What major impacts on the short term and long term viability of the enterprise does the current economic climate appear to be having on General Electric?

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Table of Contents

Introduction
General Electric
Current economic climate
Short term effect of the current economic climate on General Electric
Long term effect of the current economic climate on General Electric
Conclusion
Reference List

Introduction

Current situation in the world is rather unstable. The crisis which has occupied the whole world still echoes on some countries. Even though most countries have managed to recover from crisis and to continue developing their economies, some problems still appear. Huge international companies have already recovered from crisis and overcome all the consequences.

However, it would be unfair to think that the changes which occur in the economy of the country do not affect it any more. The current economic climate affects all the companies which operate in the world. Moreover, it should be stated that operating at the international arena, business has to be subjected to various economic and political laws which sometimes may differ from the domestic ones.

Looking at the current situation in the modern world, it is possible to state that many problems have remained. There are such difficulties as continued jobs crisis, absence of the long run activities for combating the crises (only short term actions are taken), debts of many countries and the absence of the assuredness to cover those debts, policy paralysis, etc. (World Economic Situation and Prospects 2012, 2011).

Each country has its own difficulties and operating at the international arena General Electric should consider all the problems, create a short term strategy for meeting the country’s needs and reflect on the current economic situation in the world, and form the long term plan for development paying attention to the current economic climate.

General Electric

General Electric is the company which changes the world. The company’s motto is “GE Works. Across businesses and industries, brilliant, connected machines like the GE Evolution Locomotive are changing the way we work” (General Electric, 2012).

Working in four absolutely disconnected niches, energy, technology infrastructure, capital finance and consumer and industrial, the corporation has an opportunity to change the whole world. Each sphere the corporation deals with General Electric benefits from. The closest competitor of the company is Citigroup, Inc. which has twice less market capacity than General Electric does.

The revenue of the General Electric is three times higher than that of Citigroup, Inc. Therefore, the affect of the General Electric’s activity is higher and the influence of the economy on the company is greater. It should be stated that the company works with financial operations, therefore, the economy of the world affects the company as well as the General Electric can affect the world economy. The company is directed at leading, building, and investing. These three spheres are aimed at creating stable income to the company.

According to the website of the corporation, General Electric “is building the world by providing capital, expertise and infrastructure for a global economy”, “is constantly working to make the world a healthier place by supplying the healthcare technology that saves nearly 3,000 lives every day”, “moves the world in the safest, fastest and most efficient ways possible”, and “powers the world with the cleanest, most advanced technologies and energy solutions” (General Electric, 2012).

Coming out of all these functions, there are many long term goals the company pursues, however, these long term aims are impossible without completing the short term expectations.

Current economic climate

“The world economy is on the brink of another recession” (World Economic Situation and Prospects 2012, 2011) United Nations assure, however, there is a hope that nothing is going to change. There are a lot of factors which point to this problem. Speaking about the current economic situation in the world, it is possible to underline the following aspects. First of all, the current labor market remains in crisis.

The unemployment rate is too high and the actions which are taken in the direction of reducing the unemployment rate are ineffective in a short term period (World Economic Situation and Prospects 2012, 2011). Many actions have been taken, however, it is impossible to solve the problem so far. Therefore, the unemployment rate may be reduced only in a long run period. It creates some problems for the companies at the present time.

Second, the economies of the European Union (EU) and of the United States of America are closely interconnected. These countries play a major role in the world economy.

The failures and success of these countries are important. Therefore, now the economic climate in these countries is supporting as even though the short term period does not guarantee solving all the problems, the economies of the countries have been stabilized and the world economy is going to be effective in the long term period (World Economic Situation and Prospects 2012, 2011). Therefore, these are two main factors which may affect the development of the General Electric in the long term and the short term periods.

Short term effect of the current economic climate on General Electric

Unemployment is one of the main conditions which may affect the General Electrics. Unemployment leads to serious economic problems in the countries. Low wages and the reduction of the human opportunities are important (Summers, 2008). The General Electrics is the corporation which cares for its employees, and when the world tendency is directed at the reduction of the wages due to the economy problems, the company is unable to ignore the issue.

Unemployment is the problem which affects the General Electrics in a short term period. However, we speak about this issue as about the problem which may be solved only in a long term period. Why does it happen? In a long term period the problem of unemployment is going to be decided or at least considered. But in a short term period the problem of unemployment cannot be solved, therefore, this macroeconomic problem affects such huge corporation as the General Electric.

Long term effect of the current economic climate on General Electric

Success of the economies of the European Union (EU) and of the United States of America is the economic climate which may assist the corporation in a long term period. One of the main strategies of the General Electrics is the redeployment opportunities (GE Global Growth & Operations, 2012). The positive economic climate in the countries mentioned above opens the doors before the corporation.

The rates of euro and dollar in the modern economy are very important, therefore, there is no need to enter the international market without being assured in the stable development of the European Union (EU) and the United States of America as the failure may occur.

Considering the expectations of the General Electrics, investing, building and leading remain the main directions of the company development in a long term period. The absence of the crisis in the mentioned countries and their stable development are the guarantees of successful development in General Electric.

It is obvious that the economic climate is measured by the public good and the successful development of the economy is important. The long term effect is considered in this case as the economy of the country is not that simple. Either a positive effect is caused or a negative one, it is impossible to consider the issue from the short term period as nothing seems to change.

Of course, the economy changes occur, but people do not feel it that fast and the corporations do not as well. Thus, the affect of the changes in the world giants of the economic climate are going to be experienced only in a long-term period (Impact of the current economic and financial crisis on potential output, 2009).

Conclusion

Therefore, it may be concluded that the economies of the European Union (EU) and of the United States of America affect the General Electric greatly. Even though there are many smallest problems in the world which may affect the corporation development, unemployment rate is the most serious one.

These two problems have been considered as the most important ones which may influence the development of the General Electric in a short term and in a long term periods. Having considered these issues in detail, it is possible to state that the correct planning and successful leadership in the corporation are able to overcome all the difficulties and leave the company a winner in any situation.

Reference List

GE Global Growth & Operations. (2012). Web.

General Electric. (2012). Web.

Impact of the current economic and financial crisis on potential output. (2009). Occasional Papers, 49, 1-87. Web.

Summers, L. H. (2008). Unemployment. The Concise Encyclopedia of Economics. Web.

World Economic Situation and Prospects 2012. (2011). United Nations. Web.

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