GE Growth Strategy. Business Development & Organic Growth. Hwang Soo President of GE Korea Feb. 12, 2008

Transcription

1 GE Growth Strategy Business Development & Organic Growth Hwang Soo President of GE Korea Feb. 12, 2008

2 This is GE

3 We are World s Most Admired Company The only company listed in the Dow Jones Industrial Index today that was also included in the original index in 1896 Employees: 320,000 Customer over 100 countries Revenues in 2007: $173B Earnings in 2007: $22.5B Triple-A debt rating since 1956 Market Value: $4,200B(3 rd ) World s Most Admired Company Fortune, FT, Barrons etc 6 Global Business Units Infrastructure Commercial Finance Industrial GE Money Healthcare NBC Universal 3 /

4 We are One company: Technologies+Financials+Media Entertainment Infrastructure Oil & Gas Energy Transportation Aviation Water Energy Fin Svcs Aviation Fin Svcs Commercial Finance Capital Solutions Real Estate Corp Fin Svcs Healthcare Fin Svcs Comm. Fin -Asia GE Money Europe Asia Americas Australia & NZ NBC Universal Television Group Universal Digital Media Industrial Consumer & Industrial Enterprise Solutions Equipment Services Security Sensing Fanuc Inspect Tech Healthcare Diagnostic Imaging Clinical Systems Info Technology Global Services Life Sciences Medical Diagnostic Interventional Cardiology 4 / & Surgery

5 GE is constantly evolving Consumer Products 27% 27% Power Materials Tech Products 6% 13% 7% Financial 22% Power Commercial Finance + GE Money 28% 29% Infrastructure 46% Industrial 16% 25% 11% Aircraft Engines Healthcare 10% 10% 23% Tech Products Consumer Products NBCU Industrial Revenue $3B $27B 9x $150B 5.5x Net income $0.2B $1.5B 7.5x $18B 12x Industrial NI 100% (vs. Fin. Services) 92% 50% 5 / Note: Breakout of businesses based on percentage of revenue

6 GE Strategy

7 GE Strategy Shareholder returns Results Earnings growth Returns on capital Cash flow Operations Management discipline & process excellence Foundation Best people Strong culture Great businesses 7 /

8 GE strategy Safe + reliable growth company GE advantage scale + breadth + depth 20% Great businesses founded on market leadership, domain expertise, competitive advantage, and financial strength 2 3X GDP 10%+ Reliable execution with businesses that perform consistently while expanding returns Organic revenue growth Earnings growth Expanding returns Performance accelerating Expanding operating profit rate and return on total capital Grow cash earnings Industrial Financial Services Common initiatives where we can scale ideas with speed driving incremental returns A simple structure and strong team filled with people who have broad and deep careers Clear strategy and financial goals 8 /

9 Business Development: Inorganic Growth

10 Business development at GE How we fit into GE s strategy and what we re responsible for Help sustain a healthy portfolio filled with great businesses Add Subtract Strategic analysis New technologies New geographies New growth platforms Scale / cost reduction Capabilities Low return Low growth Low tech Dispositions Sustained growth Acquisitions Help strengthen the competitive position of our businesses Evaluate our position relative to competitors Analyze and capitalize on industry trends Portfolio assessment Integration and de-integration JVs and partnerships 200+ professionals to help GE drive growth 10 /

11 In 2002, set out to reposition portfolio Strike zone Reposition for growth Reposition for value ~75% ~15% ~10% Invest to grow Energy Medical Aircraft Engines NBC Specialty Materials Plastics Commercial Finance GE Money Expanded/New growth platforms Water Security Healthcare IT Oil & Gas Hispanic media Add / Delete Transportation + Globalize service business Industrial + Systems, Sensors, Security - Commodity components Equipment Management + GE Products - Commodity Other insurance - Capital intensive; low ROE & volatile earnings Upgrade for growth Limit investment Consumer Appliances + Lighting - Low distribution leverage Global Exchange Services Low GE presence Employers Reinsurance Cyclical + unpredictable Equity portfolio GE a small player Maximize value 11 /

12 Established high growth, high margin businesses Transformed the company with $80 billion of acquisitions and $35 billion of dispositions, creating a faster-growing, higherreturning set of businesses. A Better Company A. High Growth + High Margin + Leadership Healthcare Infrastructure Commercial Finance GE Money NBC Universal Growth Platforms High-Tech Industrial B. B. Low ROTC + Volatile Insurance Low-Growth Industrial 12 /

13 Organic Growth: Growth as a Process

14 Organic Revenue Growth Target: 8% Current: 4% Nike or 3% Bottling or GE Healthcare Technologies Global GDP GE $12B~$14B of organic growth every year 14 /

15 Making growth a process Emerging Markets Growth Leadership Traits Growth Leaders Inspire and develop people that know how to help customers and GE grow Customers Use process excellence to satisfy customers and drive growth Execute for Growth Lean Six Sigma Net Promoter Score Innovation Generate new ideas and develop capabilities to make them a reality Imagination Breakthroughs CECOR framework Globalization Create opportunities everywhere and expand in developing global markets Training Enterprise Selling & Brand Commercial Excellence Develop worldclass sales and marketing talent and demonstrate the value of one GE New Product Introduction Great Technology Have the best products, content and services 15 /

16 Imagination Breakthroughs are making innovation a core capability How we re getting there: 1. Launched in Oct 2003 target: $50-100MM incremental revenue 2. Marketing-led, cross-functional teams 3. Creating portfolio of growth 4. Rigor around key milestones and deliverables 5. Benchmarking P&G, 3M, HP, FedEx, Target, Google, Pepsi 6. Ensuring strategic alignment of IB efforts Funded with lots of CEO attention 16 /

17 IB portfolio summary Commercial Finance GE Money Total 103 Annual add l revenue $2-3B Healthcare 6 20 Emerging Markets Industrial Infrastructure Fin Ind. NBCU 4 Ecomagination In market Total Emerging Market 17 /

18 Imagination breakthroughs Holistic Breast Cancer Management from GE Healthcare Water Scarcity Solution from GE Water Evolution Series Locomotive from GE Transportation Air Taxi Engine from GE Aviation IGCC Cleaner Coal GE Energy 18 /

19 R&D Global Network Researcher: 2,600(1,000 Ph.D) Expenditures: $3.7B(2006) Global Research Center, HQ Niskayuna NY, USA Est. in 1900 Global Research Center, Europe Munich, Germany Est. in 2004 John F. Welch Technology Center Bangalore, India Est. in 1999 China Technology Center Shanghai, China Est. in /

20 Solve Environmental Issues + Accelerate Business Growth Green is green

21 4 Commitments Grow revenues to $20B Double R&D to $1.5B Reduce GHG Inform public 21 /

22 NPS driving even further customer focus On a scale of 0-10, how likely are you to recommend GE to a friend or colleague? 9-10 Promoters 7-8 Passively satisfied Net Promoter Score (NPS) = % promoters World % class promoters 50%+ % detractors Typical % 10% promoters to 30% 0-6 Detractors Why we like NPS Simple Prioritizes improvement actions Responsiveness single biggest factor 22 /

23 Globalization ($ in billions) Global revenue ~$87 ~$81 $70 15+% Developing countries growth $10 $29 *$50 15+% AAGR '05 '06 '07 Priorities Share in Japan + Europe Expand presence in China, India Technology + sourcing Developing markets Play the big GE Lead in infrastructure Capture wealth creation Build local capability people, service, risk Drive GE advantages Have built strong global capability 23 /

24 A better company Stronger portfolio + Improved capability + Deliver results High growth + High margin + Leadership Low ROTC + Volatile 95% 60% 5% 40% Healthcare + Infra. + Comm l. Fin. + GE Money + NBCU + Growth platforms + Sold Insurance + Sold low growth Industrial Growth as a process Margin expansion through product management & simplification Cash generation funds reinvestment Revenue +8% Operating ~16.2% profit EPS % ROTC ~19.5% Great team Invest & deliver Cash ~$24B 24 /

25 What makes GE great?

26 GE Strategy Shareholder returns Results Earnings growth Returns on capital Cash flow Operations Management discipline & process excellence Foundation Best people Strong culture Great businesses 26 /

27 Growth generation leaders always executing with integrity Best People Investing $1B every year 27 /

28 Change Culture A Continuing Journey Employee Engagement Retaining & Engaging Lean Six Sigma Speed & Quality Growth: IB s, CECOR, Lean, Customer Centric, Execution Using Change as a Strategic and Competitive Advantage Optimizing Change Effectiveness Building a Culture that Drives Change Six Sigma Quality: Productivity, Span, Data-Driven Decision-Making Make Customers Winners: GE Tool-Kit Digitization: Sell, Buy, Make using Technological Tools Key Strategic Initiatives: QMI*, NPI*, OTR*, SP*, Productivity, Globalization Imagination at Work: Imagine, Solve, Build, Lead ACFC (At the Customer For the Customer): Faster, Better, Closer to the Customer 1992 Change Acceleration Process (CAP): Increase success and accelerate change Process Improvement: Process-mapping, re-engineering, Bullet Train Approach Productivity / Best Practices: Benchmarking External Organizations, Sharing Best Practices 1989 Work-Out / Town Meetings: Empowerment, action Expert-Driven Decision-Making, Action Work-Outs, Customized Work-Outs Strong Culture 28 /

29 Six great businesses Industry leaders in market share, value and profitability Infrastructure NBCU Commercial Finance Industrial GE Money Healthcare 29 /

30 Rigorous Operating System Annual Integrated Business and Leadership Processes Core business processes GE Opinion Survey (Biannual) Session D (Compliance) Session C (Org/Staffing Succession) Growth Playbook (Strategy) Session C Follow Up S-II (Operating Plan) Session C-IIC Follow Up February April June August October December January March May July September November Corporate Officers Mtg (COM) Global Leadership Mtg (GLM) Corporate Exec Council (CEC) CEC CEC SEB Orientation Meeting CEC Leadership meetings 30 /

31 Invest & deliver Invest in leadership businesses Safe & reliable growth company 20% Growth as a process 2-3X GDP 10%+ Reliable execution & financial discipline Revenue Earnings Returns Great people & team Built for the future + Infrastructure technology + Demographics + Emerging markets + Digital connections + Environmental technology + Value from origination 31 /

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