for their engines (Sikorsky), being leaders in elevators (OTIS), largest Supplier of heaters and air conditions (Carrier Corp), leaders in helicopters and aerospace products (Mattera, 2012). Comparing the financial statistics of G.E with United Technologies, we see that their current equity ratio is stronger. This gives us an implication that G.E are on good financial standing and will be able to pay of any major debts in the near future if required.

But, looking at Earnings per Share and Return on Equity, United Technologies generates more profits on the money invested by shareholders. By comparing the stock of the company we see that United Technologies has a higher market value. We conclude that, even though General Electric is a larger and more stable company in comparison; United Technologies is a better company from an investors point of view. 7.3 Sources of Capital The G.E Infrastructure segment is responsible for 42% of the operating profits in 2010. This section of G.E consists of Energy and Oil Businesses. GE Healthcare accounted to about 16% of the operating profits. GE Aviation and Transport contributed 21% of the companys operating profit. The GE Capital Segment was 19% of the operating income and finally GE Home and Business Solutions was 2% of the operating income (Standard & Poor Investor Report, 2010). G.E began the fiscal year 2010 with a cash balance of 38 Billion dollars. They received 40 billion dollars from long term debt issuances. Alternate funding which accounted for 9 billion dollars consisted of International bank deposits. Around 35 Billion dollars was received from their business collections. (General Electric Investor Meet, 2009).

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8. Company Outlook

8.1 Our Forecast

We here at Benchmark Consulting, have to come to a conclusion using the reliable information which was researched, amassed and provided in this report. The major factors which helped us deciding were 1. General Electrics expansion of Health Care and Energy in China 2. Strong leadership shown by CEO, Jeffrey Immelt 3. Steady and stable stock value 4. Current Ratio

General Electric is planning on expanding in China, using their clean energy as an important catalyst. China, who uses coal for 70% of their power generation, aims to reduce their carbon density by around 40%. China now is ranked as the number one country to invest in renewable resources. The ever growing economy along with the vast population of China, prove to be a very rich grounds for G.E future business (UPI, 2010, G.E.com 2008). Jeffrey Immelt, even though he was criticized for exercising some strict lay-offs and unethical trade relations, he has managed to lead the company through a tough economic time. Immelt was instrumental in recognizing the global potential and expanding globally. Now more than 60% of G.E income is from overseas markets. Looking at the G.E stock for the last three years, we can see that the stock is steady and stable. This shows that G.E is a reliable company. But on the other hand, you can see that on a 3 year comparison of the stock between G.E and United Technologies (See Appendix D), the United Technologies stock has gained potential value in contrast to that of G.E. G.E boasts a very strong current ratio. Even through this economic turmoil of the recent years, G.E has maintained its current ratio of 2.55 which is well above the recommended 2:1. 8.1 Analysts Forecast

Apart from our own forecast, we have researched and studied some other stock analysts to strengthen our recommendation. Firstly, Globe and Mail suggests buying the stock as a long term investment as they

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forecast a steady growth of the stock (Globe and Mail, 2012). They predict an EPS (Earnings per Share) of $1.55 in 2012 last quarter and $1.76 in 2013.

Yahoo finance rates G.E at 1.9 on a scale of 1 to 5, where 1 is strong buy and 5 is sell. Yahoo finance too estimates a growth in the EPS by the last quarter of 2012 (Yahoo Finance, 2012). Finally we look at the analysis by CNN Money. CNN Money provides us an in depth analysis. CNN Money forecasted that in the next 12 months, the G.E stock can reach as high as $25 and as low as about $21. These analysts forecasts strengthen our belief and trust in the General Electric stock.

Figure 6: CNN Money Stock Forecast (Source: CNN Money, 2012)

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9. Recommendation
We here at Benchmark Consultants recommend buying this stock, if you have a low risk portfolio. G.E is a steady company with an ever growing global presence. According to the information that was collected in this report it is clear that G.E is setting its sights on global markets. This reduces the risk of major losses in case one single country or economy crashes. This shows that G.E is ensuring it has a secure future.

G.E has 6 different segments through which it runs its business. Power and Energy being the major contributor to its revenue, it is concentrating on expanding this sector in markets such as China. China which has proved to be a strong global market for energy will help develop General Electric.

Looking at the financial figures we can see that the current ratio is 2.55, which is well above the recommended 2:1. This shows that G.E has a strong financial standing as it can pay any short term obligations if necessary.

Lastly, the stock of G.E has been growing very stably. Even after the steep drop of the recession (See Appendix D) G.Es stock has been gaining strength very slowly and steadily. The current stock price as of now is $19.20.

In conclusion, we make a recommendation to buy this stock, if you are looking for a low risk, long term investment. But, if you like looking for a short term high risk investment, then G.E is not the right buy.

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APPENDIX Appendix A

Appendix B Board of Directors

W. Geoffrey Beattie Dr. James I. Cash Jr. Ann M. Fudge Dr. Susan Hockfield Jeffrey R. Immelt (CEO) Andrea Jung Alan G. (A.G.) Lafley Robert W. Lane (GE, 2012) Roger S. Penske Robert J. Swieringa James S. Tisch Douglas A. Warner III James J. Mulva Sam Nunn Rochelle B. Lazarus Ralph S. Larsen

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Appendix C
Product Lines: Appliances Aviation Consumer Electronics Electrical Distribution Energy Finance - Business Finance - Consumer Healthcare Lighting Oil & Gas Rail Software & Services Water (GE, 2012)

Appendix D

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References
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Alpha Net Marketing (2010) General Electric Marketing Strategy For a New Product http://www.alphanetmarketing.com/2010/12/general-electric-marketing-strategy-for.html Marketing Teacher (2010) General Electric Marketing Mix http://www.marketingteacher.com/case-study/general-electric-case-study.html# General Electric (2012) Products and Services http://www.ge.com/products_services/index.html The Harvard Business Revew (2012) Unleash the power of marketing http://hbr.org/2010/10/unleashing-the-power-of-marketing/ar/1 General Imagine (2012) J1456W http://www.general-imaging.com/j1456w/ Refrigerator Pro (2012) GE Refrigerator http://www.refrigeratorpro.com/GE-Refrigerator.html General Electric (2011) Analysis Report http://www.better-trades.com/stock-reviews/industrial/ge/1-about.asp Forbes (2010) Jeffery R Immelt http://people.forbes.com/profile/jeffrey-r-immelt/36126 Forbes (2012) Louis R Chenevert http://www.forbes.com/lists/2012/12/ceo-compensation-12_Louis-R-Chenevert_FTA5.html Forbes (2010) Rupert R Murdoch http://people.forbes.com/profile/rupert-murdoch/13480 Businessweek (2012) Chenevert http://investing.businessweek.com/research/stocks/people/person.asp?personId=191172&ticker=UTX:US Bloomberg (2012) GE Income Statement (2010) http://www.bloomberg.com/quote/GE:US/income-statement

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UTC (2012) Conact Page http://www.utc.com/Common/Footer/Contact Corp Watch (n.d) United Technologies http://www.corpwatch.org/article.php?list=type&type=14 Yahoo Finance (2012) United Technologies http://finance.yahoo.com/q/is?s=UTX&annual Yahoo Finance (2012) General Electric http://finance.yahoo.com/q/is?s=GE&annual Y Charts (2012) General Electric http://ycharts.com/companies/GE/price Y Charts (2012) United Technologies http://ycharts.com/companies/UTX/price UPI (2010) GE Plans expansion in China http://www.upi.com/Business_News/Energy-Resources/2010/09/15/GE-plans-expansion-in-China/UPI41071284568738/

Globe and Mail (2012) GE Stock Quote http://www.theglobeandmail.com/globe-investor/markets/stocks/analyst-ratings/?q=GE-N CNN Money (2012) GE Stock Quote http://money.cnn.com/quote/quote.html?symb=GE Financial Times (2012) GE takes $1bn risk in bringing jobs home http://www.ft.com/cms/s/21a46546-78f1-11e1-88c500144feab49a,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2 F21a46546-78f1-11e1-88c5-00144feab49a.html&_i_referer=#axzz1rZjMXR7v The Economist (2009) Losing its magic touch http://www.economist.com/node/13326788 Business Week (2012) GE engine faulted for crash that killed 9 http://www.businessweek.com/ap/2012-03/D9TP1RM80.htm General Electric (2008) CEO Goals and Objectives http://www.ge.com/ar2008/governance_2.html

General Electric (2010) Alliances in Russia and China http://www.ge.com/ar2010/growth.html#!story=strategy-alliances-in-russia-and-china

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MIT Sloan Review (2012) GE Talent Management Hiring with Strategy http://sloanreview.mit.edu/improvisations/2012/02/09/ge-talent-management-aligning-hiring-withstrategy/#.T4NQ1_tYveE Investments and Acquisitions (n.d) Strategies of G.E http://investments-and-acquisitions.com/strategies-of-the-general-electric-company/ Forbes (2012) General Electric rising with Global Recovery http://www.forbes.com/sites/greatspeculations/2012/02/29/general-electric-rising-with-globalrecovery/

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