general electric case study
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GE - TWO DECADES OF TRANSFORMATION UNDER
JACK WELCH
By
Priyank Sinha(FT11441)
Purnendu Singh(FT11442)
Rachna Saini(Ft11443)
Rahul Jain(FT11444)
Rahul raj(FT11445)
GE- THE LEGACY
Created in 1878 by Thomas A Edison Developed into highly centralized and tightly
controlled model by 1930s. Shift towards decentralization in the 1950s. Started developing strategic planning system
by the 1960s Reorganization of GE started by Reg Jones –
1973 Established 10 groups, 46 divisions and 190
departments supported by 43 strategic planning groups.
SBU (Strategic business unit) based structure
CHALLENGES FACED BY JACK WELCH IN 1981.
U.S economy was in recession High interest rates and strong dollar futher
increased the problems. Country’s highest unemployment rate since
Depression.
HOW DID JACK WELCH MANAGE IT?
#1 or #2:Fix,Sell or Close concept-to disengage i.e standard for each business to
become the #1 or #2 competitor in industry Three circle concept(1983)Businesses were categorized as
Core-reinvesting in productivity and quality High Technology-Investing in R & D to stay on the
edge Services-add outstanding people and make
contiguous acquisitions.
Restructuring Businesses sold for freeing capital and many new
acquisitions were made. 50% reduction in strategic planning staff to make
organization “lean and agile” ”Real time planning” concerning:
a)Current market dynamicsb)Competitor’s key strategiesc)GE business responsed)Greatest competitive threat over next three
yearse)GE business’s planned response Reduced number of hierarchical levels and
directly controlled all business.
THE BIG QUESTIONS ..
What was the objective for the series
of initiatives that he undertook in the early 80s, late 80s, early 90’s and towards retirement ?
What was the rationale and logic for these initiatives ?
EARLY 80’S
GE’s Restructuring-downsizing, destaffing and delayering
to sustain the staff that actually added value direct control of business to enhance competitiveness to break the old culture and to bring about
change
THE LATE 80’S
Software Initiatives “dubbed Work-Out” and “Best practices”:
aimed at creating a new culture with speed , simplicity and self confidence as its elements
correcting the management practices learning from other companies , to increase
productivity “Work out” : provided employees and their
bosses with a forum to discuss problems and ideas.
Going Global mission was to make “Businesses” global and not
company evaluations were done on world market position. to expand outside after making a strong base at
home.
Developing leaders: best training and development resources for
personal and professional growth to make employees loyal and to rebuild the trust
lost in 80’s due to layoffs. to make G.E the best place to work for which the
best people compete to get into. to inculcate a set of values which every manager
should follow.
INTO THE 1990’S
Boundaryless Behavior to enhance “integrated diversity ” i.e an open
and friendly environment for exchanging new ideas
setting a set of standard principles that to be followed by G.E managers all over the world.
removing barriers between marketing, sales, engineering, manufacturing etc for easy flow of work
Six Sigma Quality Initiatives-to increase productivity , lower costs and
improve quality.
Stretch : Achieving the impossible-setting higher “stretch” goals for business-to achieve much higher targets which look
impossible to achieve.-to invent better methodologies and set new
standards in the in the process. Service Business-to explore new opportunities and supplement
the slowing growth in product domain._to win huge customer base by delivering
adding value to their products.
TOWARDS RETIREMENT
“A players” with 4 E’s 4 E’s stand for:
Energy : excited by ideas. Ability to energize others Edge: ability to make tough calls Execution: turning vision into implementation
E-business launched “destryyourbusiness.com” redefining business model and taking advantage
of internet for their expansion.
How does such a large, diversified company continue to grow and defy critics?
Was Welch adding value ?
GE is still on the path of continuous innovation
Welch made GE a success during his tenure and implementing many new strategies which were criticized by many.
His idea of restructuring and downsizing was criticized but it set a strong base for company , these decisions had their own price.
He took many initiatives to set a new culture which was sustainable in long term
He was not only a leader but a model for companies , who invented new measures and strategies which were adopted by others.
He was criticized for selling businesses when they were in loss ,but he took decisions which proved to be fruit full in long run.
He brought GE to the heights where it is now with his wise calculated decisions and risk taking ability.
THANK YOU
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