covers legal, stakeholders,governance structure,ethical issues, risk management in GE

1. Group7:
Sonali Jain-31
Priyanka joshi-32
Rishabh jyani-33
Garima kalgtker-34
Rahul kalyani-35

2. 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

3. 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

4.  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.

5. 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

6. 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

7. 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

8. 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

9. 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

10. GE world wide

12. Stakeholders of GE

16. Financial Snap shot
USA
45%
Europe
14%
Asia
17%
Americas
10%
Middle east
& Africa
14%
Global Revenues by Regions
Power
19%
Renewable
Energy
5%
Oil & gas
15%
Energy
management
6%
Aviation
22%
Health care
16%
Transportation
5%
Appliances &
Lighting
7%
Capital
5%
Global Revenues by Segment

17. 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.

18. 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

19. 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.

20. 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.

21. 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.

22. 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.

23. 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.

24. 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.

25. 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.

26.  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.

27. 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.

28. 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

29. 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.

30. 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.