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GE - Company Background History GE or General Electric is an American multinational conglomerate

corporation incorporated in New York Headquarters: Boston Formed: due to the merger of Edison General Electric Company of

Schenectady and Thomson-Houston Electric Company of Lynn Officially formed in 1896 One amongst the original 12 companies listed in the then newly

formed Dow Jones Industrial Average Current Leadership: Jeffrey Immelt appointed CEO of GE after Jack

Welch In over 160 countries Over 300,000 employees

Timeline of GE

1879: Thomas Edison invented light bulbs 1890: Edison General Electric created 1892: Merger of Edison and Thomas-Houston Electric 1896: One of the first 12 companies to be listed on Dow Jones

Industrial Index 1919: Founded RCA 1941: GE Aviation 1950s: GE began computing branch

1981: Jack Welch made CEO 1995: Adopted Six Sigma approach 2001: Jack Welch retired 2002: Acquired wind turbine assets from Enron 2004: Reorganized GE’s 13 businesses into 11 focused on customers 2007: Acquired Smith Aerospace/Sold GE Plastics 2010: Acquired gas engine manufacturer Dresser Inc.

Vision and Mission

“We bring Good Things to Life” Mission: To create intelligence throughout the business supply

chains of our customers around the globe by combining Six Sigma process disciplines with innovative electronic commerce technologies

Vision: Be the world’s largest provider of electronic commerce solutions that create intelligence for business supply chains

Values

Imagine, solve, build and lead are pillars of GE Action oriented approach Individual understanding Serving to energize everyone at GE group as a team Initiating change and driving performance

Six Sigma Vision

Critical to Quality: Attributes most important to the customer Defect: Failing to deliver what the customer wants Process Capability: What your process can deliver Variation: What the customer see and feels Stable Operations: Ensuring consistent, predictable processes to

improve what the customer sees and feels Design for Six Sigma: Designing to meet customer needs and process

capability

Divisions of General Electric

Energy: Energy Services Oil and Gas Power and Water Technology Infrastructure: Aviation, Healthcare and Transportation GE Capital Home and Business Solutions- Appliances and Lighting

GE Businesses GE Power GE Oil & Gas GE Renewable Energy GE Energy Connections GE Aviation GE Healthcare GE Transportation GE Capital – Asia Pacific, U.S.A, Europe, Middle East and Africa GE Digital

GE world wide

Stakeholders of GE

Financial Snap shot

USA45%

Europe14%

Asia17%

Americas10%

Middle east & Africa14%

Global Revenues by Regions

Power19%

Renewable Energy

5%Oil & gas15%

Energy man-age-ment6%Aviation

22%

Health care16%

Trans-portation

5%

Appliances & Lighting

7%Capital

5%

Global Revenues by Segment

Code of Conduct A code of conduct is a set of rules outlining the social norms and rules and

responsibilities of, or proper practices for, an individual, party or organization.

• Obey the applicable laws and regulations governing our business conduct worldwide.• Be honest, fair and trustworthy in all your GE activities and relationships.• Avoid all conflicts of interest between work and personal affairs.• Foster an atmosphere in which fair employment practices extend to every member of

the diverse GE community.• Strive to create a safe workplace and to protect the environment.• Through leadership at all levels, sustain a culture where ethical conduct is recognized,

valued and exemplified by all employees.

GOVERNANCE STRUCTURE

Total Board Of Directors – 17 (Of which 16 are Independent Directors)Each independent director is expected to visit at least 2 GE businesses without the involvement of corporate management

•  The Governance Principles Provides the governance framework for GE including:– Role of Board and Management– Functions of Board– Independence of Directors (Min 10 ID’s at all times, Independence Determination)– Size of board and selection process– Board Committees (Audit, management development and compensation, governance and public

affairs etc.)– Ethics and Conflict of interest– Succession Plans

Ethical Issue #1

Ethical issue one revolves around how the Chamber of Commerce has been trying to eliminate the whistleblower program completely.

Unfortunately, this attempt has caused General Electric to fire an employee due to whistleblowing.

The whistleblower came forward with allegations about possible corruption in the company. However, GE claims that the allegations are purely hypocritical and refuse to believe that the proper steps were followed before exploiting the problem.

Ethical action 1

First and foremost, the CEO needs to not side with congress about closing down the whistleblower program. The program is there to give protection to people who witness unethical actions in the company.

In order to report that anonymously, the employee or employees need governmental protection before they come forward. I understand that by closing the program this lessens the chances of people coming forward with wrong-doing in the company, but it is still necessary that those people have proper protection.

Ethical issue 1 action 2

Secondly, the CEO needs to be made aware that the rules for whistleblowing need to be more clearly stated. The General Electric employee who was fired for whistleblowing on an issue followed all the rules before stating his claim to the public.

GE needs to double check its standards before firing an employee for following proper protocol. When that measure is taken, there will be no questioning if a whistleblower skipped a needed procedure or not.

Ethical Issue #2

The second ethical issue is about the Fukushima nuclear reactor and how GE knew it was faulty. There were strong concerns about the Mark 1’s ability to do its job and maintain pressure.

A lot of questions surfaced pertaining to Mark 1 ability to handle the tremendous pressure of the reactor if it lost cooling power. The problems were identified in 1975, but weren’t taken seriously.

Dale G. Bridenbaugh and two of his colleagues were so concerned with the designs that they resigned. Bridenbaugh then came forward to express his concerns about the Mark 1 and how dangerous it could be.

Years after Bridenbaugh spoke of the problems Harold Denton the director of the NRC’s office of Nuclear Reactor Administration also came forward with concerns in 1986. Yet the problems and concerns still were not checked or taken care of. The article even talks about how government officials were concerned about Mark 1 as well. Because of the faulty design the Fukushima disaster was caused. The article goes on to talk about the problems that have continued since the disaster such as fuel pools that have caught fire multiple times, the radiation from the waste and the fact that the whole disaster has been enormously dangerous.

Ethical issue 2 action 1

The first action that should be put in place is that General Electric should take responsibility for its carelessness when it comes to the faulty Mark 1.

The CEO should take the action head on and make a public statement about the situation. The CEO should explain how Mark 1 had concerns that went uncared for.

The CEO should also apologize to all of their shareholders especially the community in and around the disaster. The message should be shared around the world in all countries that GE is located. The apology should be made on TV and be able to be shared through the internet in a video format. By apologizing and making a statement about the situation the CEO and GE are taking responsibility for their mistakes as well as taking a step forward in order to gain back respect.

Ethical issue 2 action 2

The second action that should be enacted is GE as a whole should make the Japanese/Fukushima community a priority to help them get back on their feet.

In order to do this the CEO and the board could work out a sector in the company or a charity that would go straight to the community affected by the disaster. To promote the charity GE could host an event or when products are bought around the world a certain percentage of the money from the product could go straight to the fund. It would take finances away from GE, but in order to prove that GE is ethically and socially responsible it is important to spend money to fix a disaster that was caused by GE’s faulty designs.

Breaches and corruption

The Securities and Exchange Commission charged General Electric Company with violations of the Foreign Corrupt Practices Act (FCPA) for its involvement in a $3.6 million kickback scheme with Iraqi government agencies to win contracts to supply medical equipment and water purification equipment.

The SEC alleged that two GE subsidiaries — along with two other subsidiaries of public companies that have since been acquired by GE — made illegal kickback payments in the form of cash, computer equipment, medical supplies, and services to the Iraqi Health Ministry or the Iraqi Oil Ministry in order to obtain valuable contracts under the U.N. Oil for Food Program.

The Securities and Exchange Commission filed civil fraud and other charges against General Electric Company (GE), alleging that it misled investors by reporting materially false and misleading results in its financial statements.

 The SEC alleges that GE used improper accounting methods to increase its reported earnings or revenues and avoid reporting negative financial results. GE has agreed to pay a $50 million penalty to settle the SEC's charges.

Risk management process GE has a disciplined approach to risk in order to ensure that they are executing according to the strategic objectives

They evaluate risk at the individual transaction level, at the customer, industry, geographic and collateral-type levels.

Risks are identified through the risk management processes Priotised and escalated as appropriate Senior management discusses these risks periodically and assigns

responsibility for them to the businesses Continually monitor, evaluate and report on risks Business and corporate function are responsible to present risk assessments

and key risks to senior management at least annually.

RESPONSIBILITIES OF RISK MANAGEMENT TEAM

BOARD OF DIRECTORS

COMMITTEES The audit committee The governance & public affairs committee. The management development & compensation committee Technology & industrial risk committee

SENIOR MANAGEMENT OPERATING REVIEWS

Corporate audit Compliance risk. Ge blueprint reviews

RISK MANAGERS

Risk assessment and risk management are the responsibility of management and are carried out through risk managers who are operationally integrated into each of our businesses.

These risk managers bring deep domain expertise to the businesses’ operations and core processes. Both risk managers and the business leadership teams have specific, enterprise risk focused goals and objectives that are aligned with the overall risk framework.

RISK MITIGATION & COMMUNICATION

Risk mitigation strategies, including delegations of authority, standardized processes and strategic planning reviews, operating reviews, insurance, and hedging.

GE manages the risk of fluctuations in economic activity and customer demand by monitoring industry dynamics and responding accordingly, including by adjusting capacity, implementing cost reductions and engaging in mergers, acquisitions, dispositions and restructuring.

RISK FACTORS 

STRATEGIC RISKS 

Global macro-environment – GE’s growth is subject to global economic and political risks. M&A/restructuring - The success of GE’s business depends on achieving strategic objectives, including through acquisitions and business integrations, joint ventures, dispositions and restructurings. Intellectual property 

OPERATIONAL RISKS  Operations Cybersecurity Supply chain Economy/counterparties Funding access/costs Social costs  

LEGAL & COMPLIANCE RISKS Regulatory Legal proceedings – GE is subject to legal proceedings

and legal compliance risks.