New Financial And Statistical Measures To Monitor The Success Of GE

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Term Paper Title	New Financial And Statistical Measures To Monitor The Success Of GE
# of Words	3847
# of Pages (250 words per page double spaced)	15.39

New Financial and Statistical Measures to Monitor The Success of GE

New Financial and Statistical Measures to Monitor The Success of GE

To :     The Board of Directors, GENERAL ELECTRIC COMPANY
Subject : NEW FINANCIAL AND STATISTICAL MEASURES TO MONITOR
     THE SUCCESS OF GENERAL ELECTRIC COMPANY

     After Mr. Weltch announced my new assignment, I pondered how I could go
about guaranteeing the best possible result: a creditable and well organized
work that is going to help you, the Board of Directors, plan for the future of
the company in a better way.  Before starting my analysis, I must specify that
my target is not to abolish the traditionally used financial and statistical
measures but to develop new ones to be used as guidance for the corporation's
future development.
     Our Chairman recently wrote that "the hottest trend in business in 1995
-- and the one that hit closest to home -- is the rush toward breaking up multi-
business companies and spinning off their components, under the theory that
their size and diversity inhibited their competitiveness ... breaking up is the
right answer for some big companies ... for us it is the wrong answer.²1 For us
the new trend is the entrance into the service industry. The question must then
be: is this the right answer?
     GE is expecting to increase its revenue by the year 2000 to $120 billion
compared with $58 billion in 1990.  In other words, if the forecast proves to be
correct, it will obtain an average annual rate of growth of 7.5%.  This high
rate is mainly attributed to the expansion of the services sector of the company,
which is estimated to increase by an average annual rate of 13% compared with a
corresponding one of 2.1% for manufacturing.  Today nearly 60% of GE's profits
comes from services -- up from 16.4% in 1980.2
     This is our new direction and therefore my target is to find these
measures that are going to help us understand how the business is going to
perform in that particular field.  I also consider that our attempt to expand
internationally is extremely important and in a way is something new for us.
International operating profit was $3.0 billion for 1995 compared with $2.3
billion in 1993.3  This extremely rapid expansion hides a lot of dangers, and at
the same time shows another new "trend" of our corporation.  In my analysis I
will include the international sector.  I will also narrow in on employees,
stockholders, goodwill and on potential investors.
     1) MIEC (Manufacturing Industry Expen...

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