Primary Recommendation (#1) General Electric can greatly increase revenues by tapping into the renewable energy markets of developing countries
- A large portion of the company’s revenues comes from developing countries, with Thailand, Algeria, Turkey, and Indonesia passing the threshold of $1 billion in recent years (Rudarakanchana, 2014).
- The growing rate of energy consumption, combined with increased strictness of environmental regulation, has contributed to the growth of the renewable energy market in developing countries to the point where it will exceed two-thirds of the total energy supply (International Energy Agency, 2015).
- China, one of General Electric’s major partners, offers great entry opportunities for partnerships with more than 60 Silk Road corridor countries (Miller, 2016).
- The United Nations Climate Change Conference in Paris produced a policy that encourages more than 190 countries to strive for zero net emissions by 2050 (Frankfurt School, 2016).
Reaching out to new developing countries is expected to satisfy their demand for affordable and accessible energy. The growing popularity of renewable resources reinforced by stricter regulation is expected to facilitate the success of this strategy, which explains the importance of the recommendation.
Recommendation #2 General Electric has an opportunity to boost sales by a significant amount by extending its coverage of commercial aircraft engines and components product inventory
- The emergence of developing markets and the growing popularity of low-cost carriers is expected to create an industry-wide demand for 39,620 new commercial airplanes over the next two decades with a total value of $5.9 trillion (REUTERS, 2016).
- According to research undertaken by Boeing, global passenger traffic is expected to increase by 5% each year throughout the next two decades (Team, 2014).
- The current low price of oil suggests that the aviation industry will not update to more fuel-efficient equipment, which, by extension, will boost the demand for spare parts and renovation services (Karp, 2016).
- General Electric’s aviation department currently produces a variety of aircraft engines and replacement parts (GE Aviation, 2016).
The existing R&D assets owned by the company would allow for the effective growth of its existing industry potential to cover the projected demand. In addition, the company has the capacity to develop innovative high-performance jet and turboprop engines that would meet the demand of both individual and large-scale passenger vessels.
Recommendation #3: General Electric must create a CSR strategy to avoid remediation expenses
- Global trends in environmental regulation indicate an overall increase in strictness with an emphasis on developing countries (Yang, 2013).
- The recent Hudson River cleaning operation stretched for 7 years and cost General Electric more than $1.6 billion (Mann, 2015).
- Several sites, including the Housatonic River, present a potential direct source of remediation expenses in the near future (EPA, 2012).
- A growing body of research supports an indirect positive relationship between sound CSR policies and firm performance through reputation improvement and customer satisfaction (Saeidi, Sofian, Saeidi, Saeidi, & Saaeidi, 2015).
Creating a stronger CSR program would allow General Electric to avoid future remediation expenses, maintain a good reputation, and withstand the growing wave of strict environmental regulations both in the United States and abroad. Over time, such a strategy would also result in increased revenues and long-term benefits such as customer retention.
Next Action Steps for your Primary Recommendation
Step 1. Assessing the existing demand for renewable energy among developing countries, as well as their current state of readiness for innovation
Step 2. Exploring existing environmental laws and regulations pertinent to the identified potential partners and creating an overview of possible future developments
Step 3. Designing an initial framework to introduce renewable energy sources to the identified countries, with an estimation of benefits and potential barriers to approaching stakeholders
APA Citation Page
EPA. (2012). Potential remediation approaches to the GE-Pittsfield-Housatonic river site “Rest of river” PCB contamination.
Frankfurt School. (2016). Global trends in renewable energy investment. Web.
GE Aviation. (2016). Advanced turboprop engine. Web.
International Energy Agency. (2015). Medium-term renewable energy market report. Web.
Karp, A. (2016). Airbus and Boeing are bullish on commercial aircraft demand. Web.
Mann, T. (2015). GE nears end of Hudson River cleanup. Web.
Miller, M. (2016). GE turns to Chinese partners to lift Silk Road infrastructure sales.
REUTERS. (2016). Boeing expects a ‘wave of replacement demand’ for new aircraft.
Rudarakanchana, N. (2014). General Electric (GE) goes global: revenues over $1bn from 24 countries.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341-350.
Team, T. (2014). Solid long term demand for commercial airplanes will drive Boeing’s results.
Yang, T. (2013). The top 10 trends in international environmental law. Web.