G E G E D I V E V E R S I F I F I C AT I O N S T R AT E G Y: J - PowerPoint PPT Presentation

G E G E D I V E V E R S I F I F I C AT I O N S T R AT E G Y: J A J A N E L I , H O J I N PA R K , D OYO U N G , J U L I A S H Y U S T S T R AT E G I C M A N A G E M E N T N O N O V E M B E R 7 T H T H , , 2 0 1 6

v “Diversification is essential for consistent financial performance in volatile times. We navigated our Aviation business through the 9/11 crisis when engine shipments declined 20%. Since then, Aviation earnings have tripled and our share has grown. Our shipments of gas turbines declined by 65% between 2001–2004 as a “U.S. bubble” for power generation burst. Yet we have a stronger Power business today. Through those cycles, the “Big GE” protected the businesses and gave them strategic flexibility. That gives us confidence as we approach a difficult Oil & Gas cycle. Between 2014–2016 we expect our Oil & Gas earnings will decline 20–25%. Like past cycles, the strength throughout GE is being transferred to our Oil & Gas business. We are able to invest more in R&D, something our competitors can’t do. We are providing lower-cost solutions to our customers that allow them to sustain at current resource market pricing. And we can invest in new assets based on favorable economics. As in the tough times in Power and Aviation, our investment in Oil & Gas is a long-term proposition powered by the basics of a vital industry. Our portfolio is set. Going forward, we will get more value from our market position by leading the digital wave that is reshaping the industrial world.” – Jeffrey Immelts, GE Integrated Report, 2015

Jeffrey Immelt CEO & Chairman as of September 7 th , 2001 • Transformation of GE from conglomerate to Digital Industry focus • Internet of Things (IoT): Capturing data via machine sensors •

MAJOR PORTFOLIO MOVES SINCE 2001 2002 2011 2007 ENRON WIND CONVERTEAM, DRESSER, SMITH 2004 2015 2014 ASSETS, BETZ- 2013 WOOD GROUP WELL AEROSPACE, AMERSHAM DEARBORN ALSTOM GE DIGITAL SUPPORT, WELLSTREAM LUFKIN, AVIO VETCO GRAY 2015 2005 2007 2011 2016 PLASTICS CAPITAL* INSURANCE NBC APPLIANCES ACQUISITIONS DISPOSITIONS

MEASURES OF RELATEDNESS Business Internal (Organizational) External (Market) Overall Relatedness L – M – H L – M – H UNRELATED, SUCCESSFUL NBC DIVERSIFICATION* (BROADCASTING) BUT THEN SOLD IN HIGHLY COMPETITIVE MARKET • CAPITAL, MANAGEMENT • 2011 RESOURCES L – M – H L – M – H ALSTOM RELATED, SUCCESSFUL (POWER & GRID) DIVERSIFICATION • ECONOMIES OF SCALE, • SIMILAR CUSTOMER BASE & CAPITAL EXPERIENCE