I read an article about GE(General Electric)'s turning point in its business. GE is a famous kitchen appliance company. Even though they do enormous businesses, the kitchen market is also a key part of GE. But as the market's competitors grow very fast and GE's position can be threatened. Also, GE is now allocating its budget to various industry area, so if the business is not successful at all, GE can remove it from their portfolio. Actually the scale of kitchen area is only $7 billion, and the total revenue is $173 billion. It's very small business to GE. And they now focus on the market outside of USA. The kitchen market is completely USA market, so GE now consider to give up the kitchen industry.
There are many companies that gave up their core industry and changed their portfolio. For example, Intel is now just an service company. A few years ago, Intel gave up their product line and decided to focus on the service area. Now, if you see Intel brand computers, actually, it's not a computer intel produced. Intel decided their core industry, but now they do very well in service area. If they remained the manufacturing industry, maybe they failed in the competition and also could be bankruptcy. I think GE is now facing the turning point. I think they have to get out of kitchen industry and invest in the promising industries. Author say that 'the company's future growth will largely be fueled by its health-care and energy businesses, much of it from outside the USA'. Accordingly, it's the matter of timing not the option problem. GE has to depart the old core industry and invest in the new industries. I think the resource area can be a promising industry. Though the probabillity is low, at some time, natural resources will be exhausted. If a company can be a entrepreneur in that area, it can fail in the industry. In the business life cycle, GE is now facing the maturity time. If they could't rebound, they will be a loser in the industry and fade away from market.
Korean companies also reach the maturity gradually. For example, the semiconductor is now facing a recession. At first, Samsung was a monopoly company in semiconductor market, but now many Taiwan and Japanese companies developed semiconductor technology. Accordingly, the market is now a price competition market. The demand for D-ram is also decreased. I think Samsung has to change their view to semiconductors. If the technology cannot improve anymore, the market is not a precious one. We have to find the Blue Ocean industry. Korea has many world number one products. But the premium is not eternal. At some time, we can face some competitors, and can lose from the competitions. In other words, we have to innovate ourselves and try to develop new technology. You know the iRiver, past MP3 dominator, is now facing a bankruptcy. The cause of the failure is laziness in innovation. Monopoly is a sweet one, but it can steal companies' life at the end.
Author: Matt Vella
Title: Why GE Is Getting Out of the Kitchen
Date: May 16, 2008, 12:01AM EST
Page: 1
entry # 11 20700067
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