From Thomas Edison To A Multinational Conglomerate

By definition, a conglomerate is a combination of different businesses operating in diverse industries under a single corporate group. General Electric started with the purpose of selling household appliances and later transformed into a multinational conglomerate. As of 2019, General Electric plays a major role in a variety of American industries from healthcare to aviation. According to Forbes, General Electric is ranked number 16 in its list of the world’s most valuable brands with a market cap of 81.4 billion. Tracing back to its roots in 1892, General Electric was founded by Thomas Edison with the support of other innovative inventors and wealthy investors. Inventions that changed the world, such as the microwave and incandescent lightbulb, were introduced through the company. Over time, the company became a multi-billion-dollar corporate group but slid downhill due to the poor and unethical decisions it made over the years. Once an American icon, General Electric in its downfall would harm its investors and American industries that rely on it. 

General Electric: General Disappointment

Over the years, the market share of General Electric dropped sharply as the company performed badly. The conglomerate set its foot on an excessive amount of industries and became too complex to manage. General Electric offers products and services in industries that it is not knowledgeable in such as GE Digital, a software and advisory service. GE Digital turned out to be a big failure and plunged the companies’ market share. According to Fortune, GE Digital was a complete disaster as well as a “wrong [decision]” made by the “great company”. As a result of its overextension, the corporate does not focus on creating better appliance products and loses to foreign competitors like Honeywell and Siemens. 

Wrong Direction

The conglomerate was not only underperforming but it also tried to solve its financial problem unethically. According to POGO (Project On Government Oversight), a federal contractor misconduct database, General Electric was charged $2,264.1 million for 65 instances of misconduct since 1995. The conglomerate committed misconduct such as accounting fraud and not following the GAAP (Generally Accepted Accounting Principle). In the end, General Electric not only ruined its business reputation but also it chased away its investors. The stock value of the company dwindles slowly in response to the unethical decision it has committed. Surprisingly, the company does not focus on fixing their problem but instead tried to cheat to gain an advantage. 

Major Role In The U.S. Industries

As General Electrics evolved from an appliance company to a multinational conglomerate, it changed two of the biggest industries in the United States: Healthcare and Aviation. General Electric plays a significant role in healthcare, as it offers medical imaging and cell therapy. According to USA Today, the two healthcare products had sales of $19 billion in 2017 and about 54,000 employees worldwide. Without these two products, patients in the U.S. would not receive the proper treatment they needed. On the other hand, General Electric Aviation is a major provider of military, commercial, and general aviation engine components. In both cases, if the General Electric conglomerate went bankrupt, the U.S. would not only lose out on the development of military and commercial engines but also the health services it offered to its citizens. As of right now, according to Bloomberg, the conglomerate does not look good as the corporate group was recently accused of another case of accounting fraud by Harry Markopolos, a famous financial fraud investigator who whistleblew one of America’s largest Ponzi schemes by Bernie Madoff.

Solution To The Problem

In conclusion, the multinational conglomerate has a major influence on American industries and investors. Its downfall could cause a lot of problems with health services and the development of military and commercial engines. According to Fox News, the company was given a second chance in 2009 as it was offered a $139 billion bailout by former president Barack Obama. At the time, the recession of 2008 hit the company badly along with the companies already underperforming. This time, instead of giving General Electric more money and options, an investigation should be made on the conglomerate’s executive that directed the recent accounting fraud. The executive’s practice of unfair trading should be punished instead of adding more fines to the company that is serving the American people and businesses.

 

This OpEd was written by U4SC Student Intern, Feng.

[Image Attribute: Brandon]

 

Disclaimer: The views and opinions expressed in this article are those of the author and/or student and do not necessarily reflect the official policy or position of United 4 Social Change Inc., its board members, or officers.
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