Porters Five Forces
If General Electric (GE) and Westinghouse could refrain from competition with one
another, the turbine industry is a profitable industry due to their significant control of the
market. GE and Westinghouse together held 93% of the market share in the turbine
industry post-war. Due to their size, scope, infrastructure, and maintaining an efficient
oligopoly, they established power when it came to negotiating with suppliers. Vertical
integration was also a large part of their ability to avoid forfeiting power to suppliers. With
regards to buyers, GE and Westinghouse were slightly less dominant, especially when it
came to Government controlled utilities. The top twenty-five utilities accounts were 55%
of the turbine capacity in the U.S; 9% of which was controlled by The Tennessee Valley
Authority, a government entity. In dealing with government organizations, competitors
would bid on projects and the organization would take the lowest offer as well as publish
all of the offers from the bidders. This public information significantly impacted the
negotiations process with the investor-owned utilities, often resulting in heated and intense
standoffs between high level executives. On the other hand, with such a large market
share, growth expectations, and a lack of substitutes, GE and Westinghouse were far from
powerless in negotiations. Through market dominance, GE and Westinghouse established
valuable brand equity. The risk of new entrants was low, high production costs couples
with significant research and development costs was enough to warn off most competitors
in the United States. The only real competitors were foreign companies that lacked the
brand equity of GE and Westinghouse. High barriers to entry, little to no substitutes,
medium buyer power, and low supplier power, General Electric and Westinghouse should
do very well if they dont engage in price wars.
General Electric
General Electric (GE) focused on large turbines, providing superior technology, lower-per
megawatt costs and delivering their products to large institutions and contractors, able to
afford a higher quality, higher price per unit turbine. GE should remain focused in this
market, continue innovation, be on top of maintenance needs for current customers, be
ready to provide upgrades for existing units and stick to their published book prices.
The highest level of research and development (R&D) should continue to be the focus for
GE. As a major player in the turbine industry, GE spends more on R&D than their
competitors, but less as a percentage of sales, approximately 10.8% compared to
Westinghouses 12.9%. If given the technological and financial needs, GE should not force
