How "Domain Expertise" Gave General Electric a Competitive Advantage in Aviation

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How Domain Expertise Gave GE a Competitive Advantage in Aviation

Domain Expertise ExplainedGE operates seven different industrial businesses.

This diversified model has allowed GE to gain expertise in many different areas.

GEs businesses often share common threads of expertise.

4 Major Areas of Domain ExpertiseTurbomachinery: turbines and compressors used in aviation, oil and gas, power and water, and transportation

Harsh environments: jet engines, gas turbines, diesel-powered locomotives, and oil and gas equipment

Inspection technologies: healthcare imaging technologies and a multitude of industrial quality assurance applications

Materials science: developing stronger, lighter weight, or more efficient materials that can be used in a wide range of areas

Forging a Competitive AdvantageGE has demonstrated that it can take a solution for one business and readily transfer it to another.

This can help GE gain a competitive advantage in the marketplace against competitors that may lack its domain expertise.

Case in Point: Ceramic Matrix CompositesGE has spent over $1 billion and 28 years developing ceramic matrix composites, or CMCs.

Compared to metal, CMCs are just as strong, weigh 66% less, and can withstand significantly higher temperatures.

CMCs were originally developed to improve the efficiency of gas turbines for power generation.CMC turbine blade. Source: GE

Validating The Potential of CMCsGE has logged more than 30,000 hours testing CMCs in gas turbines, producing more than 5-billion-kilowatt-hours of electricity.

After extensive testing, GE scientists became convinced that CMCs could be adapted for aviation applications, which has a more urgent need for fuel efficiency.

Steven (S) - Page 4: http://www.geglobalresearch.com/media/GEstoreTechBook_R13_HR.pdfCMCs Making the LEAP into Aviation

Source: SafranGEs co-developed LEAP jet engine with Safran will be the first commercial engine to feature CMC components inside its hot section when it enters service in 2016.

CMCs Making the LEAP into AviationAs the platform matures, CMCs stand to improve LEAPs fuel efficiency by up to 2%.

Overall, LEAP is 15% more fuel efficient than the engine it replaces.

Much of LEAPs fuel efficiency improvements can be traced back to GEs domain expertise in CMCs, 3D printing, turbomachinery, and harsh environments.

LEAPs Advantage Is ClearGE estimates LEAP could save airlines up to $1.2 million per plane in fuel costs.

LEAP has become the best selling engine in GE Aviation history, thus far winning 79% of all orders for next-generation Airbus A320neo and Boeing 737 MAX aircrafts.

LEAPs order book is worth $134 billion at list prices.

Steven (S) - Search "79%": http://seekingalpha.com/article/3078506-general-electrics-ge-ceo-jeff-immelt-on-q1-2015-results-earnings-call-transcriptSteven (S) - Page 8: http://www.ge.com/ar2014/assets/pdf/GE_AR14.pdfSteven (S) - http://www.gereports.com/post/121829551635/ge-and-partners-win-19-billion-in-new-deals-atCreating a Challenge for CompetitorsExtensive CMC testing in gas turbines has allowed GE to gain an unparalleled understanding of CMCs and the confidence that CMCs could be used in aviation applications.

Aviation companies without the ability to extensively test CMCs in a similar manner may find it challenging to compete against GEs CMC domain expertise.

RecapOperating Seven Industrial Businesses Has its BenefitsIt allows GE to acquire domain expertise that can be cross-utilized in a host of different industrial applications.

Ultimately, GEs domain expertise can be a powerful way to gain a competitive advantage in the marketplace.

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